Almost 11 million Americans receive disability benefits. But what happens to that benefit when you reach an age where you can begin claiming Social Security?
It’s a common question – and Gail Buckner answers it:
When you reach “full” retirement age (currently 66), your disability benefit will automatically be converted to a Social Security benefit. The amount will not change.
But the fact that your benefit has been re-classified gives you an interesting option. At full retirement age (FRA) anyone- for any reason- can request that their Social Security benefit be “suspended.” That is, temporarily stopped.
While your benefit is suspended, it is eligible for the “Delayed Retirement Credit.” This is computed on a monthly basis and amounts to an 8% increase in your benefit amount for every 12 months you do not receive a check. In other words, if you tell Social Security that you would like your benefit suspended starting in the month you turn 66, by the time you reach age 70 your benefit will be 32% larger.
Suspending your benefit is simple. You can notify Social Security either by phone or in writing. Your month checks will automatically resume once you turn 70 unless you request that this happen sooner. For more information about suspending your benefit , visit http://www.socialsecurity.gov/retire2/suspend.htm.
Keep in mind that any Supplemental Social Security (SSI) benefit you might be receiving will also be suspended if you suspend your basic benefit.
In addition, if you suspend your Social Security benefit and you are covered by Medicare Part B, you will be responsible for sending Medicare your monthly premium. To avoid the risk of losing this coverage, you might want to arrange to have payments automatically deducted from your checking account.
Finally, I suggest you discuss this with your financial advisor.
Photo Credit: Jack via Flickr Creative Commons License
