Ask Larry

Can I Switch From SS Disability To SS Retirement Benefits Now That I'm 62?

I'm 62. On ss disability since 2016.
Can I change over to retirement SS at my age? or do I have to wait till 66 +2 months?


You could, but you probably wouldn't be happy with the results. Social Security disability (SSDI) benefits are calculated in essentially the same manner as your full retirement age (FRA) Social Security retirement benefit is calculated. The only material difference is that fewer years of earnings are sometimes used to calculate SSDI rates than the 35 years used to calculate retirement benefits.

When you qualify for SSDI benefits, your full SSDI rate is basically the same as your unreduced Social Security retirement rate. So, drawing SSDI benefits is like drawing your FRA rate early. In fact, if you continue to qualify for SSDI benefits until you reach FRA, your SSDI benefits are automatically converted to unreduced retirement benefits at the same rate as your SSDI benefits.

If your FRA was 66 & 2 months and if you elected to switch to drawing reduced retirement benefits at age 62, your full SSDI rate would effectively be reduced by roughly 25.5%. But, if you were born in 1958 then your actual FRA would be 66 & 8 months, and the percentage reduction that would be applied to your full SSDI rate if you switch to drawing retirement benefits at age 62 would be more like 28%.

Therefore, if you do elect to switch to drawing Social Security retirement benefits now you'll probably just be taking a substantial benefit rate cut. The only way that it would likely be advantageous for you to switch from drawing SSDI benefits to retirement benefits prior to FRA is if a) you aren't receiving your full SSDI rate because your benefits are being offset due to the receipt of workers compensation or public disability benefits, or b) if you have a wife and/or child(ren) who could qualify for a higher benefit rate if you switched to retirement benefits.

Best, Jerry

Aug 13 2020 - 12:04pm
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