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Dealing with SSD benefits when you are close to retirement age

It is an odd challenge when accepting certain benefits results in the modification or suspension of other benefits. When facing this challenge, individuals must ultimately weigh the pros and cons of making such a switch. But sometimes, the transition is not voluntary. As a result of caps, limits, durations and other benefit restrictions, changes in coverage simply occur as a matter of circumstance or necessity.

For example, when individuals who receive Social Security Disability benefits (SSD) age, their benefits may be affected by changes in their income related to retirement. In general, SSD benefits are meant to ease the financial burdens of individuals who cannot work due to certain injuries or illnesses. The benefits these recipients receive are based on earnings tests and projections of how much they would have made over a lifetime of work.

Obviously, even able-bodied workers eventually retire. So how are projected earnings and benefits of SSD recipients treated once recipients reach an age at which they would likely have retired even as able-bodied workers?

Generally, at the age of 66, SSD benefit recipients have their benefits converted from SSD benefits to retirement benefits. The great news is that the benefit amount generally remains the same, it is simply classified differently. In essence, SSD recipients do not ordinarily need to worry about their benefits changing when they age, simply because these benefits convert to retirement benefits at the same amount authorized when recipients were receiving SSD benefits explicitly.

It is important to note that some individuals may benefit from receiving certain delayed retirement credits or spousal benefits subject to certain conditions. As a result, SSD benefits recipients may wish to consult an experienced attorney as they reach retirement age in order to maximize their benefits. However, recipients generally need not worry that their benefits will be cut, they need only strategize to ensure that they maximize their benefits potential.

Source: Investment News, “How to mesh Social Security disability and retirement strategies,” Mary Beth Franklin, June 6, 2013

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