I'm 62 Years Old and Need to File for Social Security Disability, What Should I Do?

September 14, 2016

This is always a tough decision.

 

Here are some likely scenarios, problems, and possible solutions. Yours may fit within one of these:

 

1. You have stopped working within the last 12 months, you are now 62 years old, and you must have some kind of income coming in besides any amount you have put back for retirements, 401k, etc.

 

Now. is when you will have to make a decision. On one hand, you can file for early retirement, but your monthly payment is going to be reduced by 1/3 because you are being penalized for filing early. Now, while you can file for both disability and retirement at this age and receive what you would normally be entitled to at 67, there are risks involved.

 

First, if you are not approved for Social Security disability benefits, then your retirement amount will stay the same and you cannot increase the amount. Second, if you are not approved, you can't return back to work because dollar for dollar is being reduced in your monthly retirement amount. But, if you are approved for benefits, then your disability will not count against you and your payment will be what you would have been paid at 67 years of age. Further, since you are likely on a fixed income, you are eligible for Medicare (after two years on disability), which can also help reduce expenses. But again, you just have to be sure your case will be approved for Social Security disability benefits. If not, there is not much of a chance (if any) of overturning your decision.

 

2. You have worked all your life and your employer has long-term disability benefits. 

 

Here is the likely scenario: You are eligible for long-term disability benefits through a private insurance company and you can also qualify for early retirement since you are now 62 years old.

 

Sounds great doesn't it? But, beware of some catches that go along with these perks. First, you must read the fine print to your policy. You are likely going to have to file for Social Security disability benefits (which kinda puts you back into scenario 1) to relieve the private insurance company of its obligations. Second, you are also likely going to have to repay your disability benefit payments out of any back pay you receive once your claim is approved. 

 

Further, you may be subject to a reduced Social Security disability payment under the reduction rule. Here is another likely scenario: Under your private long-term disability contract between you and your insurance company, you are allowed to receive 60% of your past average income. But, Social Security will only allow you to receive up to 80% of your average past income. If you were a high income earner, and that 60% is more than the 80% allowed by Social Security, then you will be subject to an offset. In other words, you may be able to dip your pen into the same inkwell twice, but there are consequences.

 

3. You have no work credits (or not enough at age 62) to qualify for Social Security disability.

 

Well, here you don't have many options. First, under federal law, if you are receiving SSI (Supplemental Security Income), then you must convert that benefit to some other federal benefit if it becomes available. So, if you are now 62 years old and you qualify for SSI, you will not be allowed to collect SSI because another federal benefit is now available to you. You guessed it, early retirement. Because the law says that you must take that other benefit that is now available, you have to take early retirement. 

 

Here's the problem, your early retirement payment is likely less than the $733 you would receive each month through SSI. Further, in states like Texas, since you are not on SSI, you cannot receive Medicaid. And, since you are not eligible for Medicare until age 65, you will not have insurance coverage for the next three years. 

 

Thus, you may be forced the accept early retirement at this age, and have to hang on for the next three years until you are eligible for Medicare. Further, since all early retirement rules are in effect, you would be penalized for taking early retirement and working.

 

Sometimes, there are no correct decisions. Sometimes, you have to pick the least worst out of all of them. But, also ask yourself are you capable of continuing to work? If there is any way possible, I would suggest working instead of considering disability, early retirement, etc. At this age, the stick is much bigger than the carrot. 

 

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