Most baby boomers will not have the retirement their parents had. To borrow a term from the headlines, the 99 percent of us who make an average wage and save an average amount for our “golden years” have watched our savings dwindle with the stock market over the past couple of years. Chances are good that we’ll be in the workforce for a few years after our official retirement age.
A study published last month revealed that one thing older workers (age 50+) fail to take into consideration is long-term disability insurance. Neglecting disability coverage, though, can be a serious mistake.
In our last post, we discussed the different insurance programs offered by employers, and we touched on the costs involved. For younger workers, employers are more likely to pick up a higher percentage of the monthly premium. As a worker ages, though, the premium increases; employers are less likely to pick up the full tab, especially for workers who are past retirement age.
Disability benefits differ, too, even among younger workers. Generally, an injured worker will receive between 50 and 70 percent of his or her monthly pay for five to 10 years or until the worker reaches the age of retirement. Coverage rarely continues after a worker reaches retirement age.
For those workers past retirement age, the picture changes. Disability insurance may pay a similar portion of the wage but for a significantly shorter period of time, usually only 18 to 24 months.
Older workers have a handful of difficult choices to make regarding disability insurance. A policy is not cheap, and the premium goes up the older the policyholder gets. But, for workers whose financial situations won’t allow them to retire as expected, the cost of an injury — in terms of out-of-pocket expenditures and lost wages — can mean an even more difficult retirement. As with all insurance decisions, it’s a matter of how much risk a person can live with.
Alan Olson practices employment law throughout the United States from his offices in New Berlin, Wisconsin. Attorney Olson may be contacted at [email protected] with questions about the information posted here or for advice on long-term disability benefits claims.
: Chicago Tribune, “Disability policy might benefit older workers,” Janet Kidd Stewart, May 11, 2012