Association for Public Policy Analysis & Management

The relationship between Social Security Disability Insurance (SSDI) and Social Security retirement (SSR) benefits is important to consider in any discussion of potential reforms to federal disability and retirement programs. SSDI beneficiaries are protected from substantial penalties for claiming early retirement benefits, because their disability benefits continue until they convert into SSR benefits at the full retirement age (FRA). Many alternatives have been proposed to restore the soundness of the Social Security trust fund, and several of them are focused on changing the availability or generosity of SSDI benefits for claimants in the years before retirement. A key consideration in designing these policy proposals should be their effect on the well-being of SSDI beneficiaries.

We match the Health and Retirement Study data to Social Security administrative records to identify how the retirement well-being (that is, well-being after FRA) of those who received an SSDI award differs from that of retired workers who did not receive SSDI, including those who applied but were rejected from SSDI. We compare these groups on multiple measures of financial well-being, including post-FRA income, the incidence of poverty, income replacement rates (both Social Security and total household income), benefit levels, and wealth. We consider differences based on age of first SSR or SSDI receipt, sex, and educational attainment. The results of this analysis will give policymakers insight into the potential consequences of policy reforms that would affect SSDI benefits earned before FRA.