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Social Security Disability and Pensions

A common question about Social Security Disability (SSD) benefits is whether a worker can receive retirement benefits from another source and still receive SSD payments. Some workers may have heard that the Social Security Administration reduces SSD benefit payments when a beneficiary receives income from other sources such as pensions, 401ks, and employer-provided disability insurance.

Does Receiving an Employer Pension Reduce SSD Benefits?

In some instances, workers can start taking their pensions as early as 50. Can they still receive SSD benefits after retiring early because of disability?

As with so many other government programs, the answer is "It depends." However, the good news is that most people will not see any change in their SSD benefits if they begin taking a pension or other retirement program. To obtain benefits, you must prove that you are disabled and cannot work. You must also have paid into the Social Security system while you were working.

Did You Work For A Government Employer?

It is this second qualification that could affect the ability to have both a pension and SSD benefits. If you didn't pay into the system, you are usually ineligible for SSD benefits, although your non-contributing spouse and children could be eligible based on your contributions.

Did That Employer Contribute to Social Security?

The important differentiator is whether you contributed to Social Security with each paycheck. Certain types of employers do not deduct payments or contribute themselves to the Social Security system, but instead provide their own retirement and disability benefits. People who worked for employers such as these may not have paid into the system long enough to be eligible - if they ever contributed.

Employers who did not deduct or contribute to Social Security are most likely to be state and governments. Accordingly, people who worked for state or local governments are more likely to have their Social Security Disability payments reduced or be ineligible for SSD altogether because they never worked for another type of employer. If you have a pension or other retirement benefit from a private employer and paid into Social Security, your retirement and disability benefits will not be affected.

However, if you worked for a state or local government employer, your disability benefits may be affected if your employer did not deduct Social Security taxes. Nevertheless, many state and local governments do just that, in addition to providing an additional pension, so you are not automatically denied retirement and SSD benefits if you worked for a government employer. It's complicated.

Windfall Elimination Provision Could Reduce SSD Benefits in Some Cases

Making things even more complicated is the Windfall Elimination Provision. This applies when you have worked in both types of jobs - those that paid into Social Security and those that did not. The Windfall Elimination Provision is designed to prevent workers with lower than average Social Security incomes because they worked for employers that did not pay into Social Security. If you worked fewer than 30 years in a Social Security-covered position and other years in a position covered by a government pension, your benefits could be cut by the amount you receive from your government pension. However, if you worked 30 years under Social Security, it does not matter whether you also worked for a non-covered employer - you will still get full retirement or disability benefits. Additionally, survivors and spouses may see their SSD benefits reduced if a government pension is part of the mix.

In short, if you always worked in jobs that were covered by Social Security, even government jobs, you do not need to worry about having your benefits reduced if you became disabled. If you worked for a government agency, you would be affected only if your employer did not contribute and provided a separate pension as well.

Get Help With the Windfall Provision Act When Applying for SSD Benefits

Determining how much you should receive in SSD benefits if you worked for an employer that did not contribute to the Social Security system is complicated. That's why it is important to get help with your claim or appeal to insure that you receive the full benefit to which you are entitled. Do what so many others have done: Call Binder & Binder®, America's most successful Social Security Disability advocates.


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