Reply to Graduate students and paying into Social Security (disability related question)

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[quote=Anonymous]And this:

https://ecologybits.com/index.php/2016/04/14/the-hidden-financial-costs-and-risks-of-graduate-and-postdoctoral-fellowships-and-grants-in-the-u-s/

[quote]While we’re on the topic of retirement, let’s consider another potential downside to fellowships (as opposed to earned income): you don’t pay social security taxes. While that’s a nice thing in the short term (you get to keep more money!), in the long term many years without earned income might mean you have to work longer into retirement age or take a lower social security payment in retirement. Is this a big deal? You can think about it like this: your social security benefits are based on your top 35 years of earnings. If you start out working when you’re 22, and have 5 years of fellowship income, that means you need to work until least 62 years of age to get fully social security benefits, which seems pretty reasonable. This assumes, though, that nothing happens in your life that causes additional years of low or no income. So while the fact that while you are on fellowship, you are losing years of social security contributions isn’t a huge deal, it is something to be aware of.

Something that is perhaps a bigger issue is the disability coverage that social security provides. This was completely off my radar until the husband of a friend was diagnosed with cancer a few years ago. He was the sole income-earner for the family of four, and he was suddenly unable to work for an indefinite period of time. If find yourself unable to work due to a disability that is going to last for at least a year, you can apply for social security disability payments. But you won’t be eligible for them if you haven’t “worked” enough recently – and fellowships don’t count. In particular, if you’re young and most of your adult income has been through fellowships or other jobs that don’t pay into social security (like many teaching jobs), you may not be eligible for disability payments at all. So if you’re on fellowships for extended periods of time, you might look into purchasing long-term disability insurance. (And while you’re at it, you might consider short-term disability insurance, too.)[/quote][/quote]

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