Those applying or recently approved understand that SSD is a benefit for those too young to draw full retirement benefits who are unable to work because of a debilitating condition. While different from “early retirement” at age 62, the government also considers SSD a type of early retirement benefit. Thus, once you’re over 67 years of age, your SSD payment converts to full retirement benefits.
Yet, while this straightforward scenario applies to those who receive SSD, a couple of exceptions exist:
Early Retirement at 62 Before Getting SSD Approval
For individuals who have taken early retirement as a result of a condition that has left them unable to work, it can be possible to apply for and get approved for SSD.
When this happens, the Social Security Administration will pay you retroactively for the benefits you missed. Specifically, a timeline of when the disability occurred and when you applied for early retirement is established. Then, you begin receiving SSD benefits from the time you became disabled. However, as soon as you’re approved for SSD, you will no longer receive additional early retirement benefits.
Once you reach age 67, the government automatically converts your SSD benefits to full retirement, without factoring in the period you took early retirement; the reason being that you should have been receiving SSD benefits over this time.
Additionally, the government also gives you the benefit of disability freeze. In this instance, your lack of income while taking disability isn’t factored in when calculating your retirement payment. Typically, an individual drawing no- or low-government benefits will have a reduced retirement payment at age 67.
You Take Early Retirement and Your SSD Claim is Rejected
Let’s say that in the previous scenario, you start collecting early retirement because you’re unable to work, but the date the SSA establishes your disability starts after you began collecting early retirement – what happens?
While you’ll still receive SSD payments, the SSA won’t compensate you for the period you could’ve been collecting disability instead of early retirement. Further, once you reach retirement age, that period you took early retirement gets factored in, reducing the payment you’ll receive once you’re older than 67.
Additionally, if the SSA denies your SSD claim while you’re taking early retirement, you’ll continue receiving early retirement benefits for the rest of your life.