If you are receiving Social Security disability benefits while still working, you may wonder how this affects your Social Security retirement benefits. Here is what to know about how disability and retirement benefits work together once you reach retirement age.
Understanding Social Security Disability Insurance
The first thing to understand is that Social Security Disability Insurance (SSDI) is different from other types of disability insurance.1 The SSDI program pays benefits to you or certain family members if you qualify, have worked long enough, and have paid Social Security taxes.
If you are eligible for private disability income insurance, that does not mean you also qualify for SSDI. Disability payments from private insurance usually do not affect your Social Security retirement benefits.
With SSDI, the amount you receive is based on two main factors. These include your average indexed monthly earnings, which reflect your lifetime income, and your primary insurance amount. Your primary insurance amount is what you are eligible to receive in retirement benefits at your full retirement age, which is between ages 65 and 67 depending on your birth year, according to the Social Security Administration (SSA).2
SSDI & Your Retirement Benefits
The amount you receive in disability benefits is usually the same as what you would receive in retirement benefits at your full retirement age.
If you receive SSDI before reaching full retirement age, your benefits will automatically convert to Social Security retirement benefits once you reach that age. The amount you receive will not change.3 You will continue to receive the same monthly payment. Only the type of benefit will be different.
Retirement Benefit Options
When your benefits change from SSDI to retirement benefits, your dependents may be able to file for benefits based on your work record. This is something they may not be able to do while you are receiving SSDI.
Once you reach full retirement age, you also have the option to withdraw your Social Security retirement benefit. If you do this, you can delay receiving benefits and earn delayed retirement credits. These credits can increase your monthly benefit for each year you wait.
You can delay benefits until age 70. Waiting may help increase your monthly income later on.
Survivor Benefits
Survivor benefits for a spouse usually stay the same whether you were receiving SSDI or retirement benefits. If a widow or widower has reached full retirement age, they will receive the same monthly amount that the deceased spouse was receiving, according to the SSA.4 However, the situation can change if a spouse is caring for a dependent child. In this case, whether you were receiving SSDI or retirement benefits may affect the total benefits your family can receive.
The SSA sets a family maximum benefit, which limits how much your dependents can collect.5 A separate maximum is used for SSDI. For SSDI, the family maximum is no less than your full retirement age benefit and no more than 150% of that amount. This means your family may receive lower survivor benefits under SSDI compared to retirement benefits.
Understanding Social Security
Social Security disability and retirement systems can be complex. Knowing how they work can help you better prepare for retirement and understand how your benefits may support your family.
Final Thoughts
Whether you are receiving SSDI or planning for retirement, understanding how these benefits work together can help you make informed decisions. Knowing when benefits change, how much you may receive, and how your family may be affected can help you prepare for the future.
Sources
- Disability. https://www.ssa.gov/disability.
- Starting Your Retirement Benefits Early. https://www.ssa.gov/benefits/retirement/planner/agereduction.html.
- What You Need to Know When You Get Social Security Disability Benefit. https://www.ssa.gov/pubs/EN-05-10153.pdf.
- Survivor benefits. https://www.ssa.gov/survivor.
- Formula For Family Maximum Benefit. https://www.ssa.gov/OACT/COLA/familymax.html.
