How Your Social Security Disability Benefits Work When You Retire

When you leave full-time employment, there is a period of time after that when you will continue to be covered by Social Security for Disability Benefits.  Welcome to the 20/40 Rule.

The 20/40 Rule

If you have become disabled after you’ve left employment, you may be eligible for Disability Benefits – assuming that you’re under Full Retirement Age (FRA).  In a case such as this, if you have worked the required number of quarters to be eligible for Disability Benefits, the rule is that you must have worked 20 quarters out of the previous 40 quarters, earning at least the minimum.

This is the 20/40 Rule.  The quarters don’t need to be consecutive, but it must be 20 out of the 40 quarters prior to the onset of the disability.  Another way to look at it is that for five years after you leave employment you will be covered by Social Security for Disability Benefits, again assuming that you’re under FRA.

If you work, even part-time, ($1,120 earned in a quarter), this will count as a quarter for your coverage.

The 20/40 Rule is adjusted for age, as well.  If you’re under age 24 when you become disabled, you must have worked for 6 quarters out of the prior 12 quarters before you become disabled.  Between ages 24 and 31, the numbers are half of the quarters after your age 21 – so if you’re 29, you would need to have 16 of the 32 quarters after your age 21.  After you reach age 31, the 20/40 Rule lives up to its name – 20 quarters out of the prior 40.

Once you reach FRA, Disability Benefits are converted to Retirement Benefits, so this rule doesn’t need to be considered.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

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