Fully insured workers under Social Security are entitled to receive reduced early retirement benefits at age 62 and continue to work with certain limitations. Should one of these individuals also become disabled and quality for Social Security Disability Income (SSDI) prior to age 65, the monthly disability benefit would be based on the worker's earnings history to the date of disability and reduced by any Social Security income already received for that year. Unlike Social Security retirement income, SSDI is not actuarially reduced when received before full retirement age (FRA). This could result in a higher monthly disability benefit.
Qualifying for Social Security Benefits
Social Security is an entitlement program, not a welfare program. It is funded, at least in part, by worker salary contributions. One qualifies for full death, retirement and disability benefits by accumulating at least 40 quarters of work history. The Social Security Administration says, "Work for a state or local government agency--including a school system, college or university--may or may not be covered by Social Security." Federal law also permits religious organizations to chose not to withhold FICA tax. Employees of such non-participating entities would not qualify for Social Security retirement income and disability benefits.
Qualifying for Social Security Disability Income (SSDI)
Only about 40 percent of initial applications for SSDI are approved because it is difficult to meet the strict government definition of disability, which is, "the inability to engage in any substantial gainful work activity (SGA) because of a medically determinable physical or mental impairment(s); that is expected to result in death or that has lasted or is expected to last for a continuous period of not less than 12 months." Once accepted, there is a six-month elimination period following the date of disability during which no benefits are paid.
Working and Receiving Social Security Income Benefits
Waiting until full retirement age, age 67 for workers born 1960 and later, avoids any loss of Social Security income due to continued employment. However, many people apply for early retirement benefits at age 62 and will receive an actuarially reduced monthly amount of about 75 percent of their age 67 check. If they continue working and earn more than $14,160 (for 2011), Social Security income will be reduced $1 dollar for every $2 dollars earned over that threshold. During the year of their 67th birthday, the impact on Social Security income is eased to an offset of $1 dollar for every $3 dollars earned above $37,680.
Working and Receiving Social Security Disability Benefits
Many disabled Americans do find employment and are encouraged by various work incentive programs offered by the Social Security Administration (SSA) which allow disabled workers to keep their cash payments and medical benefits while they test their ability to work. For example, under The trial work period a disabled worker can earn unlimited income for nine months within any five-year period without loosing benefits. After exhausting TWP, the worker enters a 36-month Extended Period of Eligibility during which SSDI ceases only for any month that earned income exceeds $1,000 (for 2011). SSA promotes other vocational training and work incentive programs to encourage self-sufficiency following expiration of the 36-month period.
- Social Security Online: Electronic Booklet: Social Security Work Incentives at a Glance
- Gerstein, Grayson and Cohen, LLP: Social Security FAQs
- Social Security Online: How Work Affects Your Benefits
- Social Security Redbook: How Do We Define Disability?
- Social Security Online: Retirement Planner: State and Local Government Employment
- Photo Credit Comstock Images/Comstock/Getty Images
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