​What’s your greatest financial asset? Your home? Your retirement savings? A business? It may be your ability to work and generate income. If you’re like many Americans, however, you may underestimate the risk associated with your ability to work.
 
According to the Council for Disability Awareness, 1 in 4 working adults over the age of 20 will suffer a disability that prevents them from working at some point in life.1 Think that figure is high? Consider the wide range of medical issues that often cause disability, such as cancer, heart disease and even joint pain.
 
Long-term disability can be financially catastrophic because it takes away your ability to earn income. That creates other financial challenges, like medical costs, debt issues and possibly even the depletion of your savings.

If you become disabled after you reach retirement age, you may be able to file for Social Security and simply choose to retire. But what happens if you become disabled in your 50s or even earlier? How do you replace your income?
 
Below are a few options for creating income after suffering a disability. As you will see, there’s no simple solution. The best strategy is to plan ahead and take steps to minimize any potential risk. A financial professional can help you develop a plan.

Social Security
 
Social Security is primarily a retirement income benefit, but it also provides benefits to those who are disabled. However, it can be difficult to qualify for benefits. Many people have to apply or appeal several times before their disability filing is approved.
 
Social Security bases the approval decision on several factors. One is your ability to work. If you earn income from a job, even a part-time one, your application may not be approved. Another factor is the severity of the disability. Social Security often reviews medical information and doctor input when making this decision. While Social Security could provide some income, it’s not a certainty that you would be approved.

Workers’ Compensation
 
If you suffered your disability on the job, you may be able to qualify for workers’ compensation. As is the case with Social Security, it can be difficult to win workers’ compensation benefits. Your employer may challenge your application, and you may even need help from a legal professional.

Generally, workers’ compensation benefits are based on the severity of your injury and your ability to generate income. You may need medical evidence or testimony from a doctor stating that you are unable to work. Again, this could be a source of income, but it’s not a sure thing.

Retirement Assets
 
Are you one of the millions of Americans using a 401(k) or IRA to save for retirement? If so, you may be tempted to tap into those accounts to fund your expenses due to disability. However, doing so may be costly and could put you in a difficult financial position in the future.
 
Your distributions from your 401(k) or IRA are likely to be taxed as income. Also, if you’re under age 59½, you could face early distribution penalties. You may be able to get an exception because of your disability, but that’s not a sure thing.
 
Most important, though, if you tap into your qualified plans early, you may deplete those accounts before retirement. You could outlive your assets and have little money to pay for bills and medical costs later in life. While it may be tempting to tap into your qualified accounts, try to look for alternatives so you don’t deplete your savings.

Disability Insurance
 
One of the most effective protection tools at your disposal is long-term disability insurance. You pay premiums today but receive a monthly benefit as an income replacement if you become disabled in the future. Some policies will replace nearly all of your income, and many don’t require you to be fully disabled. You simply have to be too disabled to continue in your current occupation. A financial professional can help you determine whether disability insurance is right for you.

Ready to protect yourself against disability risk? Let’s talk about it. Contact us today at Beacon Retirement Planning. We can help you analyze your risk and implement a plan. Let’s connect soon and start the conversation.
 
1http://disabilitycanhappen.org/overview/
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
18185 - 2018/10/22

​​If you’re a financial provider for a spouse, children or other loved ones, life insurance is probably an important part of your financial strategy. Life insurance protects your loved ones and dependents after you pass away. They can use the tax-free benefit to pay bills, support their lifestyle and overcome other challenges.
 
Life insurance is certainly important when you’re working and have children in the home, but what about after you retire? Do you still need coverage if your children are grown? Many retirees would say no. With no dependent children in the house and a substantial amount of retirement assets, surely you don’t need to keep paying those life insurance premiums.

However, life insurance can still serve an important purpose in retirement. In fact, you could use it to achieve some big goals and minimize dangerous risks. Below are a few ways in which you can use life insurance in retirement. A financial professional can help you analyze your policies and options, and then decide which strategies will best help you reach your goals.

Spousal Support
 
Today’s retirees are living longer than ever. According to the Society of Actuaries, a married 65-year-old couple would have a 50 percent chance of at least one spouse living to age 94 and a 25 percent chance of one spouse living to 98.1 That means you or your spouse could potentially live in retirement for more than 30 years.
 
A long life is always a good thing, but it can put a strain on your savings. Your savings have to last longer. You also may face high bills for health care and long-term care, especially in the later years of retirement. Those costs could deplete your assets and leave your surviving spouse in a challenging situation.
 
A permanent life insurance policy can provide a tax-free benefit to your spouse after your death. Your spouse can use those funds to pay outstanding bills and live comfortably during the remaining years of his or her retirement.

Legacy
 
Do you want to leave a legacy for your loved ones or maybe for a favorite charity? There are a number of estate planning tools you can use to accomplish that goal. For example, you can use a trust to provide specific instructions and to guide the distribution of assets.
 
However, life insurance is also an effective estate planning tool. You can use it to increase the amount you leave to your loved ones. Life insurance also avoids probate, which means your beneficiaries can receive the funds quickly. Your heirs can also use the life insurance death benefit to pay for legal fees and other costs associated with the settlement of your estate.
 
You may have purchased life insurance to protect your children when they were dependents. Just because they’re grown doesn’t mean they can’t still benefit from your life insurance policy. You can use it to leave a legacy for them or other loved ones after you pass away.

Tax-Efficient Income
 
Life insurance is primarily about the death benefit, but it can also be a source of supplemental income. Permanent life insurance policies have a cash value account. When you pay your premium, a portion goes toward the cost of insurance, and the remainder goes into your cash value. The cash value then accumulates on a tax-deferred basis.
 
You have the ability to take tax-free loans from your cash value. That could be helpful in retirement if you ever need supplemental income for emergencies or other unexpected costs. You pay back the loan with your premium over time. Any unpaid balance is deducted from the death benefit after you pass away.

Ready to explore your life insurance options? Let’s talk about it. Contact us today at Beacon Retirement Planning. We can help you review your goals and develop a strategy. Let’s connect soon and start the conversation.
 
1https://www.fidelity.com/viewpoints/retirement/longevity
 
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.

18214 - 2018/11/1