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Is The Disability Program The Ticket To Early Retirement?


A few weeks ago, I heard a story – Unfit For Work on This American Life and it’s quite startling. Do you know there are 14 million people currently on the disability program?  People on disability are not counted in the unemployment rate because they are not part of the workforce. You can read more and listen to the story by following the link above. Here is a just a short recap.

  • People on disability receive about $13,000 and healthcare coverage via Medicare.
  • Medical conditions like back pain is a lot more disabling for laborers than office workers. Ethel Thomas would love an office job, but she can’t get one with her qualifications, so it’s better for her to get on the disability program. Her previous job was at a fish plant and she can’t do it anymore due to back pain.
  • Once you get on the program, not many people leave. Only 1% of the people on the federal program for disabled workers at the beginning of 2011 have rejoined the workforce.
  • Scott Birdsall lost his job when the local saw mill closed down. He went on unemployment, had a heart attack, and then went on disability. If the mill was still in business, he would go back to work instead of going on disability.

The story is quite interesting and I wonder how many people took this path to early retirement. Scott went through the retraining program when he was on unemployment and he hated going to school. He was 56 at the time and let’s face it, employers don’t want to hire an older worker nearing retirement.

Compare with minimum wage worker

Oregon’s minimum wage is $8.95 per hour. So a minimum wage worker can make around $18,500 per year. That’s about $5,500 more than the $13,000 you would get from disability. However, our minimum wage worker also has to pay for health insurance, transportation, wardrobe, and other job related costs. Working a minimum wage job is probably about on par with being on disability, but the big difference is the growth potential. If you are younger, you can get more education and try to get a better job to improve your situation. On the other hand, it seems once you get on disability, you’re signed up to be poor for the rest of your life.

Not for me

disability program ticket to early retirement

One man who didn’t let his disability stop him.

Back pain and other musculoskeletal problems is the biggest portion of the disability program at 33.8%. I have back and shoulder pain, too. I’m getting better now that I’m not hunched up in front of a computer for 10+ hours a day, but the pain is not completely gone. When I was listening to the program, I wondered if I could get on the disability program. I doubt it and I don’t want to be on the disability program anyway. We are doing alright financially and it wouldn’t feel right to take the disability check.

Anyway, if I get on the disability program, it probably means I’ll have to stop blogging. I made about $16,000 online in 2012 and that’s already more than the disability payment. I know if I put more effort into it, I can generate more income in the future. Once Baby RB40 goes off to school and I have more time, I would like to explore other business opportunities as well.

Disability should be reserved the truly disabled

Personally, I think the disability program should be reserved for people who really can’t work. The story made it sounds easy to get on the disability program and it should probably be a bit more difficult. Older blue collar workers like Scott are in a tough position, but I think they should try to work a few more years until they reach retirement age and social security kicks in. I guess it’s easy to judge when I’m young and can still make money in nontraditional ways. I really don’t know what I would do if I was in Scott’s position.

What would you do if you were a 56 year old laborer, had a heart attack, and couldn’t find a well paying job? Would you consider going on the disability program to retire early? After you have recovered from the setback, wouldn’t it be better to find a job rather than staying on disability until 62? 

photo credit: jimbowen0306

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{ 51 comments… add one }
  • Financial Samurai May 10, 2013, 12:52 am

    “What would you do if you were a 56 year old laborer, had a heart attack, and couldn’t find a well paying job? Would you consider going on the disability program to retire early?”

    I’d absolutely apply for disability if it was between starvation, bankruptcy and getting some income to survive I’m disabled! Unfortunately, there are probably passive income limits.

    • retirebyforty May 10, 2013, 8:49 am

      I’ll try to find out the passive income limits. You can recover from a heart attack pretty quickly right? Wouldn’t it be good to go back to work afterward?

  • My Financial Independence Journey May 10, 2013, 2:32 am

    “What would you do if you were a 56 year old laborer, had a heart attack, and couldn’t find a well paying job? Would you consider going on the disability program to retire early?”

    I basically agree with Sam on this one. Of course I’d get disability. There’s not really any other choice. Even online income will take a while to get moving, probably longer than the guy has savings to cover.

    I do think that if you really need disability, you should have it.

  • Mike May 10, 2013, 6:26 am

    I agree-Disability should have limits as to who can get on the program. However, I agree with Financial Samurai. If I had to choose between starving or having something that might keep me off the streets for a little bit and provides for some food, then so be it. It really just depends on the situation.

    • retirebyforty May 10, 2013, 8:50 am

      I’ll try to clarify the question more. I think getting on disability is a good choice. What about afterward?

  • Moon May 10, 2013, 6:27 am

    As a matter of fact, my husband is a C4-C5 quadraplegia. We did not get any disability benefits from social security. We educated ourselves, both earned our master’s degrees and we both work and make very decent salary. Every month we have to shell out over $2000 just to pay for his assistant to help him at work (both adminstrative and personal/medical needs), sometime I feel that we are being ‘punished’ for trying to be self-sufficent – we don’t get to claim disability homestead exemption on our house before my husband is participating in “gainful activity” (aka, a job), but we still believe the disability should be for those who really need it and we don’t feel like taking it.

    • retirebyforty May 10, 2013, 8:55 am

      Thank you for sharing your story. I think it’s great that you are self sufficient without having to rely on the government. $2000/month just for an assistant is very expensive.
      What kind of job does your husband do? An office job? That was one of the point of the report. It’s much harder for uneducated people to get jobs that they can do with disabilities.

      • Moon May 10, 2013, 9:52 am

        My husband is an aerospace engineer. He went to school and got himself educated so he can make a decent living to support himself. His medical condition requires a lot more assistance (he uses a power wheelchair and cannot move his fingers, so he needs to be dressed and fed, etc) than a lot of the people who claim they are disable. If he can achieve all we have with such severe disability, I have a hard time to have sympathy for those who get on disability because they don’t qualify for a good paying job due to lack of education.

        • retirebyforty May 11, 2013, 4:04 pm

          I have a hard time finding sympathy too. It’s hard, but if your husband can do it, why can’t other people?

  • Judy May 10, 2013, 7:03 am

    I agree with Moon and I applaud your perserverance to continue to be in the workforce. I have been a nurse for 26 years, and I see many young/old people on disability that could be a productive person in society today but choose to be on government assistance. I am not saying that everyone on disabiltiy does not deserve it but Moon is a perferct example of not settling for government assistance. I have back pain myself but I would not dream of going on disability unless I absolutely could not work. Let’s keep disabiltiy for the truely deserving. It is obvious that the government does not monitor this well.

    • retirebyforty May 10, 2013, 8:57 am

      The number of people on disability increased so much over the last 8 years. Hopefully, it will go down once the economy recovers. There really should be a different program to help people find job rather than hiding in the disability program. I guess that’s welfare. I need to do a bit more research there.

  • Kurt @ Money Counselor May 10, 2013, 7:16 am

    My brother lives in rural Arkansas. He says the ambition of most locals there is to ‘get on disability.’ One guy who’s succeeded (I don’t know on what basis) does manual labor like fencing and carpentry around my brother’s hobby farm.

    These sorts of anecdotes are no substitute for a legitimate study of disability program abuse, but they do give one pause. I suspect abuse is rampant, as it likely is with most multi-billion dollar taxpayer funded programs. On the other hand, legitimate needs for these programs’ benefits exist. The challenge is properly policing them to limit abuse.

    • retirebyforty May 10, 2013, 8:59 am

      Thanks for sharing. We really do need better policing because there are so many people on the program.

  • Stephanie May 10, 2013, 8:02 am

    Oh man, disability – I’m a card carrying liberal BUT the disability system really upsets me. I have a master’s degree in counseling and when I was working in the mental health arena you really saw all of the abuses of disability – in fact states actively get folks off of the welfare rolls by getting them assistance with obtaining disability – even better if they can ALSO get it for a kid who has asthma. And now I work in a drs office (spine) and you see patients working the system now too- they have no intention of going back to work. It’s very irritating to see so many gaming the system. I have to wonder what percentage on disability really are disabled because in my experiences I have found very few people who were not capable of doing some sort of work to support themselves.

    • retirebyforty May 10, 2013, 9:00 am

      Oh wow, that’s crazy. Thanks for sharing your experience. I wonder if people who are gaming the system are working under the table or something. $13,000 isn’t much.

    • Chris May 11, 2013, 9:15 pm

      Wow, that sounds crazy Stephanie!
      I know I’ve suffered asthma in the past (several asthma attacks during my youth waking up in the back of an ambulance because I was busy having an asthma attack).
      I can’t imagine NOT controlling my breathing as I do now (literally no though anymore to do that), much less go out on disability for it. And yes, it has acted up occasionally in the past couple decades due to instigation from cats and/or freshly cut grass.

  • Darlene at BlogBoldly May 10, 2013, 8:10 am

    Hi Joe!

    “a heart attack (recovered), and couldn’t find a well paying job? Would you consider going on the disability program to retire early?”

    A year ago my answer would have been “No” .. but now I’m not so sure.

    And the reason is not a good one because it’s a case of “two wrongs.”

    In the last year, I have seen SO MUCH tax-payer handout fraud that if I were eligible, I might actually take it.. Not necessarily a noble choice but I’d be tempted.

    FYI, I refuse to say “government handouts” because the gov doesn’t have squat. It’s “tax-payer” handouts because “We the People” are the ones footing the bill.

    I’m sorry but this burns me up.. I have zero respect for sheer laziness of the people gaming the system. (Not talking about pp who genuinely need tax-payer assistance.)

    ~ darlene

    • retirebyforty May 10, 2013, 9:01 am

      Sorry! It is very frustrating to see other people taking advantage of the system that we are paying for.

  • Well Heeled Blog May 10, 2013, 8:48 am

    My political science professor said in college: you can set up a system so that everyone who deserves help will get it (and in this way many people who are taking advantage of the system will slip in as well), or you can set up a system so that no one who doesn’t need help gets it (but this way means that many people who deserves help will be shut out). We need to think about, as a society, which side we’d rather be on.

    • nicoleandmaggie May 11, 2013, 8:20 am

      YES, there’s type I and type II error.

      In reality it is very difficult to get on disability in the US and a lot of deserving people get shut out from the program. Some persistent fraudsters also get through.

      Disability also comes with health insurance coverage, which is something that makes it more attractive given that it is difficult to get health insurance in the private market if you have disabilities. It will be interesting to see if the ACA causes decreases in the DI program.

  • The College Investor May 10, 2013, 9:02 am

    There’s always a limit to everything, but it is still case to case basis. It will really depends on several factors, but i think it would still be better if we reserve the program to those who really need it.

  • Dona Collins May 10, 2013, 10:07 am

    I’d like to clarify that you’re talking about “permanent” disability here. My dad, for example, is out of work on disability, but it’s temporary and his state form even shows the maximum number of weeks he can collect. I’m proud to say he’s not milking the system, either. He’s going back to work earlier than projected.

    I know that there are some people who genuinely need to be on disability, but I wonder – I think like you – what holds others back from retraining for different careers. If your back hurts from physical labor but you can sit at a computer screen, it makes sense to go to an adult ed class or do something to earn the qualifications for another career. It’s done all the time. If you have the ability to work, why not actually work?

    • retirebyforty May 11, 2013, 4:06 pm

      That’s great. Hope you dad is feeling better. People should try to get more education to get the jobs that they can do with their disabilities, right?

  • jim May 10, 2013, 11:46 am

    The NPR story was pretty one sided and I honestly don’t think it did a good job reporting on the facts. Most of the increase in the number of people on disability is due to demographic changes. More older people, more women in the workforce and more children with lower incomes. All of that increases the # of people who qualify for disability.

    Here’s a response to the NPR piece from former Comissioners of Social Security :

    I’m sure there is fraud and abuse of the system and of course I’d like that to stop. However I don’t see anything quantifying the amount of fraud and abuse. There are 14 million people on disability of some form. If the fraud rate is 0.01% then thats 1400 people. 1400 is a lot of people so you can go find examples. But 0.01% is not high at all, in fact its remarkably low. Of course that is just an example. I don’t know what the actual fraud rate is. I can’t find any useful or reliable information on that. The NPR piece and its anecdotal examples seems to try and paint a picture of a system rampant with abuse but I don’t see any real evidence of that.

    I don’t personally know anyone who I’d consider to be abusing a disability program. But I wouldn’t use that anecdotal evidence and delcare that disability programs are abuse free.

    • retirebyforty May 11, 2013, 4:08 pm

      I saw some backlash when I was researching too. It would be nice if we can find the budget to do random audits or something like that. It probably cost more to audit than just paying a few shaky claims anyway.

  • krantcents May 10, 2013, 1:25 pm

    My brother in law did that! He had a double hip replacement and it did not go well. One hip kept going out and finally his doctor put him on permanent disability. Funny, he was a VP of Marketing which is hardly physical.

    • retirebyforty May 11, 2013, 4:09 pm

      Thanks for sharing. I be he doesn’t like being on disability.

      • paula September 2, 2013, 11:40 am

        I don’t like gaming the system either; I was born with spina bifida and have never considered trying to get it even though the health insurance situation makes it very difficult. (Want to see how fast insurance companies can work if they want to? Apply for health insurance with a 47 year old spina bifida diagnosis. They can turn down that ap within 5 days.)
        However, there is a lot of misunderstanding about different types of disability and I see a potential one here with the former marketing VP. As someone with hip and spinal issues, the most painful thing that anyone could have me do is sit in a chair all day. That can REALLY hurt when you have a bad back. Also, when you have anything that causes chronic pain, and you don’t have much seniority at your office job that would provide work-at-home options, you can wind up on the downside of your sick days. Even if you are only in pain 10 percent of the time, that equals about 26 days out of the work year that you can’t work. Anyone here lucky enough to have a job with 26 sick days a year? how long would you be able to keep that job if you did take that many, even unpaid? And how long would you be willing to skip your pain meds so that you can function at work?

  • Anne May 10, 2013, 7:33 pm

    That NPR story was actually very misleading–one of the key factors is that disability enrollment has risen for people with disabling conditions that did not have the job skills to do a job other than one that required physical (or cognitive) skills they could no longer perform–so you would not qualify as disabled since you are able to perform many jobs in your area–even if you could no longer work as a programmer anymore. Additionally, enrollment rose in economically depressed regions without diverse employment opportunities.

    • retirebyforty May 11, 2013, 4:13 pm

      Thanks for your input. I saw some responses to the piece when I was doing research. I still don’t think disability should depend on your job. It seems kind of silly. I’d rather have a retraining or education program so they’ll learn more skills. Getting on disability and not contributing to society seems like lose lose situation.

  • I agree with the moral barrier to taking this route. No doubt doctors can be fooled or coerced into provided adequate paperwork, but…

  • Deb May 12, 2013, 7:19 am

    I have relatives milking the system now. It is very hard to get disability. People are usually turned down multiple times and have to appeal to a higher authority at Social Security, then to a judge, then to a court. While this 1-2 year process is going on, you either have to be working under the table or have someone in the family who works enough to get by because if you work, you are not disabled.

    The legion of SSDI lawyers that advertise on daytime TV are lined up to take the case and help the uninitiated jump through the proper hoops to the tune of 25%(max $6000) of the back-pay settlement. That’s the big check the disabled person gets when his case is decided in his favor. It covers the pay for all the months since the disability began that he has been waiting for the decision. So for the attorney, the longer the wait, the better.

    The disabled person also can get checks for his spouse and for his children that are at home. Disability counts as earned income to the IRS, so it qualifies the family for the
    Earned Income Tax Credit. Therefore, the take-home may be more than $13000, depending on the former income of the recipient. Medicare is available to only the recipient after two years, but they may qualify for Medicaid until that time.

    The number of people on disability in the region where my relatives live is so high, that almost everyone in town is either getting benefits or is in the family of someone who is. It is not a shameful thing for them to fudge the symptoms a little. They advise each other how to do it. There are many very uneducated people there and that is a huge factor. If you can hardly read, you can’t do a desk job.

    SSDI has programs to retrain people and will encourage recipients to try to work while still getting payments, but most of them are leery of the program because they would have to get a job at or near minimum wage that probably doesn’t have healthcare coverage. Net loss. I didn’t say they weren’t educated enough to do math!

    • retirebyforty May 13, 2013, 9:50 am

      Thanks for sharing. I just don’t understand why people would limit themselves like that. If they get an education, they can get a better job and make a lot more money. I guess if you can get some under the table works, it would work out better financially.

      • Deb May 13, 2013, 10:40 am

        It amazed me when I visited their town for the first time. The standard of living was just so low. I’m not a snob by any means, but these folks were totally accepting of their living conditions with no aspirations of anything better. The social norm was to be proud of scraping by. To them, the disability payments are enough, but I can’t help but wonder about the example being set for their children

  • Little House May 13, 2013, 7:02 am

    I listened to a little bit of the NPR report. Life long or long term Disability should be truly for the disabled. Perhaps if there were time limits on disability so those that are capable of improving health-wise could get a different kind of job and phase out disability. It’s just sad to think that once people go on disability, they rarely ever get off it – $13K a year isn’t much to live off of.

  • D May 15, 2013, 10:43 pm

    I read your blog often, but I am a bit apauled by this one, and the comments that follow. I think it is a misconception of many people that disability fraud is rampent. You have not really presented much data or fact as noted by another commenter and the whole conversation seems very one sided. My family has been greatly affected by a work injury leaving my father on perminent disability. He is lucky to have a good lawyer to guide him through the hoopes of the insurance companies. She sees most familys go bankrupt waiting for insurance coverage that they have been awarded and entitled to.

    It is easy for you to question why peole can’t just learn a new skill and get a new job because you are capable of theat , but not everyone can realistically do that. Not until you are personally affected does it become easier to see the other side of the coin.

    • retirebyforty May 16, 2013, 9:21 am

      Thanks for your input. There were a lot of backlash on that NPR story. It was a bit one sided.
      May I ask what is your father’s injury? I think disability should go to deserving folks and I’m sorry that the process is so drawn out.

      • D May 16, 2013, 11:04 pm

        He has a spinal injury that has progressed as the years go on, so for him going back to work was not an option. In fact, he pushed for too long at work because of the stigma of “disability”. I think a lot more people have pride in actually working and taking care of their family than the media would lead people to believe.

        The real problem here is the insurance companies. Just like on TV, they recorded my dad and in court he would have to explain why the cut of their video made it appear that he could do things (by spending one day with him, one could determine he clearly could not walk and get around, but they don’t do that). The whole process could be cheaper and leaner without them and people could get the care they need. I appreciate your reply, and will happily keep reading. 🙂

        • retirebyforty May 17, 2013, 9:54 am

          That’s hard. It sounds like an open and shut case to me.
          That’s why I’m a little mad. Your dad should have an easier time getting disability.
          People that are taking advantage of the system is making it more difficult for legitimate cases like your dad.
          Hopefully, they are just a small minority.

  • mayanqueen May 19, 2013, 7:09 pm

    Yes, if I had to take disability I would take it. I am a taxpayer and if for some reason I couldn’t perform the job that I do now I will have no other alternative. I was born healthy but developed closed angle glaucoma. The glaucoma has been under control and there is no damage to the cornea at all but… What if I have a glaucoma attack and go blind. If I don’t get to the hospital on time to save my eyes, I wouldn’t be able to drive and perform my regular duties. We can not generalize that all people on disability are cheating the system. There are cheaters in all categories and even in all types of jobs. There are even the cheaters that go to the movies and pay for one and end up watching 3 or more movies! There are also husband cheaters, does that mean they are all cheaters? NO. It just has to do with moral values and how much wrong are we willing to get away with. If you need disability due to pain, take it. But only you know how much it hurts and if you do qualify for it.

    • retirebyforty May 20, 2013, 2:54 pm

      Sorry to hear about your glaucoma. Hopefully you have it under control. My mom has it too and it is scary.
      I’m sure there are only a small amount of cheaters, but they are taking up spots that could be used by people with real needs. It’s hard.

      • mayanqueen May 22, 2013, 10:58 pm

        I believe it is fine, I see fine…I only use 1.50 reading glasses. I had the drilling with laser in the iris done twice in one eye and once in the other, unfortunately…the procedure did not work. This can only be done twice in each eye. Son I only have one drilling left in my lifetime in one eye. I truly don’t feel anything wrong and never had a glaucoma attack. I don’t use drops either. People just worry for me when I tell them what I have. I heard that the side effects of the drops are terrible. What does your mother take/use for her glaucoma? Nobody has it in my family so if any of my ancestors had it was never discovered. I have confidence that I will never get an attack. I do follow a few precautions such as wearing dark glasses during sunny days and I avoid 3D movies. Besides the drilling, there is only one procedure left which is the implant of some sort of tubes to help with the drainage of the eye. I am scared to do that but if an attack occurs I will have no choice. Time is crucial, if anybody out there has closed angle glaucoma attack it is best to get to the hospital in a helicopter! The damage during an attack is blindness. The Doheny Eye Center in Los Angeles is a great place for eye procedures. Dr. Choppra is the best!

        • retirebyforty May 23, 2013, 9:02 am

          My mom use eye drops. I don’t think she has much side effect from it.
          She is using Cosopt right now. I hope you can keep it in check. Our eyes are so important to us.
          I’ll run into these problems soon too because of family history. 🙁

  • Jason May 20, 2013, 2:59 pm

    In San Francisco, social programs abound so there are a LOT of people on disability and other such assistance programs and there is definite abuse. I personally know 3 people that have admitted to milking the system by feigning/exaggerating their disability (usually hard-to-prove things like anxiety and depression) in order to basically get an early retirement. And by “early” I mean EARLY, as in early-30s. I’m sure the across-the-board percentage of actual fraud is very high.

    • retirebyforty May 21, 2013, 3:35 pm

      Anxiety and depression can improve with the right medication, right? Maybe we need more temporary disability programs that will get people back on their feet. I’m curious about the rate of fraud too.

  • Diane C May 23, 2013, 9:28 pm

    “Personally, I think the disability program should be reserved for people who really can’t work.”
    I agree 100%, Joe!
    Now, let’s talk about applying the same sentiments to Social Security/Medicare/Other Support Programs for “low-income” people who may or may not actually meet the requirements.

  • og July 1, 2013, 1:13 pm

    I know two 40-something friends on disability in CA. From my understanding however it is hard to get disability, especially for long-term, and they have to submit doctor notes and other info to continue receiving benefits. I was on temporary disability once and they called my employer to verify and I had to provide detailed information from my doctor as well.

  • Kat July 12, 2013, 5:19 am

    I think if we raised the minimum wage so that workers could make a decent living at low skill jobs, people would be more inclined to work. Right now it just doesn’t.

  • Todd April 23, 2014, 8:28 pm

    I am on ssdi for MS. The money for ssdi is money you pay into the system based on your work history NOT a hand out. It is VERY difficult to even get approved for ssdi. I would trade my MS to go back to work any day. I don’t look sick, I look healthy and in good shape even but cannot do the work I did for the past 29 years. Most days I have limited if any time I feel good but the days I do feel good I do fun stuff and whatever I feel like doing . I get a good pension ,ssdi, investments and own a home in a upper middle class neighborhood. Between the MS and drug effects it would be impossible though to be retrained. So before you jump to conclusions about people on ssdi walk a day in their shoes. I think a lot of people on this post are misinformed on how the system works. SSDI has a extremely tough screening to determine if you are disabled . If you are young and can be retrained, you haven’t payed into the system through work and you don’t have a real disability then you will not get approved simple as that.

  • Linda April 27, 2014, 5:57 am

    If it looks too easy to get on disability, then it confirms that you have never had a disability. There may be people who abuse the system. But for people who really need it the process is very difficult.

    Eight five perccent of all claims are denied on the first application. For some individuals, it takes years to obtain while trying to sustain themselves during the wait.

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