Ask Larry

Will The Contributions From My Part Time Work Increase My Benefit Rate When My SSDI Turns Into Retirement?

Started receiving SSDI in my late 30s. I did a trial work period and then kept a part time, 12 hrs a wk, job while collecting benefits. Social Security taxes were deducted from pay for 5yrs. What happens to those contributions? Will they be included in my Social Security benefits when SSDI turns into retirement Soc Sec.? Will it increase the amount of my retirement Social Security?

Hi. It's possible, but unlikely. If you became disabled in your late 30s, your Social Security disability (SSDI) benefit rate is likely based on an average of your highest 12 to 14 years of Social Security covered wage-indexed earnings. Social Security retirement benefits, on the other hand, are computed based on an average of a person's highest 35 years of Social Security covered wage-indexed earnings.

When you reach full retirement age (FRA), Social Security will pay you the higher of your current SSDI benefit rate, or the benefit amount you would receive using the normal retirement benefit computation. Using the regular retirement benefit formula would allow all of your earnings to be considered, including any earnings you had while you were receiving SSDI, but more total years would be used when calculating the average. In almost all cases, that would result in a lower average yearly earnings amount, and a lower resulting benefit rate. That's why, in virtually all cases, there is no change in a person's benefit rate when they reach FRA and their SSDI converts to regular retirement benefits.

Best, Jerry

Oct 23 2022 - 12:45pm
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