So, you had your eye on a retirement future, but an unexpected disability changed everything. What now?
While hindsight is forever 20-20, this is perfect teaching point regarding the value of a private disability insurance policy. Not just the one (perhaps) provided by your employment.
This was the observation in a recent Chicago Tribune article titled “Disability, early retirement demand a budget strategy.”
While a disability may qualify you to take a hardship withdrawal from your 401(k) plan (if the plan allows it) and from your IRAs, there are other strategies you can implement before going this route. For example, try cutting your living expenses before resorting to early withdrawals.
As the original article suggests, with your additional free time use Quicken or a similar software program to find expenses that can be minimized.
For instance, you can take a hard look at your insurance policies to find potential savings, although you might want to think about upping your auto liability coverage because of your particular disability (such as MS) if you are still driving.
Perhaps your spouse could look for another job with more comprehensive benefits, too.
Even if you are going to be spending time and money on retraining, it could pay off if your spouse gets health insurance for both of you and several more years of earned income.
Even if it means a lifestyle change, you may have to do it, the original article notes.
Because the payoff is going to be the peace of mind you have from making your new income stretch.
Finally, though it may seem counterintuitive, examine how your retirement savings are invested to see if you need to change your portfolio.
Some people who are disabled believe that they should invest very conservatively.
However, if you have a normal life expectancy, you should make sure your money at least keeps up with inflation.
Talk to an experienced estate planning attorney who can refer you to an appropriate financial advisor to help you get and stay on track.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Chicago Tribune (May 9, 2015) “Disability, early retirement demand a budget strategy”