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Financial Planning for Possible Future Disability

Published: 2012-04-08 - Updated: 2021-09-24
Author: Allsup | Contact: Allsup.com
Peer-Reviewed Publication: N/A
Additional References: Disability Information Publications

Synopsis: Financial planning if you are unable to return to work due to a serious disability or illness is essential. A 20-year-old worker has about a three in 10 chance of suffering a disability before reaching retirement age, according to the Social Security Administration (SSA). As it can take more than two years to be approved for benefits, and most people are denied at the initial application level, workers should apply for SSDI as soon as possible.

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Most financial experts advise to have at least six months of income in a rainy-day fund in case of an emergency or job loss. But even that isn't enough for someone unable to return to work due to a serious disability or illness, according to Allsup, a nationwide provider of Social Security disability representation and Medicare plan selection services.

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A 20-year-old worker has about a three in 10 chance of suffering a disability before reaching retirement age, according to the Social Security Administration (SSA). More than 8.57 million people rely on Social Security Disability Insurance (SSDI) benefits because they are unable to work. However, the average monthly benefit was just $1,072, and the average time to be approved benefits for those appealing to the Appeals Council was more than two years in 2011.

"Many people underestimate the financial severity of a disability," said Paul Gada, personal financial planning director for the Allsup Disability Life Planning Center. "With little savings of their own, they have to rely on others for support."

The Allsup Disability Finance poll for 2012 found that friends and family continued to be the leading resource for support while awaiting SSDI benefits. An Allsup Disability poll in 2010 was conducted on the same topic. However, 2012 poll results indicate that friends and family, along with credit options and charitable assistance, may be tapped out - forcing more people to sell personal items or raid their retirement savings.

Resources Tapped while Awaiting SSDI Benefits (June 2010 / April 2012)

Planning and Preparing for Disability

It's important for people to plan financially for a disability while they are still working, Gada said. This should include:

"If you are diagnosed with a chronic condition that will likely require you to stop working, you need to start planning for that day as soon as possible," Gada said. "You want to live life to the fullest, but you need to balance that with your future need for income."

Triaging Personal Finances when Disability Occurs

According to Gada, first steps people with serious health conditions or their caregivers should take include:

According to the Allsup Disability Finance poll, the most common assistance people used or considered while awaiting SSDI includes:

Pursue income sources, including SSDI and long-term disability.

Don't let healthcare coverage lapse.

"Unfortunately, people with disabilities don't have many good options for affordable healthcare coverage while waiting for Medicare eligibility," Gada said. "However, to the extent possible, keeping healthcare coverage should be a priority so they can continue to get the medical care they need."

About the Allsup Disability Finance Poll

The Allsup Disability Finance poll was conducted online on the Allsup website. Responses came from 178 individuals. The survey was completed in March 2012.

The information provided is not intended as a substitute for legal or other professional services. Legal or other expert assistance should be sought before making any decision that may affect your situation.

Reference Source(s):

Financial Planning for Possible Future Disability | Allsup (Allsup.com). Disabled World makes no warranties or representations in connection therewith. Content may have been edited for style, clarity or length.

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Cite This Page (APA): Allsup. (2012, April 8). Financial Planning for Possible Future Disability. Disabled World. Retrieved December 7, 2022 from www.disabled-world.com/disability/finances.php

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