I have written before about Social Security early retirement benefits versus disability, but the issue is worth revisiting. If you are approaching age 62, and are not working, please read this article.
Many people who are approaching the early retirement age of 62 are unable to continue their employment due to a physical or mental condition. Typically, they just take the early retirement, and never consider the possibility of Social Security disability.
However, disability benefits are preferable to early retirement benefits. Disability benefits are paid at the higher "full retirement age" amount, rather than the "early retirement" amount. For those retiring by the year 2016, there is a 25% difference between early retirement benefits and full retirement age benefits.
As pointed out by Delaware disability attorney Steven Butler, you can pursue Social Security early retirement benefits and disability benefits at the same time. Social Security allows you to take the early retirement benefit, and then undo that choice if the disability claim is granted. A real-life example may help:
My client had the same job for 30 years, and stopped work in July of 2008 due to the combined effects of several medical conditions. He just turned 62. If he takes early retirement, he would receive $1,165 per month. If he gets Social Security disability, he would receive $1,554 per month (the same amount he would receive if he retired at full retirement age).
So he applied for both disability and early retirement. The early retirement claim was granted immediately, and the client is receiving an early retirement check while the disability claim is pending.
When the disability claim is granted, the client will start to receive $1,554 per month in disability benefits instead of $1,165 for early retirement. He also will receive retroactive benefits of $1,554 a month for the 12 months prior to his filing date, since he was disabled during that time. He also will receive the difference between disability benefits and retirement benefits (in this case, $389 per month) for the months that the disability claim is pending.
11/12/10 update: this claim was granted on the initial application.
Applying for disability and early retirement at the same time solves one of the biggest hardships for those claiming Social Security disability benefits, which is surviving financially while the disability claim is pending.
Everyone's situation is different. Social Security benefits vary, depending upon how much you have paid into the system over the years. Check out the Social Security Retirement Planner. Then consider getting some professional, personalized retirement advice.
If you can no longer do the work you used to do, and you are not working now, consider applying for disability. Please consult a Social Security disability lawyer for your initial disability application, to ensure you get the benefit of Social Security's rules for those over 55 years old.