Why Working Into Old Age May Not Salvage Your Retirement

Working longer isn’t always the right solution to increasing your savings. However, the fact that staying at work has its benefits can’t be denied. One of its perks is that pre-retirees can boost their income from retirement by choosing to remain in the workforce for a little more time. You get an increase of 8% in your benefit check for every year you delay Social Security until you reach age 70.

Not everybody can continue to do this as those who leave their careers due to medical conditions turn to their retirement security

“Many people are not aware that Social Security gives out disability insurance, but the process of getting those payments is a long one,” says Niv Persaud, a Certified Financial Planner at Transition Planning & Guidance.

According to research carried out by the Centers for Disease Control and Prevention, 3 out of 4 Americans of ages 65 and above suffer from multiple chronic illnesses, which include arthritis and diabetes. These conditions pose a threat to people’s finances when they are driven to reduce their working hours or quit their jobs.

Mathematica’s Center for Studying Disability Policy recently carried out research and established that two years after developing their conditions, newly disabled employees usually in their 50s and 60s experience a decline in their earnings by 50%.

Although the affected workers have Federal Disability and Retirement Benefits, which help make up for their lost earnings, it doesn’t compare with what the workers were previously making.

Coverage For People With Disability

Social Security provides disability insurance that financially supports workers who are not physically or mentally strong. You need to have worked for a minimum of ten years for you to qualify for this insurance but the workers that are younger qualify for the benefits with lesser time. One thing about this disability coverage is that it is very difficult to qualify for it.

The agency vets applicants by using a five-question process. It also determines whether the individual’s condition is so severe as to prevent them from doing any work. After qualifying for the coverage, you will wait until the sixth month before receiving your benefits.

Boosting Income

There is nobody that really expects to become disabled, but there are measures you can take before a health emergency knocks in order to ensure your income is protected. You can start by purchasing disability insurance. The coverage will replace 60% of your total earnings within the given time. The benefits run for 3 to 6 months in the case of short-term disability plans and up to 5 years for long-term plans. You can also set up an emergency fund.

Pay Keen Interest to the Details

First, you should make sure you read your plan’s fine print. People often have to wait between 30 to 90 days to receive benefits after filing a long-term disability claim. As you wait for the benefits, you will have to tap into your funds so as to meet your needs.

You should know the definition of ‘disability’ according to your policy. Some require you to be incapable of performing work related to any occupation for you to be considered disabled.

“Ensure your policy defines disability as the state of being incapable of performing your own occupation,” said Nelson

Working Retirement Old Age Employee

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