I’ve seen lots of people file for Social Security retirement benefits when they should have filed for Social Security disability benefits.
If you are disabled and close to 62 years old (or give advice to those individuals), you need to read this post. The rest of your life is a long time to be stuck with a bad filing decision. Recently, a client asked me the following. “I'm 62 and too disabled to work. I think I’m just going to file for Social Security retirement benefits since I’ve reached that age. Disability is just too much trouble. What do you think?”
I’ve had that question often and told him the same thing I tell everyone else. (For related reading, see: Social Security Mistakes: How to Avoid Them.)
Social Security Is Not Welfare
Most folks who have worked will often have a hard time filing for disability. They may say it’s because of the trouble or paperwork, but the fact is, many of them are just embarrassed. You can’t blame them. There is a stigma to disability. For some reason, it’s viewed by many as some sort of welfare.
Here’s the news. The same taxes that provide your retirement benefit will provide your disability benefit. If one is welfare, so is the other.
The fact is, neither of these programs are anywhere close to welfare. YOU paid taxes for the duration of your working career for access to whichever program met your needs when you stopped working.
Why Receive 25% Less?
A disability payment could be higher than your retirement benefit. If you were born between 1943 and 1954, your Social Security retirement benefit at age 62 will only be 75% of your full retirement age benefit. Your disability benefit? It's 100% of your full retirement age benefit.
Here’s an example. Assume your benefit at age 66 is $1,800. At age 61, you are in a car accident and cannot return to work. If you file for retirement benefits, your monthly amount would be about $1,350. If you file for disability, you would receive the full $1,800 per month. If we assume a life expectancy of 85 years old, that would be a difference of $153,000 in benefit payments. That’s worth your attention. (For more, see: Are My Social Security Benefits Taxable?)
Age Is on Your Side
We’ve all heard the stories about how difficult it is to qualify for Social Security disability. The good news is that it’s often easier for someone to be approved after they turn age 60. For clarification on this, I turned to my resource for all things Social Security disability. Greg Giles is a Social Security disability attorney and partner in the law firm Moore, Giles & Mattson, LLP. Here’s what he had to say.
“For applicants past age 60, the Social Security Administration has age-specific rules when it evaluates your disability. If the Administration reviews your application and decides that your condition doesn't meet a disability listing, they’ll refer to a separate set of rules to decide if you are disabled. These rules will take into account one’s past work history, skill level and education combined with one’s physical and/or emotional limitations.”
If you decide you need to file for disability, be prepared for some frustration. Giles went on to say, “The process is not easy to understand. Unfortunately, it’s designed to discourage instead of encourage applying for benefits.”
The takeaway from this is the same as most other Social Security situations. Know your options! If you file for disability and are declined, hire an attorney who specializes in this work. (For related reading, see: Your Local Social Security Office: Who Can Help.)