If you are unable to work because of your health, you may be wondering if you should apply for Social Security Early Retirement, Social Security Disability Benefits or wait until your full retirement age (or beyond) to draw benefits.
Knowing your options and their financial repercussions when planning your retirement can help you make the best choice.
The Bishop Law Firm has represented Social Security Disability clients in North Carolina since 2013. Attorney Kimberly Bishop, of The Bishop Law Firm, is a NC Board Certified Social Security Disability Lawyer in Raleigh, NC who has practiced disability law since 2009. In addition, Chasity Everett, EDPNA, also represents disability clients for the firm and has worked with disabled clients since 2002.
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What are Social Security Early Retirement Benefits?
You can receive retirement benefits before your full retirement age (which is currently 67 years old in 2024).
Social Security Early Retirement Benefits are available to workers when they reach 62 years old.
You may elect to receive your retirement benefits at age 62 (To calculate your full retirement age look here) but your benefits will be reduced. This reduction can be up to 30% of your retirement benefits and a 35% reduction for a spouse.
It should be noted that this 30 - 35% reduction is permanent unless an early retiree is found eligible for Social Security Disability benefits (read more below).
If you elect to draw early retirement, you will also have to wait until you are 65 years old to receive Medicare.
Also, if you draw early retirement you will need to keep your yearly earnings below $22,320 (2024) (as long as you are under full retirement age). If you make more than $22,230 a year, your benefits will be reduced by $1 for every $2 you earn over the limit.
To use SSA's example:
You are receiving Social Security retirement benefits every month in 2024 and you:
Are under full retirement age all year. You are entitled to $800 a month in benefits. ($9,600 for the year)
You work and earn $32,320 ($10,000 more than the $22,320 limit) during the year.
- Your Social Security benefits would be reduced by $5,000 ($1 for every $2 you earned more than the limit). You would receive $4,600 of your $9,600 in benefits for the year. ($9,600 - $5,000 = $4,600)
How do I qualify for Social Security Early Retirement?
- Meet SSA's fully insured status requirements (in general, to meet this status you must have worked at least 10 years in your life)
- Be 62 years old - less than your full retirement age
- Apply with the Social Security Administration
What are Social Security Disability Benefits?
Social Security Disability Benefits are available to workers who are no longer able to work because of their health. There is no age requirement, but you will have to be found disabled by the Social Security Administration in order to receive benefits.
The amount of money that you will receive will be equivalent to the amount of money that you would receive if you wait until full retirement age (no reduction). Also, you will be entitled to Medicare after two years of being found eligible for disability benefits.
SSA generally offers two types of benefits for the disabled: 1) Social Security Disability Insurance Benefits (SSDI) and 2) Supplemental Security Income (SSI).
For the purposes of this post, we will focus on SSDI:
Social Security Disability Insurance (SSDI)
SSDI (Social Security Disability Insurance) is based on the credits from the work you have done in your life. You must be found disabled before your disability date last insured (DLI) to be found eligible for SSDI. Your DLI is calculated by counting your “quarters of coverage” from your earnings record. You must have 20 “quarters of coverage” of the last 40 quarters. Simply put, you must have worked 5 years of the last ten years (in general). In addition, Adult Disabled Children can be eligible for benefits off their parent’s account.
How do I qualify for Social Security Disability?
- Meet SSA's disability insured status requirements (in general, to meet this status you must have worked 5 of the last 10 years)
- Apply with the Social Security Administration
- Be found disabled by the Social Security Administration*
*Read more at North Carolina Social Security Disability Attorney
If you are approved for Social Security Disability benefits, you will need to keep your earnings below the amount mandated by Social Security, which is called Substantial Gainful Activity (SGA). In 2024, SGA is $1,550 per month (please note that this is GROSS, not net).
We advise clients that coming close to SGA can also trigger a closer look from SSA.
You will need to keep your earnings under SGA until you reach full retirement age in order to not run the risk of losing your disability benefits.
SSA does have a few programs that allow unsuccessful work attempts and trial work periods, but always make sure that you are grossing below SGA to protect your benefits.
What are Social Security Full Retirement Benefits?
Full retirement benefits are what most people recognize as Social Security. After working for most of your life, you decide to retire at full retirement age (which as discussed above is currently 67).
But, not everyone retires at 67. Some people continue to work full time for many more years. If you are able to continue working (congratulations to you!) past your full retirement age, you can receive delayed retirement credits from SSA.
Even if you delay drawing full retirement, you can still begin to receive Medicare at age 65.
You will receive your full retirement amount from SSA (no reductions) and may even receive more if you were able to attain delayed retirement credits.
Per SSA: " Starting with the month you reach full retirement age, there is no limit on how much you can earn and still receive your benefits (Via SSA)."
How do I qualify for Social Security Full Retirement Benefits?
- Be full retirement age or older
- Be fully insured (as discussed above under Early Retirement benefits section)
- Apply with the Social Security Administration
Frequently asked questions:
- Does Social Security Disability pay more than Social Security Retirement? No, Social Security Disability is the same amount that a claimant would receive if they waited to full retirement age to retire (Via SSA).
- Can I collect early retirement while waiting for disability? Yes. Many people apply for early retirement and disability at the same time. They receive the "early" retirement reduced benefits until the disability benefits are approved. Read more here.
- At what age does Social Security Disability turn into Social Security Retirement? Social Security Disability turns into Social Security Retirement at your full retirement age.
- Can I receive Social Security Disability and Social Security Early Retirement at the same time? No. The law does not allow a person to receive both retirement and disability benefits on one earnings record at the same time.
- Can I receive Social Security Full Retirement and Social Security Disability at the same time? No. The law does not allow a person to receive both retirement and disability benefits on one earnings record at the same time.
Which option is right for me?
We often speak to clients who have stopped working and started drawing early retirement benefits at 62 years old because of their health. This results in a reduced benefit amount over the rest of their life and they still have to wait until they are 65 years old to draw Medicare.
This results in less money and no health insurance for 3 years.
If you are unable to work because of your health, applying for Social Security Disability may be the better option for you. You will receive more money and will have access to health insurance sooner but you will have to be found disabled by the Social Security Administration before your date last insured in order to make this happen.
Even if you have already filed for early retirement, you can go back to SSA and apply for Social Security Disability if you are still under full retirement age.
If someone is 62 (or closely approaching 62) and are unable to work because of their health, SSA does give the option of applying for early retirement and Social Security Disability at the same time (Via SSA.)
The catch is that if you are not subsequently found disabled, you will be stuck drawing the early retirement "reduced" benefit amount permanently. But for those that are unable to work because of their health, you don't really have a choice.
For those that are able to continue working full time after their full retirement age and earn late retirement credits, you are ensuring that you are receiving the most money possible from Social Security BUT you are also taking a risk.
If you pass before you draw full retirement, you have essentially paid FICA all your life and have never received any of the money from your payments.
If you are wondering if you should apply for Social Security Early Retirement or Social Security Disability Benefits give the Bishop Law Firm a call.
The Bishop Law Firm represents Social Security Disability clients Raleigh, Durham, Fayetteville, Cary, Rocky Mount, Wilson, Smithfield, Louisburg, Chapel Hill, Roanoke Rapids , Winston Salem, Garner, Greensboro, Greenville and surrounding areas in North Carolina. Call us today for a free case review, (919) 615-3095.
