Three Hidden Yet Potent Costs of a Disability

By Peter Lewandowski

People work because they need to fund their lifestyles, save as much as they can, and try to prepare as best they can for retirement. And many are on the quest to find better, or higher-paying jobs. We know it because we are each individually involved in it. From just a gig job to something more significant like our life’s work, a career is a journey, and a major aspect of life. It’s important because we trade a large portion of our time for income, and in turn, that income is saved, invested, or spent.

It’s no secret that perhaps the biggest threat to your retirement is outliving your money. But when was the last time you considered the greatest threat to your working years is being alive, but not able to earn an income?

Think about it: we earn income to fund our lifestyle both now, and in the future. The future retired you needs money to live, and that money comes from now, from today, both saved and invested. So, really, it’s your future-self that I’m appealing to today.

Consider that being disabled during your working years brings with it some hidden things that can bring you down that are not just the obvious lost income.

Being disabled brings emotional baggage

If you’re like me, you like having the sense of dependability that comes with being in a relationship. I love knowing that I both provide monetarily, and physically for my partner. In our house, I’m the “KM,” the Kitchen Manager. We both cook, but I cook more, and spend most of my time in the kitchen when we’re doing the clean-the-house-on-Saturday routine. I walk our dogs in the morning and cook their food every few days. This last spring, I completely rototilled the backyard and put in sod.

But what if I couldn’t do any of those things? How would that make me feel? Pretty bad, I can tell you that. A disability is an interruption, sometimes a few weeks or months, and sometimes for years. There is an emotional impact to not being “your old self” and not being able to provide for those you love like you used to — leaving them to cover your side of the work and the finances.

Now consider the moment you’re in the hospital and faced with the possibility that you can’t work. If you have strong and complete income protection in place, that’s just one less thing to beat yourself up over and on significant relief for those covering for you.

Being disabled draws down on assets - and not just yours.

If you’re not working, then you’re not generating any kind of savings or retirement contributions. But it’s more than that. You’re most likely drawing down on your savings - or maybe even someone else’s. Remember that emotional baggage thing we discussed? Think about how you’d feel if someone else was the one paying for all your needs while you’re unable to work. Imagine how taxing that might be on them to be in that situation.

A disability that prevents you from working for even six months to one year can have a vast impact on your retirement plans. Now consider if that disability lasted 3 years or 5 years. Not only are you missing time to add to the future-you’s needs, but you’re also actively detracting from future-you to provide for the present-you.

Strong and complete income replacement can help keep things where they are, can provide for the now, so that the future-you isn’t in as much of a disadvantage.

Being disabled brings other consequences

Cancer patients were 265% more likely to go bankrupt than people without cancer, according to a 2013 study in Washington state. Not only that, but patients under 50 were more likely to experience bankruptcy¹. The younger you are when tragedy strikes, the larger the impact on your financial future.

This goes hand-in-hand with point number two above. During a period of disability, you’re not adding to your savings and retirement, you’re likely drawing down on them. The one-two punch of no income coupled with sky-high medical bills can spell a likely TKO. And it’s not just missing income for a couple years – it could be the complete collapse of your financial life.

Strong and complete income replacement can help keep your financial ship afloat.

So, do your future-self a favor. Get with a trusted insurance professional and have them review your disability insurance. Make sure you know what you have, how it works, and you know your options for getting strong and complete income replacement in place.

1. Ramsey, S. D., Blough, D. K., Kirchho , A. C., Fedorenko, C. R., Snell, K. S., Kreizenbeck, K. L., … Overstreet, K. A. (2013). Washington Cancer Patients Found To Be At Greater Risk For Bankruptcy Than People Without A Cancer Diagnosis. Health Affairs(Project Hope), 32(6), 1143–1152.