Question

Disability Before Retirement: Jack, age 60, was planning on retirement at 67. He currently has $400,000 in his retirement accounts and would likely have doubled that by the time he retired. However, he has become permanently disabled after getting into a vehicle accident a few months ago.

1. If his average earnings were $65,000, what would his Social Security disability benefit be?
2. Social Security Disability benefits end at age 65, and he will switch over to Social Security Retirement benefits. What will his retirement benefit amount be at age 65?
3. Construct a spreadsheet with the various eligibility options for receiving these benefits,
4. what you would recommend to him, and why including if you would recommend delaying his benefits.

Answer 1

Social Security's full-benefit retirement age is increasing gradually because of legislation passed by Congress in 1983. Traditionally, the full benefit age was 65, and early retirement benefits were first available at age 62, with a permanent reduction to 80 percent of the full benefit amout. Currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later. Early retirement benefits will continue to be available at age 62, but they will be reduced more. When the full-benefit age reaches 67, benefits taken at age 62 will be reduced to 70 percent of the full benefit and benefits first taken at age 65 will be reduced to 86.7 percent of the full benefit.

  For those who suffer from severe and permanent disabilities, there is no “expiration date” set on your Social Security Disability payments. As long as you remain disabled, you will continue to receive your disability payments until you reach retirement age.A person who earns more than a certain monthly amount is considered to be "engaging in SGA." Federal regulations use the national average wage index to set the income limit for determining the SGA each year. In 2020, the amount is $1,260 for disabled applicants and $2,110 for blind applicants.

He get disability benefit $1752 per month and retirement benefit $1942 . So I recommend retirement benefits because he gets more security in financial aspect .