The Critical Role of Disability Income Planning for W2 Workers and Business Owners
Tony Sablan, MBA
Your Partner in Building, Enhancing, and Safeguarding Wealth | Podcast host | Author
As a wealth advisor, I've seen firsthand the transformative impact that comprehensive financial planning can have on individuals and families. One often overlooked, yet critical aspect of financial planning is disability income planning. Whether you're a W2 worker or a business owner, the risk of disability is significant, and the consequences can be financially devastating without proper planning.
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Why Disability Income Planning Matters
No estate or financial plan is complete without a thorough evaluation of the risks associated with disability. Planning for the possibility of a disabling illness or injury is as crucial considering the likelihood of encountering a disability during one’s working years. Before a disability strikes, most people are able to save money because their income exceeds their expenses. However, a sudden disability can drastically change this balance. Income often plummets while expenses surge, quickly depleting savings and creating substantial debt.
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For W2 Workers
W2 workers generally rely on a steady paycheck to meet their financial obligations. In the event of a disability, Social Security may provide some relief, but it’s often insufficient to bridge the gap between falling income and rising expenses. This shortfall can be even more pronounced for those without children, as Social Security benefits for disabled workers with dependents are typically higher. Additionally, the payments from Social Security Disability Insurance (SSDI) only kick in after six months of continuous and total disability, often leaving a significant period with little to no income.
Without a robust disability income plan, many families might find themselves selling personal possessions, cars, or even their homes in a desperate attempt to manage their finances. This strategy is rarely sufficient to cover the extensive costs associated with long-term disability.
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For Business Owners
For business owners, the stakes are even higher. Not only do they need to consider their personal financial needs, but they must also plan for the continuity of their business. A disability can be a common reason for an owner to leave their business, yet this risk is often ignored when setting up buy-sell agreements. Just as life insurance is essential for protecting a family in the event of death, disability income insurance is vital for safeguarding both the individual and their business in the event of a disability.
Planning for disability is crucial when advising clients on business succession and buy-sell matters. Without a solid disability plan, the future of the business and the financial security of the owner’s family can be at significant risk.
The cornerstone of any effective disability plan is disability insurance. This type of insurance acts as a safety net, protecting the insured and their family from the financial fallout of a disability. Comprehensive major medical expense plans can also help manage the high costs associated with many disabilities. Additionally, a waiver of premium rider on life insurance policies can ensure that premiums continue to be paid even during periods of disability, providing further financial relief.
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Why Doctors and Dentists Prioritize Disability Planning
It’s no surprise that doctors and dentists often prioritize disability income planning as their first line of defense in financial planning. These professionals understand that their ability to earn an income is their most valuable asset. Protecting it with disability insurance is a smart, proactive step in safeguarding their financial future.
Whether you’re a W2 worker relying on a steady paycheck or a business owner with broader responsibilities, having a disability income plan in place ensures that you and your family are protected against the unexpected. Don’t wait until it’s too late— Consider integrating disability income planning into your financial strategy today.
Take Action Now
Understanding disability income planning can be complex, but you don't have to navigate it alone. Reach out to me for personalized advice and to ensure that your financial future is secure. Let's work together to protect what matters most. Contact me today with any questions or to schedule a consultation.
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Tony Sablan, MBA |?Wealth?Advisor*?
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New York Life Insurance Company and its employees do not provide tax or legal advice. Please consult with your tax and legal advisors regarding your personal circumstances.
*Financial Adviser offering investment advisory services through Eagle Strategies LLC, a Registered Investment Adviser and a?Registered Representative offering securities through NYLIFE Securities LLC (member FINRA/SIPC), A Licensed Insurance Agency. Financial Professional, New York Life Insurance Company. Eagle Strategies and NYLIFE Securities are New York Life Companies. Ultimate Wealth Strategies, LLC is independently owned and operated from NYLIFE Securities and Eagle Strategies or any of their affiliates. CA Insurance License # 0I29141?
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