Many disabled applicants nearing the age of 62 ask whether to apply for disability or take early retirement benefits. Here are the implications of each option:

Early Retirement Benefits

  • If a disabled worker starts collecting Social Security retirement benefits early, their monthly benefits are reduced for each month before they reach their designated full retirement age.
  • Disabled workers who take early retirement must wait until full retirement age to obtain Medicare benefits.

Social Security Disability Insurance

  • Older workers (60 and older) who accumulate 40 quarters of work credits (10 years of work) are “fully insured” for Social Security retirement or disability benefits.
  • If a disabled worker receives SSDI, they will receive full monthly benefits and annual cost of living increases.
  • Disabled workers are also entitled to Medicare and prescription drug coverage.
  • When the applicant reaches retirement age their SSDI benefits will be converted automatically into retirement benefits.
  • When the Social Security Administration calculates an applicant’s retirement benefits, the years they received disability insurance is not included and their retirement benefits will be higher because their earnings are averaged over a shorter period of time. The earnings from SSDI are considered but the number of years the applicant was disabled is not. It ends up looking like they earned more money per year, which equals a higher monthly retirement check.

Advice to Advocates

  • Encourage applicants to apply for disability benefits first, knowing that they can seek early retirement if their benefits are denied.

If a person is 62 years old or older and they apply for SSDI and SSI, they are required to apply for the early retirement benefits.  If approved for disability, their monthly benefit amount will be increased to their benefit amount as at full retirement age, and the difference will be awarded to them back to the month they started to receive early retirement or onset date, whichever is later.