SSDI vs. Early Retirement

Social Security Attorneys Advising Massachusetts Residents on Benefits Options

For individuals in their late fifties and early sixties who are finding it increasingly difficult to work due to health issues, a difficult decision often arises. On the one hand, they can apply for government benefits to compensate them for time off work. On the other hand, it can often seem easier and less time-consuming to simply opt for early retirement and begin to receive Social Security. Making the decision between these avenues for benefits can be complicated and requires careful consideration of all the variables involved. At Kantrovitz & Associates, our Social Security lawyers have extensive experience helping Massachusetts residents understand the pros and cons of SSDI and early retirement benefits.

Early Retirement and SSDI

As an initial matter, many applicants wonder if it is possible to receive Social Security Disability Insurance (SSDI) and retirement benefits at the same time. Unfortunately, the answer is no. Since SSDI was implemented as a way to provide financial assistance to individuals who had not yet reached the age of retirement, it is not meant to overlap with retirement. Instead, once SSDI recipients reach the age of retirement, their benefits are converted to full Social Security retirement benefits.

When debating between SSDI and early retirement, many applicants lean towards receiving early retirement benefits because they are easier and less time-consuming to obtain, and because they do not carry the stigma that is sometimes attached to disability payments. However, these same applicants may not realize that taking early retirement can actually cost money in the long run. This is because, when an individual opts for early retirement, his or her overall retirement benefit is reduced in proportion to the number of months that he or she will be receiving benefits before reaching the full retirement age of 66. Essentially, the same amount of money is spread out over a longer period of time, leading to reduced monthly benefits.

However, if an individual opts to apply for SSDI, he or she will receive those benefits until reaching the age of 66, leaving full retirement intact. Additionally, since SSDI benefits are based on the same wage calculations as retirement, a recipient will receive the full benefit amount for both the period on SSDI and when on retirement. By taking early retirement, the applicant is deprived of the money he or she would be entitled to under SSDI and must stretch retirement benefits further, leading to reduced income throughout retirement.

The one exception to this rule, and potentially something to discuss with a lawyer, is whether you can apply for SSDI and then request early retirement benefits in the interim while you wait for your SSDI to be approved. If an applicant takes this route, and is successful in obtaining SSDI, he or she will be entitled to receive backpayments to make up the difference between the early retirement amount that was received and full disability payments for the months when the individual was waiting for SSDI approval. Additionally, after approval, upon reaching full retirement age, the applicant would still be entitled to full retirement benefits. Thus, this is an option for people who cannot wait the full SSDI application period to receive benefits. However, it does run the risk that the applicant will be forced to use early retirement benefits if the SSDI application is denied.

Seek Guidance on Your Government Benefits Claim from a Massachusetts Lawyer

Choosing between SSDI and early retirement can be challenging. While applying for SSDI protects your retirement benefits for future use down the road, it can leave you in a financially difficult spot if the application process takes a long time. Alternatively, applying for SSDI and then opting for early retirement can be an option for those who are willing to risk the possibility that they may be denied. At Kantrovitz & Associates, our government benefits attorneys can help explain the eligibility process to individuals throughout Massachusetts. From our Boston offices, we assist residents of Plymouth, Norfolk, and Suffolk Counties, as well as New Hampshire and Rhode Island. You can contact us for more information at (800) 367-0871 or online.