 In wealth management we encourage people to make plans for their financial future. We help them to establish financial goals, to quantify them and to set realistic time lines. For example, if your goal is retirement, or financial independence, you may dream about traveling the world, spending time on an interesting hobby, or playing golf every day (this is the fun part!). You make an assessment of your available resources, including assets and direct income and plan accordingly. You find yourself really looking forward to what lies ahead. As long as you continue to work, you are able to save, invest and accumulate for a comfortable and secure retirement and the future looks bright and hopeful.
Not unexpectedly, when you think about retirement you naturally visualize yourself as being in good health – but what if you’re not? What about people who, on reaching retirement age, are in poor health? Will they need more money, the same, or less money than people who are in good health?
Ironically, people in poor health will need more money than those who retire in good health.
The problem is that when people are disabled, they can no longer contribute to their retirement plans and 401(k), so they will have less money upon reaching retirement.
Think of friends and family who live with life-changing health issues: Someone close suffering from ALS for more than 10 years; a friend with Multiple Sclerosis (MS) since age 28 and whose wife has recently been diagnosed with cervical cancer; another friend whose son is a quadriplegic as a result of a motorcycle accident…You can probably think of similar examples in your circle of acquaintances.
What they all share besides their disabilities is a need for additional money to live. In many cases, they still have families to support, and they may live a long time – even into retirement. It’s a harsh reality but these are not isolated cases. In fact, 40% of people suffer long-term disability lasting at least 3 months before reaching retirement. The average duration of their disability will be more than 5 years and 30% of these people will never work again.
Because of advances in medical science, there has been a dramatic decrease in premature death and a corresponding increase in disability statistics. For example, the death rate from hypertension is down 73%; whereas the disability rate is up 70%.
Poor health can be devastating to you and your family’s future plans, but it doesn’t have to ruin your financial future. Start by asking yourself these questions:
If your income suddenly stopped, would you deplete your current savings and investments in less than 5 years?
Yes or No
If you have disability income insurance, either through work or on your own – will it cover 90% of your current income?
Yes or No
If you are disabled, will you be able to continue to save for retirement and other life goals?
Yes or No
If you are sick or injured, will you still be able to achieve your financial goals?
Yes or No
If you answered “No” to any of these questions – talk to a financial advisor about ways to protect your income and your assets. You owe it to yourself and your family.
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