Understanding Social Security Disability Benefits – Who's Eligible and How it Works

Understanding Social Security Disability Benefits – Who's Eligible and How it Works

While I’ve talked about the importance of having disability insurance in the past, a lot of questions still arise regarding Social Security disability benefits. Everyone seems to have a story, or know someone who’s receiving Social Security disability, so there is always some skepticism as to whether or not outside coverage is needed. Think of it this way–if it is easy to qualify for Social Security disability benefits, why is there an army of attorneys and law firms that specialize in Social Security disability claims and appeals?

Go ahead and do a quick web search for these attorneys. You’ll be amazed at what you find, and how many of those sites look about as good as those cheesy local ambulance chaser commercials you see on your local TV station. All cynicism aside, this is a real benefit that is paid for by tax dollars, so let’s take a look at this benefit in a nutshell.


To be entitled to a disability benefit, a worker must:

  • Be fully insured at the onset of disability.
  • Have worked in Social Security-covered employment for at least five of the previous ten years (20 out of 40 quarters). This applies to disability that begins after age 31. If the disability begins before age 31, you must have worked under Social Security-covered employment for the greater of six quarters, or at least one-half of the quarters between age 21 and the age when disability began.
  • Be under Social Security normal retirement age. After normal retirement age, disability benefits become retirement benefits.
  • Have a physical or mental impairment that (1) disables the worker from the performance of any substantial work, and (2) is expected to either be terminal or last for at least 12 months.


A disabled worker who qualifies for Social Security disability benefits is entitled to the full benefit payable until the earliest of the following:

  • The disability ends: benefits are terminated in the second month after the end of disability.
  • The worker dies: benefits are terminated in the month prior to the worker’s death (e.g., worker dies in July; no June benefit is paid).
  • The worker attains normal retirement age.

Spouse’s benefit. Disability benefits for spouses are calculated in the same way as retirement spousal benefits: 50% of the worker’s benefit, reduced if the spouse is under normal retirement age. Benefits are subject to a family maximum.

Child’s benefit. A child who is under age 18, or under 19 if still in high school, is eligible for a benefit amounting to 50% of the disabled worker’s benefit, again subject to the family maximum.

But how much money would you receive even if you do qualify? Well, the Social Security Administration has a few nice calculators that can help you see how pitiful the benefit would be if you were really unable to work. I went ahead and did the first option of using the quick calculator just to see what my benefits would be, and it wasn’t pretty. My disability benefit would be around 38% of my current salary. And this number is high, because my pay has only been at this relative level for just a few years. Prior to that it was significantly lower. So, in using the detailed estimator, I found out my benefit would be about 23% of my salary.

Go ahead, plug in your numbers and see what it comes up with. I don’t know about you, but even in the rare event I was able to qualify for this disability benefit, my life would certainly not be the same while trying to live on a fraction of my pay.

Author: Jeremy Vohwinkle

My name is Jeremy Vohwinkle, and I’ve spent a number of years working in the finance industry providing financial advice to regular investors and those participating in employer-sponsored retirement plans.

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