Becoming disabled before retirement can be a huge financial blow. In addition to having to deal with medical bills and lost income, Northwestern Mutual states that a two-year disability at age 50 can reduce total investment accumulation by 30% at the time of retirement. The Social Security Administration (SSA) says that three out of every ten workers will become too disabled to work before they reach retirement age. Further, 7.8 million people received Social Security disability benefits last year according to SSA in its publication "Workers Insured for Social Security Benefits, 2010." For most people, knowing that SSA provides disability benefits is a comfort. Few of us, however, know who is covered, how this safety net is funded, or how to apply for benefits if we need assistance.

Where do disability benefits come from? Disability benefits are paid by SSA from two similar sources, SSDI and SSI. In general, if you have worked and paid into the Social Security system for the required number of quarters and are suffering from a severe disability that prevents you from working, you can apply for SSDI benefits. You pay premiums for national disability coverage with every paycheck earned over your working life. However, if you have not worked for a long time, your coverage can lapse. If it does, you no longer qualify for SSDI and must apply for SSI.

SSI covers individuals who are not covered by SSDI, such as severely disabled individuals who simply cannot work, young people who did not work long enough before the onset of their disability to qualify for SSDI, and individuals who stopped working for whatever reason and allowed their coverage to lapse before applying for disability benefits. SSDI and SSI make payments to people who have not yet reached retirement age. After retirement, payments are continued under Old Age, Survivors, and Disability Insurance (OASDI).

How is Social Security funded? According to SSA, most Social Security funds come from payroll taxes paid by employers and employees. Additional income comes from interest earned by the Social Security trust funds and from an income tax paid by about one-third of beneficiaries on their Social Security benefits. In 2009, the two Old-Age and Survivors Insurance and Disability Insurance Trust Funds collected $807.5 billion in revenues, which means that at the moment, Social Security is paying for itself.

In order to apply for disability benefits, you must present medical records and a medical history giving a diagnosis of your condition and demonstrating that you will be unable to earn a living for at least 12 months or that your condition is expected to end in death. 75% of applicants are turned down at their initial hearing. 90% of applicants are turned down at their first appeals hearing.

While it is permissible to represent yourself at these hearings, it is often much less stressful and success is more likely if you allow a trained Social Security disability lawyer or other knowledgeable professional to assist you in preparing and presenting your disability case.

Despite the hurdles to receiving disability benefits, most Americans are grateful it exists and don't understand why it is being questioned. Reasons include the fact that more and more Americans are reaching retirement age, qualifying for Social Security, and are living much longer lives than people did 60 years ago. There are also many more disability claims as the population ages. Finally, the national deficit is increasing at an alarming rate, and our representatives are looking for ways to trim the budget to pay that debt.

Almost 20% of the national budget is allocated to Social Security, making it a high-profile target for budget cuts. There is no question that the federal budget must be cut. The problem is what to cut and who it will affect. We cannot help but hope that Congress will not flip the bill upon those among us with the least means to cope.

Disability Claim

Disability Help