Early Retirement vs. SSDI — Which Is Worth More?

Social Security retirement benefits are the primary source of income for most retirees, but anyone born in 1960 or later can only receive full benefits if they work until age 67. Retiring before that gets you reduced payments through early retirement benefits (ERBs).

For someone who has a disability or medical condition that makes it difficult to continue working, Social Security Disability Insurance (SSDI) pays full retirement benefits even if you can’t work until age 67. But are higher SSDI benefits worth the extra time and stress that it takes to apply for SSDI?

An example:

Let’s say you just turned 62 and the SSA determines that you’d get the average SSDI benefit, which is $1,537 in 2024. Claiming early retirement instead would only get you $1,038.10 per month. That means you’d be missing out on $5,338.80 per year and over the course of your retirement you’d earn $64,065.60 less by claiming ERBs.

Not everyone earns the average benefits, though. Atticus also ran the numbers for some other benefit amounts to give you a better sense of whether SSDI is a better option for you than early retirement.

What are early retirement benefits?

People who qualify for Social Security benefits can begin receiving full retirement benefits between the ages of 66 and 67. The exact age depends on what year they were born. Everyone born in 1960 or later has a full retirement age of 67.

Starting at age 62, you can instead claim early retirement benefits — ERBs — which are worth less than what you’d get if you waited until your full retirement age. How much less depends on the year you were born, but someone who was born in or after 1960 and who claims ERBs would get a benefit worth 30% less than their full retirement benefit.

Full retirement age for Social Security benefits

What is SSDI?

Social Security Disability Insurance (SSDI) provides monthly benefits and Medicare to people who can’t work because of a disability or medical condition.

You can only qualify for SSDI if you’ve worked for the equivalent of at least 10 full years, and paid Social Security taxes during that time. There is also a rigorous application process where the Social Security Administration (SSA), which runs SSDI and retirement benefits, will confirm that your medical condition is severe enough that it keeps you from working.

Once you reach your full retirement age, your SSDI benefit will automatically become a retirement benefit without any changes to how much you get or how you receive payments.

Early retirement vs. SSDI — which is worth more?

If you qualify for SSDI, then your SSDI benefits will always be worth more than your early retirement benefits. Your monthly SSDI payment is worth the same as your full retirement benefit, while ERBs are worth up to 30% less than your full retirement benefit.

Both SSDI and retirement benefits have a maximum value of $3,627 in 2023, though most people don’t receive the full amount. At the start of 2023, the average Social Security retirement benefit (including workers without disabilities) was worth $1,827 per month. The average monthly benefit for disabled workers was $1,483.

Difference between SSDI benefits and early retirement benefits

The table below shows the difference in value between full retirement benefits (SSDI) and early retirement benefits.

How much you lose with ERBs vs. SSDI

As mentioned earlier, your early retirement benefits are worth as much as 30% less than the SSDI benefit you’d get. That means you’re losing money if you claim ERBs instead of SSDI.

As an example, let’s say you were born in 1961, you just turned 62, and the SSA calculates that your full retirement benefit would be worth $2,000. If you decide to claim early retirement benefits, instead of getting $2,000 per month, you’ll receive just $1,400 per month.

That’s a difference of $600 each month and $7,200 each year. For the average retiree, $7,200 is enough to cover rent for four to six months, groceries for an entire year (with about $600 left over), or utility bills for almost two years.

In this example, getting early retirement benefits instead of SSDI would mean missing out on between $144,000 and $216,000 over the course of your retirement.

How much you lose by taking ERB instead of SSDI

Should I Retire Early or Apply for Disability Benefits?

Applying for SSDI instead of ERBs is the right decision for many people, but unfortunately there’s no single answer that fits everyone’s situation.

Claiming early retirement benefits will give you payments more quickly, but SSDI benefits are worth potentially hundreds more each month. Medicare is also included with SSDI, but retirement benefits likely won’t include Medicare coverage until you turn 65.

If you want to apply for SSDI, it’s also important to do so before claiming ERBs. Even though it’s possible to claim early retirement benefits and then go through the SSDI application process to get the full value of your SSDI benefits, the SSA makes it difficult to switch from ERBs to SSDI.

Read more on the tradeoffs between SSDI and ERBs.

Can I check my SSDI benefit amount?

Yes, you can find out exactly how much your SSDI benefits would be worth if you applied for benefits right now. You’ll need to create an SSA.gov account:

• Visit the SSA’s mySocialSecurity page.

• Log in or create an account with your Social Security number (SSN).

• Scroll down to the section titled “More Benefits.”

For a more detailed look, here’s how SSDI payments are calculated.

SSDI spousal benefits vs. early retirement

SSDI and Social Security retirement benefits both pay spousal or dependent benefits. But like regular benefits, those payments are reduced if you retire early and not if you claim SSDI.

At the start of 2023, the average monthly benefit for disabled workers was $1,483, but disabled workers who were married and had at least one child received an average benefit of $2,616 per month when including additional benefits.

Reduction in spousal benefits for early retirement benefits

Related resources:

What Conditions Qualify for Disability?

By Jackie Jakab

Everything You Should Know About Disability Benefits (SSDI and SSI)

By Sarah Aitchison

---

Related resources:

What Is Workers' Comp & How Does It Work?

By Victoria Muñoz

What to Do if You're Injured at Work

By Victoria Muñoz