Question of the Month: Can I Take Early Retirement While My Social Security Disability Claim Is Pending?

March 8, 2021

If you are eligible for Social Security disability and are between the ages of 62 and 66, you have a choice to make: Should you take the early retirement benefit?

Regardless of your age, when you qualify for Social Security Disability Insurance (SSDI), Social Security sets your benefit as though you had reached full retirement age. Full retirement age is when you qualify for 100 percent of the benefit Social Security calculates from your lifetime earnings. Currently that age is 66 years old (but over the next few years that will gradually rise to 67).

If you are at least 62 years old, you can get early retirement benefits while you await a decision on your disability case. If you are successful in your disability case, you will be paid the higher disability benefit amount. In effect, you will get a monthly pay increase from Social Security. However, there can be a downside. If you are unsuccessful in your disability case, you may not be able to reverse your decision to take the lower benefit. There is a 12-month deadline for withdrawing the application for retirement once it is filed, and you need to pay back any benefits that you or your family have received. Whatever may be technically possible, in our experience, we do not ever recall a client actually making such a payback. What is more common instead is the overarching need for the reduced retirement monies pending the disability claim finalization and the hoped for approval. We most certainly always try to give very honest feedback regarding the prospects and what is important for success. It’s all part of what we do.

The advantage of filing for disability while receiving early retirement is a higher monthly Social Security check. The early retirement age benefit can be as much as 30% less than the full retirement age benefit while your monthly disability benefit is 100% of your full retirement age benefit. Your disability payments will end when you reach your full retirement age and Social Security will begin paying you your retirement benefits.

A less common scenario can affect those who qualify for Supplemental Security Income (SSI) (which is for individuals with little or no income) and also qualify for retirement benefits. This can occur when you have worked enough years in the past to qualify for a retirement benefit, but didn’t work recently enough in relation to when you filed for disability to be eligible for SSDI. If this is your situation, you will only be paid SSI benefits until you are 62 years old, at which time you become eligible for Social Security retirement. When you reach 62, you will have to apply for early retirement benefits, because Social Security requires that—as a condition of receiving SSI benefits— you must apply for any benefits that are available, including Social Security early retirement benefits.