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Choosing the Right Path: Disability vs. Early Retirement – Which is Best for You?

When you are unable to work, consider filing for disability benefits from the Social Security Administration. Depending on your age and circumstances, you may have the option between filing for Social Security Disability Insurance (SSDI) or early retirement benefits. Whether filing for disability or early retirement is a better choice depends on your individual circumstances, health, financial situation, and personal goals. There are, however, some key factors to consider when making the decision.

How is Your Health?

How your health impacts your ability to work is the primary difference between taking early retirement or disability benefits. Disability benefits are typically intended for individuals who have a medical condition that prevents them from working. If you have a disabling condition that significantly impairs your ability to earn a living, filing for disability benefits may be appropriate.

Early retirement is typically not based on your health needs, but on your age and how long you have been contributing to the Social Security system.

Consider Your Age

Early retirement typically starts at age 62, while the age for full retirement benefits varies depending on your birth year but is generally between 65 and 67. There are significant reductions in your retirement benefits if you take early retirement. If you are significantly under your retirement age and need financial support from Social Security due to a disability, disability benefits are likely a better option.

Financial Considerations

Retirement benefits and disability benefits are often not the same amount.

The amount of your monthly benefit can vary greatly between disability and retirement  benefits. Social Security disability benefits are calculated based on your work history and earnings, while retirement benefits are based on your full retirement age and the number of years you have contributed to the Social Security system.

It’s important to compare the potential benefit amounts and how they fit into your financial needs. While there are calculators for both available online, it may be beneficial to speak to an experienced SSDI attorney who is very familiar with the Social Security Disability process.

Are You Able to Work?

If you are younger than the current age for early retirement, retiring early may not be an option for you. If your disability prevents any form of work, disability benefits may be the more appropriate choice, as you will have the medical and legal documentation necessary to prove that you need benefits now.

Be careful if you continue to work less than full-time. You need to make sure you earn enough to get work credits for Social Security, or you could work yourself into a situation where you are no longer “insured” by Social Security (ie. eligible to apply for Social Security Disability).

Consider the Long-Term Implications of Your Choice

When you are not working and have no income, you may be tempted to choose the quickest route to get some money coming in again.  However, it is important to think about the long-term implications. Filing for early retirement may result in a reduction of your monthly benefits compared to waiting until your full retirement age, and this reduction can continue even after you reach full retirement age.

Disability benefits allow you to receive your full retirement at a younger age without being reduced for taking the retirement early, if you are disabled and not able to work.  Qualifying for disability will take longer to be approved, but considering the increase in your benefits over your lifetime, your choice will impact your financial security.

Do You Meet the Eligibility Requirements?

To qualify for Social Security disability benefits (SSDI), you need to meet certain criteria related to your health condition, work history, and contributions to the Social Security system. The process can be complicated and is based on work credits that have been earned since you started contributing to the system, as well as your inability to work that must be thoroughly documented by your medical team.

Retired senior man in wheelchair playing cards with friends

On the other side, early retirement has age-related eligibility requirements, and your benefits may be reduced if you file before your full retirement age. If you are too far from the retirement age, then you may not be able to collect early retirement and will need to make sure that you have the right eligibility to file for SSDI.

Legal and Medical Documentation Needed

To file for disability, you typically need to provide medical evidence supporting your claim, and it may involve a more rigorous approval process. Many who apply for Social Security Disability Insurance (SSDI) will get denied initially due to insufficient medical evidence of disability or missing documentation. If you are hoping to receive SSDI, you need to make sure that you have all the documentation that proves your disability and inability to continue working. If your initial claim is denied, we recommend working with an experienced SSDI attorney during the appeal process.

Comparatively, opting for early retirement is generally based on age alone and doesn’t require thorough medical documentation. The process is easier to navigate, and based on your age, is not likely to be denied.

Before determining which path is right for you, it’s essential to thoroughly evaluate your specific situation, consult with an experienced attorney, and consider the long-term implications of both options. Your decision should align with your health, financial stability, and long-term goals. It’s important to keep in mind that this decision can have significant financial and lifestyle implications, so it’s important to make an informed choice. If you are uncertain about anything during the process, talk to an attorney who can help you evaluate your current situation objectively and guide you through the right choice to protect you, your family, and your future. If you’re facing this decision, or you’ve been denied benefits but are unable to work, contact Arthur Law Firm (419) 782-9881 for a free consultation right away.