Disability is very difficult to plan for. It is almost as depressing as pre-planning your own funeral, so it's no wonder that most people just don't think about it. However, the time to plan for disability is now--before it happens to you. Some facts to consider:
First, you can't gradually transition from work to Social Security disability benefits. If you are working and earning more than $1,090 per month, there is no disability benefit from Social Security. You have to quit working to apply.
Second, the first 5 full calendar months of disability are not covered by Social Security. That means you need to be prepared for a minimum of 6 months of no income.
Third, short-term disabilities that are expected to last less than 12 consecutive months are not covered by Social Security.
Fourth, about two-thirds of all Social Security disability applications are denied. The appeal process will probably take between 12 and 24 months, during which time you are not receiving any benefits. Getting Social Security disability, in spite of what you may have heard or read, is a tough road.
So, how would an individual plan to survive during a disability? These things may seem obvious, but 90 percent of my clients did not do these things.
Finally, avoid costly and time wasting mistakes by getting good advice if you do need to file a disability claim. What you don't know can cost you a lot of time and money.
First, you can't gradually transition from work to Social Security disability benefits. If you are working and earning more than $1,090 per month, there is no disability benefit from Social Security. You have to quit working to apply.
Second, the first 5 full calendar months of disability are not covered by Social Security. That means you need to be prepared for a minimum of 6 months of no income.
Third, short-term disabilities that are expected to last less than 12 consecutive months are not covered by Social Security.
Fourth, about two-thirds of all Social Security disability applications are denied. The appeal process will probably take between 12 and 24 months, during which time you are not receiving any benefits. Getting Social Security disability, in spite of what you may have heard or read, is a tough road.
So, how would an individual plan to survive during a disability? These things may seem obvious, but 90 percent of my clients did not do these things.
- Try to get some form of private disability insurance that will cover you for at least 12 months. If your employer has a group disability plan, I recommend you enroll. It can be a financial life saver when you become disabled. If your employer has no plan, see if a private insurance company offers a short-term disability policy that you can afford. They are not as expensive as you may think. (CAUTION: Avoid the policies that cover accidents only because many disabilities don't involve accidents).
- Put aside some money in a safe place. Figure out what it will cost you to meet basic living expenses for at least 6 months and save this money in a risk free or very low risk place. If you can't set that money aside all at once, put aside a little gradually but faithfully and build your disability nest egg. Avoid the temptation to "borrow" out of this fund for non-emergencies.
- As you age, reduce unnecessary expenses. Pay off your car, think about a smaller house mortgage if necessary and avoid large credit card debts--things that would make life miserable if you suddenly became unable to work.
- Think about your options to keep medical insurance if you have to stop working. This can be one of the biggest challenges of all. Your emergency savings should include enough money to buy medical insurance in the event of a disability.
Finally, avoid costly and time wasting mistakes by getting good advice if you do need to file a disability claim. What you don't know can cost you a lot of time and money.
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