Does your Income have a Good Defense?

During the game to reach retirement goals there is a lot of focus on the offensive strategy or the accumulation of wealth. This focuses on increasing income and saving for retirement including: taking advantage of 401(k) plan and company matches, Traditional vs. Roth IRAs, asset allocations, etc. This gets a lot of airtime as it should. These are important pieces of retirement planning.

However it’s as important to protect what is funding those investments during the game—income.

Managing risk, often with insurance products, is a prudent defensive strategy. It’s an easy choice when it’s mandated or has obvious high financial impacts. States require auto insurance. Mortgage providers require homeowners insurance. Health insurance is another must-have coverage and a majority of the population understands the need for life insurance.

Despite this, one of the biggest risks while working is often overlooked. What could knock you out of the game?

Getting sick or injured and being unable to work (and earn an income)!

• The Risk—The chances of a disability keeping an employee out of work for of 90 days or longer before retirement is about 25%. (This calculator can help you determine your average risk: https://www.whatsmypdq.org/) The cause of being unable to work varies, but it should be noted that accidents are only about 10%. Most often a health issue such as back, joint, or muscle issues will be the cause. Even the fittest person with healthy habits may experience an illness.
• The Financial Impact—Calculate your future income potential between now and retirement. Depending on your age, this is an asset of several hundred thousand dollars or well into seven figures. The further from retirement, the bigger the number.
• The Solution—Income protection, also known as Disability Insurance. Think of this as insurance for your paycheck. An employer may provide or offer some coverage (Group Long-Term Disability), but those with higher incomes or if you plan to work at more than one employer, additional coverage should be considered (Individual Disability Insurance). Yes, most workers are covered by Social Security Disability Insurance (SSDI), but benefits are very modest, the requirements to qualify are strict, and even if you do, it can be years until receiving benefits.

Take the game into your own hands. Defense wins championships or in this case can prevent a catastrophic loss. Disability insurance provides protection to maintain your income stream to fund your everyday lifestyle expenses and keep your retirement plans on track.