Early Retirement Benefits and SSDI | The Disability Benefits Podcast #30

In this episode, we go over early retirement benefits and how that affects SSDI eligibility.

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Disability Consulting, LLC
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Disclaimer: We are a non-attorney firm. Our company specializes in representation for Social Security disability claims and is not a law office. The information provided in this video is for general informational purposes only and does not constitute legal advice. For legal guidance specific to your situation, please consult a licensed attorney.

Transcript

SPEAKER_00 0:00

Okay. Let's talk about early retirement benefits. Um trying to think would be the best way to start this. So let me uh let me talk about primary, what do they call it? The primary insurance, like the the amount that you get, um what's the A? The PIA for full retirement or disability, SSDI.

SPEAKER_01 0:22

Right, your A PIA. It's basically your benefit amount, your monthly benefit amount.

SPEAKER_00 0:26

Yeah, that would be like the full retirement, or if you get approved for SSDI, that is the that's basically a hundred percent of of the social security amount as they declare that.

SPEAKER_01 0:36

Of course, if you take early retirement, your benefits are reduced. Yep. Um because it's early retirement. I mean, there's a trade-off. You're taking it early, but you're not going to get your full retirement benefit amount. You can take it at 62. I think primary insurance amount. I think that's the same. I think that's what it is. Yeah. Um I just know that it's their benefit amount. Um So the differences between being approved for disability and being approved for the PIA or the ERB, early retirement benefits. It can be substantial, but I'm not going to say thousands of dollars, but it could probably be you know a couple hundred or more a month, which that becomes substantial, you know, over the course of your life. Um and is it in your best interest? Let's say that you're a 62-year-old and you called us up and you said, Yeah, I've I've taught to Social Security and um and I've applied for early retirement. Um, should it be starting next month? I turned, you know, I turned 62 next month. Um can you help me out with my disability claim though? And I'm like, well, when did you become disabled? You know, well, you know, I haven't been working for a couple years now. Um my condition was so hard. So there are going to be back pay. And keep in mind that, you know, full disclosure, we are a for-profit firm. You know, I I pay people to process cases, um, and we expect a fee if we do win your disability case. And so if you are drawing or about to draw early retirement benefits, they're however long it's gonna take us to win your case, during that time you would still be amassing some back pay. But since that you're getting a monthly ERB benefit, early retirement benefit, um, that back pay is gonna be minuscule to somebody who is, you know, 52 um and it it takes 10 months. All that money, you know, they haven't gotten anything, so all that money is in um their retroactive benefits. And that's where our fee comes from. You know, we can only receive a fee if there are retroactive benefits. So, you know, it took 10 months to get you approved, and your monthly benefit amount is a thousand dollars, therefore they owe you ten thousand dollars of back benefits, and our fee is twenty-five percent of that. So we made, you know, two thousand five hundred and you get the the 7500, and then of course, you get all of your monthly benefits. We don't we don't get any of that. So we have you know a little bit of a problem. I'm not gonna say it's a huge, insurmountable problem, but we do have a problem with somebody who's drawing early retirement early retirement benefits in that they're not gonna amass a huge amount of back pay because they're getting those benefits a month. But seeing that there's a difference, so social security disability is higher than social security benefits, um, there is gonna be a difference. And it can be as small as like, well, it's fifty bucks a a month. And so it took, you know, took 10 months to to to win your case, and well, your back pays $500 because you've been getting early retirement benefits. And so, you know, a quarter of $500 um $500 is what a buck twenty-five or something like that. Um not great at math, but that would be our fee. And so if you've ever wondered, if you've called us up and you're 63 or 62 and you're getting or about to get early retirement benefits, if you've ever wondered if we ask about that, it it it is a material consideration that we have to make, and that um we can likely help you um if the medical evidence is pretty clear. Um certainly if you've got a terminal condition, that's not even gonna come up because I'm gonna take your case. Um will I work for free? Yeah, in that case, I you know we do it 40, 50 times a year. I mean, it is what it is. Um I think it's the right thing to do. However, if you have a case that's gonna, you know, gonna really take a lot of time, um, and there's just very little money in it um for my peeps, and I I know I sound greedy saying that, but I have I have to pay my people no matter what. Every week, if I don't make zero, if I make zero dollars in a week, I still have to pay all of my employees. I mean, that's just that's you know, it's business 101. Um, and I'm not complaining about it, but it it's just a fact. And so it is a consideration if you're on early retirement benefits, uh, especially if you know you're 64 or already and you've been drawing them for two years, when did you become disabled? Well, you know, last year. Okay, well, that there's definitely going to be just a really little difference between the ERB benefits that you've been drawing and then disability benefits if I'm able to get you approved. Um I might take the case, but I might not. So that is the big um the big consideration. And of course, all firms are gonna be that way, not just disability consulting. It everybody's gonna be like that. Um it's kind of like federal court cases. You know, the first thing that attorneys do um when we've referred a federal case to them is they call the claimant, do you have any debt? Do you have any IRS outstanding? Do you have child support debt? Do you have student loan? Because if they have any of those and the attorney wins at federal district court, guess what? All the money that they owe goes into that before anything can be released to the attorney. And they're like, you know, I'm not gonna take a case, you know, and you know, spend 20 hours and I I I can't make a dime at it. So that's the first thing that they'll ask, you know, do you have any outstanding federal debt? Um and it's the same with us and and ERBs. Again, in in a lot of cases we take them. Um but if you've wondered why we asked that, that's that's what it is. But the big difference, the the big thing that I want to point out is that there's a difference in retirement benefits and disability benefits. Um if you've ever gotten like your statements, they used to send them all the time in the mail, they came on like newspaper paper. Um and I think they just email them to you now. Um at least I get, you know, I get an email once a year, which is you know, if you retire at this date, this is what your benefits will be. But if you were disabled at this date, this is what your benefits will be. And it's higher. Disability benefits are higher than retirement benefits. And you're like, well, what happens when I you reach full retirement age? Which, you know, for people in my generation and for most of the people watching this, you know, it's just gonna be 67. You know, the days of 65 being the full retirement age are are over. It's now 67. All right, well, what happens at 67 if I'm getting, you know, disability benefits? So they go back down? Nope. You know, if you if you're disabled, when when you hit that magic age that you retire, it just morphs into that, but it stays at the same amount. They don't they don't penalize you. Yeah. Um, you're receiving disability benefits, but now you're 67, so it's retirement benefits, and so we're gonna bring it back down. That doesn't happen. You know, it'll it'll stay at whatever the the disability benefit would be. So many of the people who are uh wondering about this, uh, and the question is always just hanging out there is it in my best interest to draw disability um if I'm close to retirement at Yes. Yeah, yes, it's a higher benefit amount. Um if it's 30 bucks a month, and sometimes it is that low. Um if it's only 30 bucks a month, is it worth yes, it's absolutely worth it. Now, you may not get a rep to take the case, but if you feel that you're disabled, you know, I would always encourage you to apply. And it's always like this, you know, if you're receiving early retirement benefits and you apply for disability, the worst that they can do is say no. They're not gonna cut your retirement benefits, you're still gonna be that, you're just not gonna get the the extra money. But it's always in your best interest if you believe that you meet the criteria for disability, the income criteria, the medical criteria that you've paid into the system. And of course, if you're receiving early retirement benefits, you probably paid into the system. Um it's with it's definitely in your best interest to to uh apply for it because disability benefits are higher than retirement benefits, even early retirement benefits. You know, I've took them from 63. If you found disabled at 63, your benefit's gonna be higher. So it's in your best interest.

SPEAKER_00 9:15

Yeah, that's as far as the penalty amount goes. Um that's why I was pointing out the primary insurance amount at the beginning of this um this conversation. So you can think of that as 100% of what Social Security owes you when you either turn 67, because that's your full retirement, or you become disabled and you prove, you know, you get approved for disability, SSDI. That would be 100% of what they owe you basically, is what you can think of that. You work and you pay into the system, and then those are the ways to get 100% of that benefit. If you take early retirement starting at 62, um, the it's not 100%. At 62, it's 70%. And then every year after that, it starts working its way up. So if you take early retirement at 62, you only get 70% of the what would be your full retirement or what would be your your SSDI amount. At 63, then it goes to 75, and then um at 64, I think it goes to 80. And eventually it'll get to the point where if you're 66, you're one year off, it's really close. It's like 93%. Right. So how worth it it is for you will largely depend on that. With the age, because you're you might be looking at a 30% reduction, which is substantial, you might be looking at a 6% reduction, which is not substantial. And the only real risk, um, and I don't I try to make a point to not scare people with this, I'm just trying to be honest. There is a with when people are applying for disability for SSDI and they ask, should I apply for early retirement? Um, if you apply for early retirement and you get approved for early retirement, say you're 62.

SPEAKER_01 10:49

You're locked in.

SPEAKER_00 10:50

You if you worst case scenario, if they deny your SSDI case, you're not it's not gonna go up. A lot of people think that you take early retirement and then you get to full retirement and you no, it doesn't work that way. If you take early retirement at 62, so you're getting 70% of your benefit, that's your benefit, it's not going up. The only way it goes up is if you get approved for SSDI, because then it'll just go up to 100%. So that's the only kind of um thing I would caution people about is technically speaking, if you worst case scenario, you know, if we're taking your case and you're over 60, we're pretty confident we can win the case, but worst case scenario, if you get denied, you will be locked into that lower amount.

SPEAKER_01 11:29

Yeah. Yeah. That's again, when people ask me about, you know, well, should I do this? And I'm rarely gonna say yes or no because everybody's circumstances are different. And we've talked about this. For example, if somebody was destitute, okay, they've already been kicked out of their house, they're staying with a friend, um, and they get a letter from their local employment security office that, you know, do you wish to apply for you know unemployment? And you're like, well, I didn't know I could apply for unemployment. I've you know, been gone for six months. Um but yeah, you know, and you apply for apply for it and you're draw, you're trying to draw disability too. And we've talked about that, you know, you have to tell the state that you're ready and willing to work, and then you tell the Social Security Administration that you're unable to do any kind of work, that causes a problem. And people will ask me, well, you know, do you recommend me to to to take the unemployment benefits? I'm not gonna recommend anything. Your situation. If it if it's basically, you know, I'm gonna have to work out these seemingly contradicting um uh statements that I've made, ready and willing to the state, unable to do anything to Social Security. If you're if you're willing to to kind of work that out and explain it to Social Security if it comes up, and it usually will, um okay, but I'm not gonna tell you, yeah, you gotta do this, you know, you you oh no, you shouldn't do that. Um certainly if something you know as dire as being able to put food on the table is hanging in the balance. Yeah. You know, I I am a Social Security disability rep. That's what I do. I'm I'm I'm not a case manager, I'm not a uh a case worker, I'm not a therapist. Um, you know, I can recommend a lot of really smart things for you in your disability case, but things that might affect your life, you know, should I go see this doctor? I don't know. You know, it's yeah, you know, you yeah, you need to be in treatment, but I'm not gonna say you need to see this doctor, you know. Or take this medication or get this treatment. Yeah. You know, will this will this hurt my case? Could possibly, you know, may not. You know, you got to do what's best for you. Um and you know, as long as it's not an ethical violation, you know, do what's best for you. Um I can, you know, I can certainly advise you on on some of those types of things, ethical things, and playing by the rules again. Um but I'm not gonna advise you on whether you should take early retirement benefits or not. I'm just gonna tell, I'm gonna give you the facts, and then you make the decision, you know, and we get that sometimes. You know, you know, well, you know, Mr. Groves, I you know, I I want you guys to take our case, take my case. Um, I'm I'm 63. I have not applied for early retirement, but they told me that you know it's automatic. Well, it is automatic. You don't have to prove that you're 63. You know, you have to prove you're disabled, don't have to prove you're 63. Um, or else they already know that you're 63. You do have to prove that you're not going to be able to prove it. It doesn't take very long. It's not an argument. Yeah. You know, I am. There is I wish disability was that easy. But um, yeah, so you know, I've I I'm I'm 63, and you know, should I sign with you guys? Or, you know, should I should I take early retirement or should I try to do both? You know, I'm not gonna tell you yes or no. Uh, you know, I'll give you the facts. You know, if you apply for early retirement right now, you've got a reduced amount. If you win your disability case, and there's no guarantee that you will win your disability case, but if you win your disability case, this is what your monthly benefit would be. It's gonna be higher. It would be in your best interest in a in a basically black and white, all things considered, you know, this much money is more than this much money weigh. But I don't know what your circumstances right now. If if you have nothing, if you're facing foreclosure, um, if you're having a hard time, you know, scrounging up, you know, food every month, uh, and you're having to, you know, beg your family or or church services or social services for something. Um, and early retirement is literally, I'm 63, and they give it to you. You know, who am I to say, oh no, no, no, no? If you wait and let me get you on disability, I'm not gonna do that. So, you know, there there are gonna be some gray areas, and I know a lot of people who are watching this are like, well, I really, you know, I really need an answer. And sometimes maybe is the best answer I can give you. Because uh, you know, saying no, you need to wait, um, I'm not you. I'm not, I don't know what kind of hardship that's gonna cause you now, yeah, or in the long run. Um, all I can do is say the he's here are the facts. You'll get more money if you apply for disability. But if you wait, you know, and you've got bills coming in now, or you've got things that you can't do because you have no money, you know, it might be in your best interest to go ahead and take that. Um but I I rarely would will make that um that advice to you. Here are the facts, here's what you need to weigh, do it intelligently, you know. Uh certainly if you're married, talk to your spouse about it, and then make a make a great decision and then call us um if you need us.

SPEAKER_00 17:06

Yeah, the time we we will make a recommendation is if the person is 59, because I've spoken to people like this too. If they're 59 or they're 60, they have a great case. They've been out of work for the past year or two due to their health, great medical evidence, and they ask, should I apply for disability or should I just, you know, I'm almost 62. If I wait another couple of years, should I just wait for that? Absolutely, we will still have it in that sense.

SPEAKER_01 17:31

We will give them some solid advice on that.

SPEAKER_00 17:33

And that will be a yes or no. Yeah, because I mean, for one, if they've already been out of work, that back pay, it's not going to be there forever, you know, they'll only pay up to a year in advance. So there's the back pay, and then you could be collecting money now instead of waiting another two years. And then if you're 60 years old and you wait all the way until 62 and you start drawing early retirement, it's still not it's like I said, it there's a 30% reduction.

SPEAKER_01 17:56

Yeah.

SPEAKER_00 17:56

So definitely if you qualify for SSDI based on your technical eligibility and based on I'm not able to work due to my health, if you're 60 years old, there's no reason to wait two years for early retirement.

SPEAKER_01 18:08

Absolutely. There and another thing is that if I apply and I'm denied, you know, how does that affect my, you know, if I do want to apply for early retirement at 62? No harm, no foul. I tell people this all the time. You know, if you apply for disability and you get denied, um, and even if we appeal it and then that gets denied, um, denials, they do not haunt you at all when it's retirement age. And that means early retirement age too, 62. Okay, you you know, Social Security, you know, takes your early retirement claim at 62, and they say that you applied for disability when you were 52, and then you applied when you were fifty-six, and then you applied again, you know, a couple years ago in a denial denial. Nothing. No harm, no foul. It doesn't affect you one bit. One bit. It's it's it's not probably they won't even be looking. It's not even on their radar because it doesn't impact your ability to draw your retirement benefits. So yeah, I always in that scenario, you're 59, you're 60 years old, 61 years old. Um let's let's get on this. You know, let's get on this. Let's go ahead and and and and and try to win your case. Because if you do win the case, it is substantially different from just early retirement benefit with a reduced amount, whereas SSDI, Social Security Disability, um, not only is it um higher than you would be at full, it's higher than you would be at full retirement. And so disability is that you get more than you do for retirement benefits. Yeah.

SPEAKER_00 19:44

And then it also doesn't even it doesn't negative negatively affect your full retirement, even if you get approved for SSDI and then they cut you off because you go back to work. You know, I was I was talking to a lady a a couple of days ago, um, and she was under the impression, she was hesitant on signing up for SSDI for applying for it, because she was under the impression once you get approved, like that's it. You know, you gotta stay on it, and that's like this is the rest of your life, you know. And that's not how it works. With SSDI, the minimum amount of time that you gotta be expected to remain out of work or be out of work is 12 months. But there is no maximum. It's not like you have to be on it for five years or for 10 years. If you recover and you tell Social Security, hey, I'm going back to work because I'm not disabled anymore, that's completely fine. Yeah. And if you do that at 49 years old and then you work all the way up until 67, assuming social security still exists at six, you know, when you get to that age, then yeah, you can just collect it the same way. There's no they're not going to look back and say, we already drew SSDI, it's completely separate. Right.

SPEAKER_01 20:44

Yeah, and and that is that's not a far-fetched scenario at all. Because think about it, you know, what what also comes with a disability benefits? Well, medical coverage. Um and so if you're if you're one of those persons who has really had a sporadic or poor history of medical coverage because you don't have any money or insurance, and then you get approved for SSI, Medicaid, or SSDI, Medicare, um, and then you start seeing a doctor regularly, and the doctor's like, okay, well, we'll try this Medicaid. Oh, that's not working. We'll try this Medicaid, let's try this therapy, let's try boom, and all of a sudden something hits with you, and you're able to get, you know, some kind of treatment, physical and or mental. And I I feel better than I have for 10 years, and you go back to work. By the way, that is exactly what the disability program was designed for. Yeah, that is exactly what Social Security wants from me. That's the best case scenario. That is the best case scenario. It's like, okay, well, I got I got monthly benefits because I couldn't work, and therefore I was able to pay some bills, and I got medical care. Because I'm sick, and I was able to pay bills while I'm trying to get my health improved. Um, and it worked. Got to the point where I'm actually able to work again. Da-da! You know, you've won basically. You know, Social Security loves you because the program worked, you love you because you're back working. Um, I even love you. So, you know, it's you know, it's it's a win-win-win um when that happens. And that's the way that it was designed. And it's funny that you bring up that scenario because a lot of times we just we just forget about that. Okay, well, you you got put on disability and you're gonna be drawn a check for forever. No, especially if you're younger, they're gonna review your case every you know three to five years. Um and if you're older, you know, maybe, you know, and then when you hit retirement age, you won't know it except that now they're you know coding your your disability check not as a disability check anymore, it's now a retirement check. But it just naturally turns into that 67. Yeah, it just morphs into it.

SPEAKER_00 23:01

Yeah. Yeah, that's what I tell people is it lasts as long as you need it. And so once you get approved for SSDI, if you only need it for a year, then it only lasts for a year. And if you need it, you know, all the way up until retirement age, then it'll just naturally turn into um social security retirement at sixty seven. That's true. Cool. All right, well that's uh I think that wraps it up. Grooving. If you have a question about your disability case, drop it in the comment section below and we will do our best to answer it in the next episode.