Is It Possible To Receive Both Retirement Benefits & Disability Benefits?

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Disability Benefits
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Is It Possible To Receive Both Retirement Benefits & Disability Benefits?


Perhaps you are a disabled American and are unable to work. Or perhaps you have difficulty performing the job that you used to do.


Perhaps your disability goes back to when you were a kid. All of these factors may allow you to be eligible for Social Security Disability Insurance, or SSDI, benefits and Supplemental Social Income, or SSI, benefits.

You may have a substantial working history prior to the disability, wherein you paid into Social Security through the Federal Insurance Contributions Act, or FICA, tax. Now, however, you are disabled and cannot work at the level required by the Social Security Administration, or SSA.

You are now 62 years old and are eligible for Social Security retirement benefits. Per your disability, you are likely eligible for SSDI benefits and possibly, based on income, SSI benefits. However, you are also eligible for retirement benefits. All the plans are social security plans administered by the SSA. Are you able to keep your SSDI and SSI benefits while receiving retirement benefits?

Furthermore, when receiving SSDI and SSI benefits, what are the tax implications? If you can receive those benefits concurrently with social security retirement benefits, what are the tax implications about receiving funds from all those programs?


Social Security Retirement Benefits

Social security retirement benefits were created so that retirees have a security net for retirement when their working years are done. To be eligible, you must have worked for at least 40 quarters, which is 10 years. You can start collecting these benefits at the age of 62, though putting off collecting the benefits will give you a higher amount later on.

Retirement benefits are calculated based on your 35 highest earning years. The higher you earned during your working years, the higher your social security retirement benefits. If you only worked for 10 years, then the SSA will compute 10 years of income plus 25 years of no income, which would be a low amount.


Are Social Security Disability Insurance Benefits Taxable?

SSDI benefits can be considered taxable income, depending on overall income. Married couples filing jointly that earn more than $32,000 per year, including up to half of SSDI benefits, are subject to federal income tax.


Single taxpayers that earn more than $25,000, including up to half of SSDI benefits, are subject to federal income tax. On a monthly scale, this equals $2,666 for married couples filing jointly and $2,083 for single taxpayers.

Be careful with lump-sum back payments of SSDI benefits. You may receive lump-sum payments as back pay from the time that you applied but were not yet approved for benefits.


When this occurs, it may bump your earnings into the taxable threshold or may increase your marginal tax rate. Note that a marginal tax rate is that you pay a higher percentage of tax as your income rises into higher tax brackets, which can be applied for those receiving SSDI benefits.

When receiving lump-sum payments, you can apply those payments that relate back to the year they would have been owed. For instance, if you receive back pay for 12 months, then those payments can relate back, taxwise, to the previous 12 months.

With respect to state tax, many states do not consider SSDI benefits as taxable income. Some states, however, consider up to half of the benefits received as income. Pennsylvania does not tax SSDI benefits.


Is SSI Taxable?

Unlike SSDI, SSI is not taxable income because it is a supplement paid for by the United States Treasury. SSDI is paid for by payroll tax under the FICA program and is therefore taxable, at least partially, whereas SSI is not.


Those who receive SSI benefits must report the benefits received to the SSA but not to the IRS. It would not be included on a tax form.


SSDI and SSI with Retirement Benefits

SSDI benefits will convert into retirement benefits. This means that when you retire and are eligible for retirement benefits, then you will only receive retirement benefits.


The time that you received SSDI will not factor into the amount to which you are entitled under social security retirement benefits. Therefore, it may be advantageous to not collect social security retirement benefits until you are 67, instead of age 62, so that you will continue to receive SSDI benefits and will also be eligible for Medicaid.

For SSI, it all depends on income. If your retirement benefits from social security do not bring you above the income threshold, then you can continue receiving SSI. If not, you will no longer be SSI eligible.

In sum, the taxation, rules, regulations, and guidelines for receiving SSI and SSDI benefits, in conjunction with retirement benefits, are complicated.


Contact an Experienced Philadelphia Disability Attorney Today

You are entitled to receive SSI, SSDI, and retirement benefits, depending on your specific circumstance. However, as explained, qualifying for SSDI and SSI benefits are complicated. In addition, retirement benefits are complicated, especially if you are receiving SSDI and SSI benefits.


If you suffer from a disability, you may be eligible under the SSA guidelines. You may also be eligible for retirement benefits, depending on your age and work history. To obtain the benefits that are rightfully yours, you need an attorney who is experienced and knowledgeable in disability law. Contact the Philadelphia disability law firm of Krasno, Krasno & Onwudinjo at 800-952-9640. We are advocates on behalf of the disabled.

Krasno, Krasno & Onwudinjo
Krasno, Krasno & OnwudinjoAbout the author

Krasno, Krasno & Onwudinjo have been serving injured Pennsylvania workers since 1936. If you have been injured on the job or are seeking Social Security benefits, call us today for a FREE no obligation consultation.