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Don’t Let Disability Derail Your Retirement

Filed under: Retirement, Insurance

Imagine the following scenario. You’re closing in on retirement. It’s less than 10 years away. As you get older, though, you start to experience more health issues. Maybe that nagging back pain you’ve had for years becomes more serious and limits your mobility. Perhaps your chronic high blood pressure develops into heart issues, and as a result, you have to cut down on stress and work. Maybe you’re involved in an accident that prevents you from working.

Think it can’t happen to you? Think again. According to the Council for Disability Awareness, 1 in 4 adults will suffer a disability at some point in life. The group reports that the average disability claim lasts nearly 32 months.1

As you might expect, a break in your career that lasts months or years can have a significant impact on your retirement planning. If you can’t work because of a disability, you may be forced to stop saving for retirement. You might even have to take early distributions from your retirement accounts to fund your expenses.

Fortunately, there are steps you can take to prevent disability from undermining your retirement plans. Below are three steps you may want to consider. If you haven’t planned for disability risk, now may be the time to do so.

Identify areas to cut back.

A budget is always a helpful tool, but it’s especially valuable during an emergency. You can analyze your budget to find areas of spending that you could cut. For example, you might scale back on travel, shopping and other discretionary expenses. Or you might opt for a less expensive car or even a smaller home. A budget can help you make informed spending decisions.

The key is to create your budget and identify these areas in advance. That doesn’t mean you should implement the spending cuts today. However, you should create a plan so you’ll know exactly which costs you could cut as soon as you suffer a disability.


Build a healthy emergency reserve.

Again, it’s always important to have an emergency fund. And that need becomes even more critical as you approach retirement. You may want to create a sizable, liquid account that could fund months or even years of expenses.

A large emergency reserve could help you protect your retirement accounts. For example, if you suffer a disability and have to retire a year early, you could rely on your emergency fund to pay the bills. That allows your retirement assets to continue to grow.


Protect yourself with disability insurance.

Finally, disability insurance may be the best way to protect yourself from disability risk. A disability insurance policy pays you a monthly benefit to replace lost income if you aren’t physically able to work.

There are two types of disability insurance policies: short-term policies, which pay benefits for several months, and long-term policies, which could pay benefits potentially all the way up to age 65. Disability insurance policies have a wide range of adjustable features, so you can create a policy that meets your needs and fits into your budget.

Ready to develop your disability protection plan? Let’s talk about it. Contact us today at Ambrose Financial & Insurance Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.


Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.

16604 – 2017/4/25