CMP Financial Planning

Why Taking Social Security Retirement Benefits Early Often Makes Sense for Special Needs Families


The decision as to when to start Social Security benefits is a big decision for retirees. In many cases, it makes sense for a retiree to wait to collect benefits until age 70; however, for special needs families with a child with a disability, waiting is often not the best strategy.  This article provides a brief summary of why in most cases it is beneficial for the special needs family to take benefits sooner rather than later. For a more detailed discussion of this topic please refer to Should I collect Social Security Benefits Early?

What happens when the primary working parent takes the benefit?

When the primary working parent starts benefits, the adult child with a disability qualifies for SSDI benefits. Because the SSDI benefit is based on the working parent’s Social Security benefit, it is in most cases a higher benefit amount than what the child would be receiving through SSI. In addition, the individual with a disability then qualifies for Medicare benefits, which can be a great additional health insurance benefit to the benefits being received through Medicaid.  

How is the additional family benefit calculated when the retiree begins Social Security benefits?

First determine what the retiree benefit will be at full retirement age (FRA) and then what it will be at the age the worker intends to collect benefits (either at, before, or after their FRA.) Determine what the SSDI benefit is for the adult child with a disability.

The SSDI benefit is 50% of the primary working parent’s benefit at FRA. Calculate what the additional Social Security benefit might be by subtracting the SSDI amount from the child’s current SSI benefit.  Total the retiree’s SS benefit with the additional benefit the child might receive by qualifying for SSDI.  This total represents the additional total household benefit to the family when the retiree begins to receive Social Security. A simple example illustrates the calculation. Let’s say the primary worker’s benefit is $2,600 at FRA. FRA for this person is age 67. The SSDI benefit will be $1300 for the child with a disability. Let’s say the child is currently receiving the maximum SSI benefit, which for 2020 is $783. To keep things simple, let’s, assume the primary working parent collects the SS benefit exactly at their FRA. The additional household Social Security benefit when the working parent begins SS is: $2,600 + ($1300-$783) =$3,117.

Does it ever make sense to delay taking benefits for the special needs family?

The calculation of the additional family benefit is important in determining when to begin taking benefits. The higher the additional household benefit, the more likely the family Social Security benefits are maximized by taking benefits early compared to waiting until age 70. This holds true for the working parent who attains FRA; however, before FRA, the benefit decision really rests on whether the working parent decides to continue working and collect benefits. 

Work earners can begin collecting Social Security as early as age 62; however, that benefit is reduced by 2/3rd if that person continues to work (assuming their working earnings exceed $18,240.)  Given this drastic penalty that occurs for those who work and collect benefits before their FRA, it is most likely not beneficial to the special needs families to collect early, even when considering the additional SSDI benefit the adult child could be receiving. If, however the primary work earner quits working, it is likely that the family overall is better off in taking Social Security benefits early.

Social Security is a complex benefit for everyone in general, but in particular it is so for special needs families, because they have to consider not only the benefits of the parent but those of the child with a disability as well.  Contrary to a typical retiree in good health, the special needs working parent is likely to maximize benefits by taking benefits sooner rather than later. Because each person’s situation is different, special need families are encouraged to talk with a finance professional in order to determine when to begin collecting benefits.