Will My SSDI Amount Change When I Reach Retirement Age?
Concerned about your SSDI amount at retirement? Learn how your disability benefits convert to retirement without a change in your monthly payment.
Individuals receiving Social Security Disability Insurance (SSDI) often wonder if their monthly benefit amount will change as they approach retirement age. This article clarifies what happens to SSDI benefits when a recipient reaches their full retirement age.
Understanding Full Retirement Age
Full Retirement Age (FRA) is the age when an individual becomes eligible to receive 100 percent of their Social Security retirement benefits. This age varies based on an individual’s birth year. For those born between 1943 and 1954, FRA is 66. For individuals born in 1960 or later, it is 67. For birth years between 1955 and 1959, the Full Retirement Age gradually increases from 66 years and two months to 66 years and ten months. This phased increase was implemented through the 1983 Social Security Amendments to adjust for longer life expectancies.
The Transition from SSDI to Retirement Benefits
When an individual receiving Social Security Disability Insurance (SSDI) reaches their Full Retirement Age, their disability benefits automatically convert into regular Social Security retirement benefits. This process is a re-categorization of the benefit, not a new calculation of the amount itself. The monthly benefit amount generally remains the same after this conversion, except for any cost-of-living adjustments (COLA) that may apply. The Social Security Administration (SSA) sets the SSDI benefit amount as if the recipient had already reached their Full Retirement Age, regardless of their actual age when they became disabled. Therefore, the transition typically results in no change to the monthly payment amount you receive.
How Your Benefit Amount is Determined
The consistent benefit amount during the transition from SSDI to retirement benefits is rooted in how Social Security calculates benefits, primarily through the Primary Insurance Amount (PIA). The PIA represents the basic Social Security benefit an individual is entitled to at their Full Retirement Age. This amount is derived from a person’s Average Indexed Monthly Earnings (AIME). AIME is calculated by taking up to 35 years of an individual’s highest earnings, which are adjusted for wage growth over time to reflect current wage levels. The Social Security Administration applies a specific formula, using fixed percentages (often referred to as “bend points”), to portions of this AIME to determine the PIA. Since SSDI benefits are already paid at a rate equivalent to the full retirement benefit (PIA), there is no change in the monthly payment when the classification shifts from disability to retirement.
Automatic Transition and Your Role
For most individuals receiving SSDI, the conversion of their benefits to retirement benefits at Full Retirement Age is an automatic process. The Social Security Administration (SSA) handles this change internally, meaning there is no need for the recipient to file a new application or take any specific action. The SSA’s computer system identifies when a beneficiary reaches their Full Retirement Age and makes the necessary adjustments to the electronic record. While the transition is largely seamless, the SSA may send notifications regarding the change. Once benefits convert to retirement status, periodic medical reviews for disability eligibility cease. In rare instances, such as if an individual is also receiving a reduced surviving spouse benefit, contacting the SSA might be advisable for any necessary adjustments.