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SSDI and Retirement

91ddd6_9a490f28ff754b6d8fd504b0e4e71766.jpgAnyone who has received a denial noticefrom the Social Security Administration in regard to their claim for SSDI benefits will be familiar with the bolded words 'Retirement, Survivors and Disability Insurance' that appear at the top of the notice. But why does the notice say 'Retirement, Survivors and Disability Insurance' (or RSDI) instead of Social Security Disability Insurance (or SSDI)? This is because SSDI falls under the purview of the RSDI 'wing' of the Social Security Administration. As the name indicates, this section of the SSA deals with retirement benefits and survivor's benefits in addition to SSDI.

But why would it make sense for SSA to lump together these three seemingly different programs? The reason for this is that, rather than being entirely separate from your retirement benefits, SSDI is essentially a way to receive a percentage of your monthly retirement benefit early due to your disability. You cannot receive your ongoing Social Security retirement benefits and ongoing SSDI benefits from SSA at the same time.

SSA uses a complicated formula to determine the percentage of your full retirement benefit that can be paid out to you as a disability benefit. However, your disability benefit will generally be around 90% of your full retirement benefit. Unlike early retirement, SSDI benefits do not lock you into a lower benefit rate for the rest of your life. If you are receiving SSDI benefits, once you reach retirement age (67 for individuals born after 1960 and between 65 and 66 & 10 months for individuals born before 1960), Social Security will start to pay you your full retirement benefit. Once this happens, you are considered to be receiving retirement benefits rather than disability benefits.

If you are close to your retirement age, one key factor to remember is that an application for disability benefits does not merely determine the amount of future benefits you will receive. It also determines the amount of back-due benefits you are eligible to receive. In other words, it is possible to receive (in the case of SSDI) a lump-sum award for the months prior to retirement in which SSA finds you to have been disabled. In fact, Social Security's 'GRID' rules generally make it easier for older individuals to be awarded disability benefits.

Please feel free to contact us if you would like to discuss this issue in greater detail.

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