By AMAC Certified Social Security Advisor Russell Gloor, Association of Mature American Citizens
Dear Rusty: I am now 64 years old and started taking my Social Security at 62. I continued to work part time since I applied, until December of last year when I was disabled from a bad car accident. I haven’t been able to work since the accident, and I’m wondering if I can switch from my regular benefit to disability benefits, because I think that will be higher. Can you tell me – is it possible for me to switch to disability benefits and get a higher payment than I’m now getting because I took Social Security at 62? Signed: Worker now Disabled
Dear Worker: Social Security disability insurance, or SSDI, is intended to sustain you financially if you become disabled while still working. Included in the FICA tax you contributed each payday was your insurance premium for disability coverage. If you were still working, became totally disabled and unable to continue working, and the total disability is expected to last a year or more, you can apply for disability benefits even though you are already collecting Social Security early retirement benefits. There are, however, some things you should be aware of.
If you qualify, your SSDI benefit would be higher than your reduced early retirement benefit, as you believe. You would still need to meet the fairly stringent requirements to qualify for SSDI benefits (which you can find at www.ssa.gov/disability) and among those requirements is that you must have worked and paid FICA taxes for at least 5 of the last 10 years. You can apply online at the website referenced above, by telephone at 1-800-772-1213, or by visiting your local Social Security office which you can find at www.ssa.gov/locator. Be aware that it could take 3 to 6 months for a decision on your case but, if approved, benefits will be paid retroactively. If your case is not approved, you have the right to appeal, but the appeal process is significantly backlogged and could take a year or more to adjudicate. Statistically, only about 1/3rd of applications are initially approved but the success rate for appeals is considerably better.
Disability benefits are based upon the benefit you’re entitled to at your full retirement age. If you are approved for and start collecting SSDI disability benefits, the amount of that benefit will be reduced corresponding to the number of months you received retirement benefits prior to being awarded SSDI. From what you’ve told me, that reduction will be about 13.3% because you’ve collected retirement benefits for about 2 years. When you reach your full retirement age of 66, your SSDI benefit will automatically convert to retirement benefits, but the benefit amount will stay the same as your reduced SSDI amount. That will, however, be more than your current early retirement benefit which was reduced by about 25% because you applied at age 62. The switch is mostly an accounting transaction because retirement benefits are paid from a different Social Security trust fund than disability benefits.
Finally, you may want to consult with a law firm that specializes in SSDI disability claims. An SSDI attorney should not charge a retainer or upfront fees, and Federal law limits the amount they can charge in contingency fees to 25% of any past due benefits they get for you to a maximum of $6,000. You should not have to pay anything unless you win, though some attorneys will charge a small fee for out-of-pocket expenses. As with anything you sign, be sure to review the legal agreement carefully.