Many older Americans have a simple plan for paying for retirement: keep working longer, or never stop working at all. But for a large share of workers, that plan falls apart. About 40% of people who are employed end up leaving their jobs earlier than expected, often because of an unexpected disability.
When that happens, the consequences for retirement security can be severe. Lost wages can force disabled workers to burn through their savings and claim Social Security as early as age 62, locking in permanently lower benefits instead of the higher payments that come with waiting.
There is, however, an important alternative. Older workers who become disabled can apply for Social Security Disability Insurance, which replaces a substantial share of the retirement benefit they would otherwise receive later.
While retirees make up the largest group of Social Security beneficiaries, SSDI serves a significant population—about 8.2 million people with physical impairments or conditions such as intellectual or mental disorders. Roughly three-quarters of those beneficiaries are age 50 or older, and many have low incomes. For them, disability benefits often act as a bridge to retirement, keeping a large share out of poverty.
But the program is at a turning point. Applicants have long faced extremely long waits for decisions, and policymakers have been debating how best to modernize the process Social Security uses to determine eligibility.
That debate moved into public view recently, with reports that the Social Security Administration had paused work on a plan to overhaul the disability application system. The proposal would have updated an outdated database the agency uses to determine whether jobs exist that an applicant could perform. At the same time, it would have made it harder for people over age 50 to qualify.
Some experts expect the agency to return to the project eventually, particularly the long-overdue update to the jobs database.
But one part of the proposal raised serious concerns: it would have increased the age at which age is considered in disability decisions from 50 to 60. Disability experts warn that such a change would lead to more denials for older, vulnerable workers who have few realistic options left in the labor market.
My latest “Retiring” column for The New York Times explores the policy debate on SSDI – and the potential winners and losers.