Atlas Insights Blog

Making Sense of Social Security Disability Benefits

September 11, 2018 View all posts by Atlas Wealth Advisors Atlas Wealth Advisors Disability, Social Security

The statistics are nothing short of alarming: studies show that a twenty-year-old worker has a one in four chance of becoming disabled before reaching full retirement age. Most of us think of disability as something that happens to the “other guy” – tragedy we might hear about, but never think would come to our door. But we might be surprised at how tenuous our hold is on physical health and wholeness.  

Social Security started in 1935 in reaction to the suffering of the Great Depression. The elderly, as well as those born disabled or disabled through injury, had local care from family, church, and local government. The Act made this concern for the vulnerable a national issue, and starting the complex, but helpful program that is still in place today.  

In this post, let’s look specifically at what how Social Security addresses disability.  

Am I Eligible? Determination of Disability

The first step in the Social Security Disability Insurance (SSDI) benefits process is the determination of disability itself. The Social Security Administration (SSA) has some strict parameters on what constitutes disability, and more specifically how that disability affects your ability to work.  

Bear in mind that Social Security is unique in that it only pays for total disability – no benefits are given for partial or short-term disability.

You are considered disabled under Social Security rules if:

  • You can’t do that work that you did before (sustaining an injury or otherwise becoming disabled).
  • The SSA decides that you can’t adjust to other work because of your medical conditions
  • Your disability has lasted or is expected to last at least one year or result in death.  

That definition may seem narrow, but the program assumes that working families have access to other resources during times of short-term disability. Worker’s compensation, insurance, savings, investments and help from loved ones are considered support in these cases – the terms of how Social Security addresses disability are more firmly boundaried.

The SSA provides some helpful information on determining disability, which will begin the process of application for benefits.  

Categories of Benefits

One distinction to draw in this area is between Social Security Disability Insurance and Supplemental Security Income. The first, which is our focus here, is drawn from payments made by the person while they were working age and/or ability. The second is cash assistance for the basics for those who are disabled or elderly. Supplemental Security Income is drawn from general taxes.

Age also affects your interaction with Social Security Disability benefits. If you are disabled before you turn 22, your SSDI is considered a “child benefit,” which is actually based on your parents’ earning record. If the adult (over age 22) “child” in this situation has a parent who has died and worked long enough to receive Social Security or has a parent who is receiving Social Security (due to retirement or disability), they become eligible. They will not have to have a working record, as the benefits are based on the parents’ record of working and paying into the system.

For those who become disabled later in life due to injury or medical condition, benefits are based on your personal working record. Any conversation about Social Security discusses the forty credits you earn over a career that are used to calculate your benefits in retirement. You can earn a maximum of four credits per year, so, as you can see, the full forty credits are usually earned long before retirement age.

If you’ve earned the full forty credits, you are eligible for full benefits as you would be in retirement. If you are considered disabled within the parameters of the SSA, then you can take benefits. When you do reach retirement age, your benefits convert to retirement benefits, but the amount remains the same.  

Those who are disabled before they are able to reach the full forty credits also have special considerations based on their work history and age.

How the Numbers Read

The average SSDI benefit amount for a recipient in 2018 is $1,197 per month, which is based on average lifetime earnings, not on household income or how severe a disability is. The actual amount could be less than this, or up to $2,788 depending on the person.

Similar to Social Security benefits in retirement, SSDI benefits aren’t meant to be a sole income, but a supplement. Other disability programs and benefits have to be in place to keep a household above subsistence level.

If you, or a loved one or child, is in need of Social Security benefits, a little education goes a long way. Congresswoman Diane Watson said it well, “Social Security is a family insurance program, not an investment scheme.” Knowing how benefits work, how much money is really involved, and how that will fit into your lifestyle are important factors to consider.

Our Door is Open

Disability, whether from birth or from an injury or illness later in life, presents obstacles that most of us can’t imagine. The smallest task can take up an entire day; the simplest irritation can become an ordeal.

Social Security is one way to provide some relief, but the system is not easy to understand or straightforward. You might be walking a loved one through this process, or trying to give an adult child with a disability their own income stream and independence. You might be going through this yourself.

Whatever your situation, Atlas is here to simplify the wealth experience. A listening ear and an educated guide are invaluable in understanding how Social Security addresses disability, call us today.

Juggling Multiple Advisors? Just STOP.  Click Here to Get Clear &  Actionable Counsel

Atlas Wealth Advisors

10000 N. Central Expy., Suite 700, Dallas, TX 75231 972.421.1987
Investment Insights

Download Investment Insights

If you're planning on using the stock market as you navigate your life goals, you need to understand how the market works. Without a clear picture, it's easy to get swept up in the latest news or to let fear drive your decision-making. But with a deeper understanding of how the market works, you should be able to invest with confidence. In this resource, you'll learn:
• How to avoid buying high and selling low
• How to use market risk to your advantage
• What to do with a "unicorn"
...and much more.