No one wants to lose their primary source of income due to an illness or accident that leaves them disabled. It is never part of someone’s ten-year or retirement plan, but a surprising number of people in the United States are living with at least one disability.
According to the Census Bureau, about 32 percent of people over the age of 18 have at least one limitation. The number increases dramatically with age. About 60 percent of individuals over the age of 65 have at least one limitation. What can be done to help secure the finances of an individual who suddenly finds themselves unable to work at previous levels?
Social Security Disability Insurance
Until they are faced with the need to supplement their income with government assistance, most people are not aware that there are two different disability programs. Social Security Disability Insurance (SSDI) and Social Security Income (SSI) were put into place to help those who are unable to financially support themselves.
SSDI is available to those who have been part of the workforce and have accumulated the work credits necessary. The taxes they paid throughout the course of their time in the workforce provided this federal insurance. SSDI requirements include the recipient being over the age of 18 and younger than 65 and have earned the appropriate number of credits. After being part of the program for two years they become eligible for Medicare.
Under the SSDI program, the children and spouse of the disabled person are eligible to receive auxiliary or dependent benefits. There is a waiting period of five months after a disability occurs before individuals are eligible for this benefit. The total amount of the SSDI payment will be based on past earnings similar to the retirement benefit from the Social Security Administration. As all Governmental regulations are subject to revision at any time seek professional guidance to ensure these are still applicable.
SSI was created to help low-income individuals who have not yet met the income requirements for the SSDI program. This program is entirely need-based and participants must have a low income and less than $2,000 in assets. Those eligible for SSI are also eligible for the Medicaid program offered by their state.
In addition to SSDI, the U.S. Department of Labor maintains an extensive resource list of agencies that are available to assist those who have a disability. The provide resources for benefits, civil rights, community life, education, and employment.
One of the most important things anyone of working age can do to secure their financial future is to create a safety net in the event of an emergency, unexpected illness, or injury. Private disability insurance is one option that is available through many employers but which can also be purchased independently. This will provide partial or full income replacement for a designated period of time if the insured is unable to work. These typically have a wait time before they kick in — similar to the SSDI coverage — so it is important to have funds on which to survive in the interim.
That is where an emergency savings account plays a key role. Experts recommend having three to six months of living expenses set aside. The exact amount of money an individual or family will need depends entirely on their unique living situation. It can be helpful to create a budget to accurately determine the exact monthly needs and then build a savings plan based on what is needed. Even those living on a very limited budget should make an effort to put some money into savings each month. It may take longer to reach your goal but the money adds up over time and can be a lifesaver during an emergency.
Financial responsibilities that were once easy to address can become unmanageable in the event of an illness or disability. Thankfully, there are numerous resources in place to help make it easier.