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When Disability Benefits Turn Into Retirement Benefits

When Disability Benefits Turn Into Retirement Benefits

As we have discussed before, Social Security Disability Insurance (SSDI) was designed to provide benefits for workers who earned enough work credits to qualify for Social Security retirement benefits but who became disabled and unable to work prior to reaching retirement age.

With that in mind, many SSDI recipients are concerned about what happens to their disability benefits when they reach retirement age. And the simple answer is: nothing. If your disability does not improve, and you remain completely unable to work until you reach retirement age, your disability benefits will switch to retirement benefits automatically.

When we talk about retirement age, what we really mean is full retirement age, or the age at which you qualify for 100% of the benefits that Social Security calculates from your lifetime of earnings. In years past, full retirement age was 65, but the federal government is increasing the age over the next few years. What full retirement age means at any given time depends on the year you were born, but, eventually, full retirement age will be 67 for everyone.

The conversion from disability benefits to retirement benefits happens automatically, and you do not need to contact Social Security for any reason once you have reached full retirement age. The formula that Social Security uses to calculate SSDI and retirement benefits is exactly the same. At this point, you are also no longer subject to the earnings limits that you needed to fall under to qualify for SSDI benefits originally.

The amount of money that you receive in monthly benefits remains exactly the same when the switch to retirement benefits occurs, with one exception. If you received SSDI benefits along with workers’ compensation or other public disability benefits for a government job at which you did not pay taxes to Social Security, your SSDI benefits were reduced; once you reach full retirement age, the reduction ceases, so you will see your monthly Social Security retirement benefit payments increase proportionately.

After you qualify for SSDI benefits but before you reach full retirement age, Social Security will conduct periodic continuing disability reviews. These reviews are usually simple and are designed to ensure that individuals who have been approved for disability benefits remain eligible for them, despite the passage of time. How often your case is reviewed depends on the severity of your condition and how likely it is to improve.

Before you reach full retirement age, you are obligated to report any changes in your situation to Social Security, even if doing so could result in the termination of your SSDI benefits. These changes include whether you have tried to return to work, whether your medical condition has improved, or whether there has been any change in your ability to work.