Are You Prepared?

Financial Security Plan in the event of a disability

Being aware of and planning for the potential financial impact that a long-term disability could have on your "financial lifestyle" is a responsible action for all people earning an income to take. By helping you to understand where your income will come from should you become disabled, the Financial Security Plan is an important tool.

Complete Income/Expense Review
The first step in developing a plan is determining your monthly income and expenses in the event of a disability.
Adjust Expenses
If your Income/Expense Review shows that in the event of a disability, your expenses would exceed your income, you should look for areas to save money. Where could you cut?
- Entertainment expenses
- Dining out
- Vacations
- Cable television
Find Additional Sources of Income
Your greatest asset is your ability to work and earn an income. Without that, alternative sources of income can help support you and your family's lifestyle and financial security. Review the list below which provides information on some potential sources of income should you become disabled. Or download the CDA Income Replacement Benefits Inventory.
- Employer Sick Pay
  Many employers have sick pay programs for their employees. But, eligibility and payments vary from employer to employer. It's important to understand what payments might be available to you if you become disabled and can't work. Check with your human resources manager for program details.
- Disability Benefits
  Disability insurance, whether provided through an employer or purchased individually, can offer invaluable benefits to workers and their families. If you are an employee and your employer offers disability insurance make sure you fully understand what benefits are available to you and how the disability program works. If you are self-employed, disability insurance can provide important protection. Disability insurance can be complex so you may want to consult your financial advisor or insurance agent for assistance.
- Social Security Disability Insurance (SSDI) and Workers' Compensation
  Social Security Disability Insurance and workers' compensation are the cornerstones of financial security for a large majority of disabled American workers.
  - Social Security
    If you become disabled, you may qualify for disability benefits through the Social Security Disability Insurance program (SSDI). SSDI generally pays benefits after six months to people who cannot work because they have a disabling medical condition. Your eligibility for and the amount of benefits you can receive are based on the number of years that you have contributed to the Social Security program and on your wages.
    
    For more information on Social Security benefits: http://www.ssa.gov/dibplan/dqualify.htm
  - Workers' Compensation
    If you have been injured while at work or suffered a work related illness, you can receive benefits through workers' compensation. This can pay for your medical care as well as for your rehabilitation to help you return to work.
    
    Workers' compensation generally pays a portion of salary after a short waiting period. Benefits vary significantly by state and are subject to maximum and minimum amounts.
    
    For more information on workers' compensation, go to: http://www.comp.state.nc.us/ncic/pages/all50.htm. This site links to all 50 states' workers' compensation board Web sites and provides addresses and phone numbers of state agencies.
- Personal Savings
  Some people have enough money in their savings to support themselves for a prolonged period of time without income. Disabilities, especially those lasting more than 90 days, could rapidly deplete lifelong savings and add to financial stress. This is important to consider given that the savings rate for Americans is the lowest it has been in 73 years according to Parade Magazine. In addition, the Social Security Administration estimates that 1/3 of Americans have no retirement savings and are not eligible for a pension.
- Last Resort Sources of Income
  Using credit cards for your expenses, seeking equity on your home through a second mortgage, withdrawing money from your retirement plan and asking family and friends for assistance.
Stay Healthy
Maintaining a healthy lifestyle may help to reduce your chances of becoming disabled. Developing a personal wellness program should be a part of every person’s Personal Financial Security Plan. It is something everyone has some control over and it can contribute to your well-being and financial security.
Take Action
The Income/Expense Review provides an estimate of what your net income would be during a period of disability.
Now develop your action plan:
- Make a checklist of those specific actions including top priorities and timelines.
- Include a wellness program, develop healthy eating habits and incorporate exercise into your daily lifestyle.
- Update your plan every year your personal and financial circumstances are continually changing.
It’s never too soon to build a personal financial plan to help you and your family better prepare for the unthinkable.

We hope you’ve found this planning tool useful in helping you better plan for your financial security in the event a disability should occur that prevents you from earning a living.

Visit the CDA website for more information: www.disabilitycanhappen.org