Social Security treats those persons getting disability benefits differently than retirees. If you are not on disability, you can take your retirement as early as age 62. There is, of course, a severe penalty for doing this. But, if you are on disability, you do not face this decision. This is because Social Security will keep a disability beneficiary on disability status right through full retirement age. This is one of the good things about getting disability benefits.
But what happens at full retirement age? In general, Social Security will simply change your status from disabled to retired. The amount of the benefit you receive should be the same. The switch over from disabled to retired should be virtually invisible to the beneficiary.
The benefit a disabled beneficiary gets from not having to even consider retiring at 62 has a negative corollary. The disabled person cannot extend his or her retirement until age 70. As you know from previous posts, Social Security will increase your retirement check substantially if you wait until 70 to collect. But, for those disabled persons, Social Security does not give them that option. I suppose it is fair that Social Security takes this middle approach--no early retirement penalty, no delayed retirement credit.
For those persons approaching age 62 who are putting in for retirement benefits because they can no longer work, it is important to also apply for disability at the same time. Social Security will pay retirement benefits while they process a disability application. For this reason, a person getting disability benefits after starting to collect retirement benefits before full retirement age will see a decrease in what they would have gotten had they waited until full retirement age. But, once that person is on disability, the early-retirement penalty goes away until full retirement age.
If You Are Taking Early Retirement For Health Reasons, Apply For Disability
It could be argued that anyone applying for early retirement at 62 should also apply for disability if his or her health is a contributing factor to the decision to retire. At worst, Social Security will deny the disability application. There is no cost to apply and no penalty for an unsuccessful attempt to get disability benefits. Better still, if possible, to wait for Social Security to decide the disability application before going on early retirement. The penalty for retiring early is going to get you one way or another.
Beware Of Special Rules For SSI Beneficiaries
Note that this information only applies to those persons who are getting Social Security disability. If you are getting Supplemental Security Income (SSI), but you have worked enough to also qualify for retirement, Social Security is going to force you to switch to early retirement at age 62. This is because SSI is a "payor of last resort." If a person has any other resources, Social Security will reduce his or her SSI benefits. Retirement benefits are a source of income and a person on SSI is obligated to claim them at 62. This is not as bad as it seems, because a person caught in this situation can generally get SSI and retirement, provided the two are equal to or less than the current SSI benefit. If the early retirement was more than SSI, the beneficiary would only get retirement. Which she would want to do anyway, since it is a higher amount.
This can all be confusing and many special rules and exceptions apply. Feel free to contact me with any questions or concerns.