If you are receiving disability benefits and are approaching retirement age, you may have some questions about how SSI and SSDI work and how one affects the other. It is important to understand the basic steps you need to take in order to receive full benefits without making costly mistakes that may impact your income for life. Because rules regarding SSI and SSDI can be quite complex, we recommend consulting with a Florida Social Security Disability attorney to understand your rights.
How Are Social Security Disability Benefits Calculated?
In a few words, the SSDI benefit amount you may receive monthly is calculated based on the average lifetime earnings that you have accumulated up to the point when you became disabled. You cannot be denied SSDI benefits because you have too many assets or unearned income; however, the amount you receive may be affected by other income sources.
The benefits are calculated using your average indexed monthly earnings over a period of time. If you received paychecks from an employer and a portion of your check was withheld for Social Security taxes, those may count as covered earnings. If your employer was not required to collect Social Security taxes from your paycheck, your wages from that employer do not count as covered earnings and may reduce the amount you will receive for your SSDI benefits.
Can I Receive Disability and Retirement Benefits at the Same Time?
Many people wonder if it is possible to double their benefits by receiving both disability and retirement benefits at the same time. With very few exceptions, the answer is no. Even when someone is eligible to receive both, it does not mean they will be able to “double-dip” and receive full payment from both sources; instead, retirement and disability payments will be combined to bring you up to your full benefit amount.
Those who are receiving SSDI benefits will automatically have their benefits converted into retirement benefits once they reach the retirement age of 65. You will still receive the same amount, and no extra steps are needed for this to happen. Becoming disabled after reaching your full retirement age does not make you eligible to receive SSDI benefits.
How Does Early Retirement Affect My Eligibility for SSDI?
Early retirement is the only exception to the rule stated above regarding the combination of retirement and disability benefits. It is still important to mention once again that no person will receive double the benefits, but rather a combination of both retirement and SSDI payments, adding up to your full benefit amount. Such is the case when an individual opted for taking early retirement benefits at the age of 62 and shortly after got approved for disability benefits. Social Security will then retroactively pay you the difference between your disability payment and your early retirement payment for the months during which you received early retirement payments.
However, the opposite is not true. If you started collecting disability benefits before being approved for retirement benefits, you will not receive payment for the difference and will likely be stuck receiving payments at the early retirement rate for the rest of your life. This is not an ideal situation – if you anticipate needing to opt for early retirement and may qualify for disability benefits, it is recommended that you speak to a social security benefits attorney before filling out any applications. As you can see, SSA rules can be confusing and it is easy to make a simple mistake that might cost you money – and this can be easily prevented with proper advice.
What Kind of Pensions Affect My SSDI Benefits?
According to the Social Security Administration, certain types of benefits may reduce the amount paid to you monthly for SSDI. These include worker’s compensation payments and other public disability benefits, such as civil service disability benefits, state temporary disability benefits, and state or local government benefits based on disability.
The main rule, in this case, is that the amount of your other public disability benefits, when added to your Social Security disability benefits, cannot exceed 80% of the average current earnings you were receiving before you became disabled. If the total monthly sum of all your benefits exceeds the 80% average current earnings threshold, then your SSDI payments will be reduced by whatever amount exceeds that limit. The reduction will continue until you reach your full retirement age, or until the additional benefits end.
Some employers or private institutions may provide LTD (long-term disability) benefits as a way of providing additional income for disabled employees. It is common practice for an LTD provider to require you to apply for social security disability benefits because SSID payments can be used to offset or reduce LTD benefits on a dollar-for-dollar basis.
However, disability benefits from private sources including pensions and insurance benefits will not affect your social security benefits. Most private pensions are required to collect social security taxes and thus do not affect your ability to receive SSDI. The same goes for certain public benefits, namely Veteran administration benefits, state and local government benefits (as long as taxes have been collected for each payment), and Supplemental Security Income (SSI).
To sum up, most privately-sourced disability benefits and some government-funded disability benefits will likely not affect your retirement in Florida, as long as social security taxes have been collected off your payments. There are a few exceptions to this rule, and it is always a good idea to seek the help of a Florida social security disability benefits attorney so you can better understand the law, avoid costly mistakes and make informed decisions about your retirement.