When most working adults think about financial threats, they focus on events such as job loss, market downturns, or unexpected expenses. One of the biggest threats to a working person’s long-term financial security, that often gets overlooked, is a disability that prevents them from working to their full capacity for any prolonged period of time.
Why Disability Is a Major Threat?
We tend to associate disability with rare accidents or old age, but the truth is far more sobering. According to the Social Security Administration, more than 1 in 4 of today’s 20-year-olds will become disabled before reaching retirement age. These disabilities often stem not from sudden trauma, but from chronic illnesses like back injuries, cancer, heart disease, or mental health conditions.
If you rely on your occupational income, and most of us do, a long-term disability can devastate your financial life. In addition to lost wages, it can also:
- Drain savings meant for retirement or emergencies
- Result in losing employer-provided benefits, like health insurance or retirement contributions
- Increase medical expenses related to treatment, rehab, or assistive devices
- Strain family members who may need to become caregivers or cover financial gaps
A Risk That’s Often Ignored
Despite the odds, many people don’t prepare for the possibility of being unable to work. Part of the problem is psychological, as we don’t want to imagine ourselves becoming sick or injured. But it’s also practical: few employers offer long-term disability coverage, and government disability benefits (like Social Security Disability Insurance or SSDI) can be difficult to qualify for and slow to arrive. Lastly, the few that recognize the need for insurance are sometimes priced out of the private disability insurance market.
What Can You Do?
There are several proactive steps working individuals can take to guard against the risk of disability:
- Understand your benefits: Know what your coverage options are through your employer. Some provide short- and long-term disability insurance, but coverage amounts and terms can vary widely.
- Consider private disability insurance: This is especially useful if you’re self-employed or your employer doesn’t offer coverage. The benefit of private coverage is that it “goes with you” if/when you change jobs.
- Build an emergency fund: While this won’t replace income long-term, it can help bridge short-term gaps and reduce stress during a crisis.
- Take care of your health: It may sound obvious, but preventive care, mental health support, and lifestyle changes can reduce your risk of many disabling conditions.
- Have a plan: Talk with your family about what would happen if you were unable to work. It may not be pleasant, but it’s necessary.
Disability is not just something that happens to “other people.” It’s a real and significant risk for all of us and is perhaps one of the biggest financial threats a working person can face. Ignoring the statistics will not make them any less favorable, but having a plan can provide clarity and security when you need it the most.
If you rely on your income, protect it like your future depends on it — because it does.