Social Security Disability pays you the amount you’d receive at your full retirement age. If you’re between age 62 and 67, you may find yourself running low on cash while waiting for a favorable disability decision. Taking Social Security retirement benefits early while still waiting for a decision can offer a welcome lifeline, but doing so will impact your benefits later on.
For more help with financial planning, consider working with a financial advisor.
Applying for Disability in Your 60’s
Applying for Social Security in your golden years can get you a decision faster than applying while you’re younger, but it’s no guarantee. Social Security’s disability examiners consider your previous work history and your medical conditions. To be considered permanently disabled, your conditions must be something that prevents you from working any job permanently, not just the job you currently have.
When you’re in your 20s, it can be harder to prove that there will be no job you could be trained into for the next forty years that would accommodate your conditions and needs. Once you’re nearly at retirement age, it’s much easier to prove that your conditions prevent you from working a job for the next few years.
How Long Does a Disability Decision Take?
Even if you have age working in your favor, it can still take a long time to be approved for Social Security Disability. Timelines depend on many factors, including your conditions, how quickly your medical sources respond, and if your application is randomly selected for a quality review. On average, you’ll receive an initial decision three to six months after submitting your application.
In general, more severe conditions which you’ve seen several doctors for or been hospitalized for get decisions faster than harder-to-diagnose conditions or ones with no medical history. Someone with terminal cancer will be approved very quickly, while someone with a bad knee that’s never seen a doctor for it may have a harder time.
If your initial application is denied, you’ll file an appeal at the reconsideration level if you disagree. The average timeline for a reconsideration decision is six months. If your reconsideration is denied, you’ll file an appeal at the hearings level and go in front of a judge, which can take one to two years, depending on your region.
You do not need an attorney to file any of these appeals. Filing an appeal yourself online at ssa.gov immediately after receiving a decision can help you save around 60 days of initial processing time. Appeals still need to be typed in manually by Social Security workers if you mail them in, which can lead to significant delays depending on staffing shortages at your local office.
How Taking Early Retirement While Waiting Works
Taking early retirement while waiting for Social Security is easy. You’ll file online at SSA.gov and pick whatever month you want your benefits to start. If you need payments to start fast, select the soonest month. Your application should be processed in a matter of weeks. You can file for early retirement up to three months before your 62nd birthday, but you won’t receive benefits until two months after your birthday.
When you take early retirement while waiting, your eventual disability check is lowered by the number of months you’ve received a check. Every individual’s social security amount is different based on how much they’ve paid into the system in their working years. You can see your monthly benefits breakdown by creating a My Social Security account online.
Each month you receive an early retirement check gives you a reduction factor on your monthly disability check once you’re approved. A reduction factor is equal to taking retirement one month earlier. So, the longer your decision takes, the more your check is reduced.
For example, Jane is eligible for $2000 at 67 and $1400 at 62. Jane filed for disability, was denied, and filed an appeal. She decides to file for early retirement while she’s waiting. After one year, she is approved. Because she received benefits for 12 months, there are 12 reduction factors on her eventual disability amount. Instead of $2,000 monthly, she would get $1866 monthly as her disability check.
Taking early retirement while waiting can also affect backpay. You’ll only receive backpay for the difference between the checks you received and what you were eligible for on disability. This can lead to comparatively small backpay checks and can make it hard to find attorneys to take on your case if you decide you want one.
Pros and Cons of Taking Early Retirement While Waiting
The biggest advantage of taking early retirement while waiting is that you can have a source of income during a difficult time. There’s no real way to predict how long a disability decision will take. It could be fast, or you could end up with multiple rounds of appeals and years of waiting. Early retirement applications process quickly, so you could always wait until you’re close to needing the money before you apply for it.
The main disadvantage to taking early retirement while waiting is the long-term reduction in benefits once you’re approved. While the reduction is relatively small if you get a quick decision, it can be significant if you wait years. Additionally, if you’re unwilling or unable to file yourself, you may find it hard to hire an attorney to file for you. Attorneys are paid out of backpay, and filing for early retirement while waiting will significantly reduce your backpay because you’ve received most of it directly yourself.
The Bottom Line
Taking Social Security early while waiting for a disability decision reduces the amount you’ll be eligible for when you’re approved. The reduction correlates to the number of months you receive benefits while waiting and is relatively small if you get a decision quickly. Taking early retirement while waiting can be a savvy move to keep your family afloat if you need it.
Retirement Tips
- A financial advisor can help you make the right retirement decisions for you. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you have access to a 401(k), make sure you use it — and take advantage of any employer match you have.