Can Filing for Social Security Disability Benefits Lower My Pension?

Can Filing for Social Security Disability Benefits Lower My Pension?


You are a disabled American. Perhaps you have a work history but, due to an injury, are no longer able to work.


Your disability is a result of an accident that you suffered, either while at work or not related to work. As a result of your disability, you are eligible for certain government benefits.

In 1935, Congress created the Social Security Administration, or SSA, as part of the President Franklin Delano Roosevelt’s call for Social Security. Through later amendments, notably President Richard M. Nixon’s call for adding to Social Security, two government programs emerged to help those who are disabled: Social Security Disability, or SSDI, and Supplemental Social Income, or SSI.

Another congressional program administered by the SSA is the Social Security retirement benefits program. Those with working history who paid payroll tax into Social Security retirement are eligible for pension benefits when they retire if they are at least 62 years old.

The issue is how a government pension and long-term disabilities interplay. Can you keep both sources of income? Will SSDI benefits reduce pension income?


Will pension income reduce SSDI benefits? What about SSI? This paper will discuss these issues.


Social Security Disability Insurance and Supplemental Social Income Benefits


A person can be eligible for both SSDI and SSI. The SSA administers both programs. Eligibility for SSDI is based on a person’s work history.


You must have worked at least 10 of the past 20 years and have not worked in the past 12 months. Applicants aged 31 and under do not have the same work requirements. SSDI benefits can also cover family members, based on circumstances.


SSI, unlike SSDI, is not based on work history; instead, it is for disabled Americans whose income falls below a certain threshold. The disability you suffer can be either physical or psychological. It can be due to a physical ailment or a disease that renders you unable to work.

SSDI is paid by payroll taxes through the FICA tax, whereas SSI is paid by the United States Treasury. Thus, SSDI is tied to work history, but SSI is not.

For both programs, a major factor in determining “disability” based on the SSA guidelines is the person applying for SSDI or SSI cannot perform “substantial gainful activity,” or SGA. A person cannot perform SGA if, due to the disability, it is determined that a person cannot earn $1,180 per month or $1,950 for a blind person. In other words, if you are earning beyond the threshold or if it is determined that you have capacity to earn beyond the threshold, then you can perform SGA and are not disabled based on the SSA guidelines.


Social Security Pension and SSI

If you receive SSI, then, as mentioned, you qualify based on your income level. If your income level goes up, then your SSI benefits go down, even though you cannot perform SGA.


As such, when you start receiving retirement benefits you started receiving more income. In turn, your SSI benefits take a hit. This is known as “offset” because the programs offset each other.

Therefore, if you are eligible for Social Security retirement benefits, are age 62, and have an option of waiting until age 67, you may want to wait, depending on the size of the payout.


Social Security Pension and SSDI

The interplay between Social Security retirement benefits and SSDI is more complex. In determining how the two work, it is important to distinguish between how you paid into Social Security.

If you paid into Social Security through a private employer by paying a social security tax, then your Social Security pension will harmonize with your SSDI benefits. You will not see a reduction in either benefit. Note, however, you may face certain tax implications when you file your taxes.

If you worked for a government agency that was not required to pay Social Security tax, then receiving Social Security retirement benefits will affect your SSDI benefits. Until 1983, such circumstances did not reduce SSDI benefits.


However, with the passage of the Windfall Elimination Privilege Act in 1983, or WEP, retirement benefits affect SSDI benefits. The SSA provides a table advising those receiving SSDI benefits and retirement benefits subject to reduction how it can be reduced and what the maximum reduction could be. Note that the calculation is very complicated.

Similarly, if you are a spouse of someone disabled and therefore entitled to spousal SSDI benefits, it is possible that you may face a reduction in your Social Security retirement benefits. In that instance, you are not subject to the WEP; however, you are subject to the Government Pension Offset that will offset your disability payments against pension benefits received for not paying into the plan.


This means that if you, as a spouse, worked for a government agency not required to pay a social security tax, then you face an offset. Note that Government Pension Offset, in contrast to WEP, is not as complicated and not as severe.


Contact an Experienced Philadelphia Disability Attorney Today

You are entitled to receive SSI, SSDI, and retirement benefits, depending on your specific circumstance. However, the rules related to disability benefits, especially as it interplays with retirement benefits, are complicated.


To obtain the benefits that are rightfully yours, you need an attorney who is experienced and knowledgeable in disability law. Contact the Philadelphia disability law firm of Krasno, Krasno
& Onwudinjo
at 800-952-9640. We are advocates on behalf of the disabled.

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