When making decisions about whether to continue working or take time off after a cancer diagnosis, it is important to understand your options so that you can make an educated decision. Disability insurance (e.g., SSDI) is a way to replace your wages if you need to take time off work because of a medical condition.
For an overview of disability insurance options, read our Quick Guide to Disability Insurance, or watch our recent webinar on Taking Time Off & Paying For It. One option is Social Security Disability Insurance (SSDI), which is one of the two federal long-term disability programs.
Depending on your age, you may also be considering retiring early or at your full retirement age and receive Social Security retirement benefits. We often get asked:
“Can you get both Social Security Disability Insurance (SSDI) and Social Security retirement benefits?”
For the most part, the answer is no. If you are receiving SSDI because you have a disability and are unable to work, you are effectively receiving your retirement benefits early. If your disability continues through to the time when you would normally retire, your SSDI benefit will just automatically convert to Social Security retirement benefits and the amount of money you receive each month will not change.
There is one exception and that is early retirement. You can file for early retirement (which you are eligible for at 62), while you are waiting for your disability claim to be approved. You would receive a reduced retirement benefit (currently 25% less than your full retirement benefit amount) right away. If you are approved for SSDI, you will begin to receive your full retirement amount. You could also receive prorated retroactive payments for any time that you were determined to be disabled and were receiving reduced benefits.
The Risk/Reward of Early Retirement
If you take early retirement and then never apply for, or are never approved, for SSDI, you will receive a reduced monthly retirement benefit amount for the rest of your life. That’s the risk.
But if you are approved for SSDI for a disability that began before your early retirement, your benefit payment will rise back up to the full amount. Furthermore, the Social Security Administration will enact a “disability freeze” on your earnings. This is important because the amount of your retirement benefits and SSDI benefits are determined by your earnings record over your lifetime. Zero earning or low earning years reduce the amount of benefits that you are eligible to receive.
If you are found to have a disability that began after you took early retirement, you would not get the benefit of a “disability freeze.” Furthermore, you would receive the higher SSDI payments only until the time that you turned your full retirement age, then your payments would return to the reduced early retirement amount for the remainder of your life.
Understanding the rules is the first step in getting the maximum benefits for which you are eligible.