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  • Writer's pictureChris Stein, CFP®

Social Security Disability Benefits & The Rules Behind Delaying Your Retirement Benefit

A Florida reader collecting Social Security disability benefits looks for clarification on delaying his Social Security retirement benefit to age 70.

"I have been on SSDI since after I had a stroke and a heart attack in 2016. I'm now 58, and I hope to still be on SSDI when I reach FRA, at age 67. SSA tells me I'd keep receiving the same benefit, except they would now refer to it as a retirement benefit, not a disability benefit. I intend to tell them I want to delay receiving the retirement benefit until I turn 70. Will I be allowed to do that?"

SSDI is the acronym for Social Security Disability Insurance. The program is for the permanently disabled, not for a short disability, and the government has a specific definition for "permanent." If you are deemed permanently disabled by the system, you can expect to be re-evaluated over time to see if you have improved.

Once your "permanently disabled" status has been confirmed, you essentially get an accelerated retirement benefit, as I see it. In fact, the disability payment that you receive is right about what you would be collecting if you retired at your Full Retirement Age (FRA), regardless of your age when the disability was deemed permanent.

Then, when you reach FRA, the government will say, "Well, you'd be collecting a retirement benefit now whether you were disabled or not, so let's just pay you out of the regular retirement pool." So you'll be terminated automatically from the SSDI program and its source of money and converted to claiming Social Security retirement benefits from the Old Age and Survivor Benefit pot of money.

Often, benefit recipients don’t even know the source of funds has changed. It's still about the same amount of money being deposited in your account every period. (In practice, I usually see a difference of a few dollars between the two payments for some unexplained reason.)

You mention intending to tell Social Security to delay the payment of retirement benefits at your FRA to allow the amount to grow until you reach age 70. But there's no way of getting around the auto-conversion. There's no opt-out, and you can't extend the disability payment past the hard cutoff at your FRA. Instead, you will automatically be deemed filing for your retirement benefit.

But, while delaying is technically not allowed, you can simulate it.

Since you will be at your FRA at that point, you're still allowed to suspend your benefits. And by suspending your benefits, you would then earn the same delayed retirement credits that you otherwise would if you were simply "delaying." So it would accomplish what I think you're trying to do, which is to get 24% more benefit at 70 than you'd get at 67.

Essentially you'd collect disability up to FRA, followed by a 3-year gap while you were "suspended." Then, when you turn 70, they'd turn your retirement benefit back on, and it would be 24% larger, plus any cost of living adjustments that have happened in those three years. They'll give you credit for those as well.

You can accomplish your goal, but it's not technically "delaying" because you will have filed. In short, you can't get out of the actual claiming of the retirement benefit, but you can immediately suspend.

In effect, you are telling Social Security, "I have filed, but I would like you to stop sending me benefits right now. Pause and hold them for me. And then, when I turn them back on, give me the benefit of the delayed retirement credits that I'm earning while in suspension."

That's how it will actually work if you want to accomplish what you're describing.

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