Q: I am about to turn 62. I am thinking of retiring and taking my Social Security. However, everyone I know tells me I’d be foolish to do that. They all tell me to wait until at least age 66 when I can get full benefits. And others suggest I wait even longer — until age 70. What do you think? And FYI: My wife and I have a 22-year-old son who has been mentally disabled since birth. My wife is 60 and stays home to care for our son.
A: When I read the first couple lines of your email, I was ready to give you my stock response when people ask me whether they should retire early and take reduced Social Security benefits, or wait until a later date to get higher benefits. I essentially tell them to take reduced retirement benefits if they want more money at the front end of their senior years; if they want more money in their later years, they should wait until age 66 or 70 to start their Social Security.
But the fact that you have a disabled son changes everything. And that’s because he, and possibly your wife, will be eligible for benefits as soon as you sign up for your Social Security. By waiting until a later age to apply for benefits, not only would you be forgoing your own monthly checks, but you’d be throwing away tens of thousands of dollars in benefits due to your family.
The rules usually say that benefits due to a dependent child of a retiree end when that child turns 18. But the law also says that benefits can be paid to dependent children over age 18 if they have been disabled since childhood. So, assuming your son can be classified as disabled, he will be eligible for benefits on your account for the rest of his life.
While you are alive, he will get a rate equal to 50 percent of your full age 66 rate, even if you take benefits at age 62. After your death, he will get 75 percent of your age 66 rate. And, if your wife is not working, she is also potentially due benefits as the dependent caregiver of a disabled child. She, too, would get the 50 percent rate (and 75 percent after you die).
However, there is a law that limits the amount of money that can be paid to dependent family members on a retiree’s account. The math is too messy to explain in this column. But there is a chance that your son and wife will each get slightly less than the 50 percent rate. You will have to talk to the Social Security people about that.
But the bottom-line message is this: The combination of benefits due to your wife and son makes those reduced retirement benefits a pretty attractive option for you to consider.
Q: I became disabled about five years ago. I did not have enough work credits to get Social Security disability, so they put me on SSI disability. I recently turned 62, and my Social Security office forced me to sign up for Social Security retirement. I then lost my SSI disability benefits. I have two questions: How can they say I didn’t have enough work credits for Social Security disability, but then turn around and tell me I have enough for retirement? Also, why was I forced off of disability and made to take my retirement? I’m getting $950 per month now from Social Security.
A: Before I answer your question, I’ve got to clarify something for the rest of my readers. You said you were getting SSI disability. SSI stands for Supplemental Security Income. And SSI is a federal welfare program managed by the Social Security Administration. It is funded out of general tax revenues, not Social Security taxes.
The rules for every welfare program I am familiar with, including SSI, say that you must file for any other benefit for which you might be eligible. In other words, you only get welfare after you’ve exhausted your efforts to get other forms of financial assistance.
You were not able to get Social Security disability benefits, because the rules for that program say you must have worked and paid Social Security taxes for five out of the last 10 years before you became disabled. Apparently, you didn’t do that.
But the rules for Social Security retirement benefits say that you simply need 10 years of credits from anytime during your working lifetime to qualify. Obviously, you had more than enough work credits for that, because $950 at age 62 is a close-to-average reduced retirement check.
Finally, since the maximum SSI payment rate is in the $750 per month range, I’m not really sure why you are griping. You are getting an extra $200 per month under this program you say you were forced to take.
Q: I had to retire at age 58 because of severe neck and back issues. I started getting Social Security disability benefits at that time. I am now approaching age 62 and will be forced to file for my reduced retirement from Social Security. I think I made a huge mistake by filing for disability benefits, because now I will get less money in retirement. Is there anything I can do to fix things?
A: There is nothing to fix. And you did not make a huge mistake by filing for Social Security disability benefits. In dollar terms, a disability benefit equals a full retirement age benefit. In other words, it’s like you got your full retirement benefit, only eight years early. And, you will not be forced to file for reduced retirement benefits at age 62; you will keep getting your disability benefits until you turn 66. At that point, you will be automatically switched to the retirement program. But your benefit payment will remain the same because, as I said, you are already getting your full age 66 rate.
For those readers who might be confused by my answers to the last two questions, you need to understand this: The prior question dealt with a guy who was getting SSI disability, not Social Security disability. To repeat: SSI rules require that he file for Social Security retirement as soon as he is eligible. But the reader who sent in this last question is getting Social Security disability, not SSI. So, again, that means he is essentially already getting his full retirement benefit rate and will be automatically switched to the retirement program at age 66.
