Apply for disability and retirement benefits simultaneously
Time and time again, we hear about people who are forced into early retirement due to circumstances beyond their control such as a job layoff, health crisis or caregiving responsibilities for a spouse or other family member.
Often, those people turn to collecting Social Security retirement benefits earlier than planned, which usually results in reduced benefits for them for rest of their lives. Claiming reduced retirement benefits early can also have a detrimental effect on benefits for a surviving spouse.
But if someone has a physical or cognitive impairment that prevents them from working, they may also qualify for Social Security disability benefits, which would result in a larger monthly payment. Disability payments are based on average lifetime earnings, and for someone who is near retirement age, disability benefits are often close to or equal to the full retirement age benefit amount.
Just the other day, a reader named Chip emailed me asking for advice on what his 62-year-old father, who was diagnosed with Alzheimer's disease earlier this year, should do about claiming Social Security benefits. His father, a lawyer, stopped working last December because of the illness. His mother is 61 and no longer working.
I suggested that his father go ahead and apply for Social Security retirement benefits, since at age 62 he automatically qualifies for early benefits. His full retirement benefit of about $2,000 per month at age 66 would be reduced to about $1,500 per month by claiming benefits four years early.
Chip's father should also apply for Social Security Disability benefits at the same time. Disability benefits are based on average lifetime earnings without an early claiming reduction. But it takes a long time to process an application for disability benefits—often up to five months or more. So he could receive reduced retirement benefits immediately, and if he is later approved for disability benefits, his benefit amount would increase.
Robert Bruce, a retired Social Security District manager from California, recommends that anyone who has a debilitating health condition and who is under full retirement age when they apply for retirement benefits should also apply for disability benefits.
“Even after your start receiving Social Security retirement benefits, you should apply for disability if a health problem develops and you have not reached your full retirement age,” Mr. Bruce writes in his helpful handbook “Social Security Inside Out” (SocialSecurityInsideOut.com). “Checks will be larger because your early retirement penalty will be removed or readjusted,” he explains. “In addition, you could get Medicare before you are 65 years old.”
If approved, disability benefits will be paid for the first full month after the date the disability began. But approval of a disability benefit can be arduous and requires extensive documentation of your medical condition.
You can call the general Social Security Administration number, 800-772-1213, to make an appointment to file a disability claim at your local Social Security office or to set up an appointment for someone to take your claim over the phone.
Once you schedule an appointment, SSA will send you a Disability Starter Kit to help you assemble all the documents you will need for your disability claim interview, which usually lasts about an hour. Or, you can download the kit directly from the website at www.socialsecurity.gov/disability.
If Chip's father is ultimately approved for disability benefits, not only will his monthly benefit amount increase, but it will result in a larger survivor benefit should he predecease his wife.
Survivor benefits are based on 100% of a deceased worker's benefit if the surviving spouse claims them at his or her full retirement age; less if claimed earlier.
Because Chip's mother has earned Social Security benefits based on her own work record, she could collect reduced retirement benefits when she turns 62 or hold out for larger retirement benefits by waiting until 66 or later to claim then.
If her husband dies first, she would be able to collect a survivor benefit if that is larger than her own retirement benefit. And, if she hadn't begun collecting retirement benefits at that point, she could allow her own retirement benefits to accrue delayed retirement credits worth 8% per year between ages 66 and 70 and switch to her own retirement benefit at that point if it was larger than her survivor benefit.
