Is your relative prepared for disability?


June 25, 2012

Is your relative prepared for disability?The demands of going into retirement can be a shock for most seniors, especially if they're accustomed to an active lifestyle. For seniors who become disabled, the financial constraints of transitioning to a fixed income can be equally difficult to cope with.

According to a recent study, the average age of people receiving Social Security Disability Insurance (SSDI) is 53-years-old, while the average monthly income is $1,111. If your relative is nearing retirement and has a history of health issues, a few of these tips may help them make an easier adjustment to a life on SSDI.

1. Long-term disability coverage. If your relative invested in long-term disability coverage while working, he or she was in luck. Studies show that 33 percent of workers are offered long term disability through their employers, while an estimated 37 percent are offered short term disability. Policies typically can cover up to 50 percent of a worker's income and can be used with SSDI benefits.

2. Savings. There are several things your relative can do to stay afloat financially on a very tight budget, but the only concrete buffer between financial disaster and your relative is a savings account. To make the most of this, seniors should be stockpiling money for years prior to retirement. While most people may not have enough in savings to permanently supplement SSDI, small savings can help shoulder some of the cost of living. The Social Security Administration (SSA) also offers low cost, tax-deferred 401K options for those seeking to prepare for the future.

3. Adjust monthly expenses. Visions of hanging by the beach and dining out every night in retirement may have gotten your relative through their years of workplace toil, but they're just not realistic activities if money is tight around the house. Urge your relative to make changes to his or her monthly expenses, and to trim anything that's not vital or necessary to ensure him or her can have a good quality of life even on disability.

4. Develop a financial plan. While the senior in your life considers which adjustments need to be made to his or her budget, it may be wise for you to help him or her devise a full-fledged plan for the future. Help your relative by setting a monthly budget and prioritizing which expenses matter versus those that do not. If your relative has credit cards, encourage him or her to close them out to ensure that he or she don't begin to rely on them to fund unnecessary purchases.

5. Maintain health insurance. Whether your relative is still employed, about to become retired or is waiting for the approval of their SSDI application, it is imperative that he or she retain healthcare coverage. The Consolidated Omnibus Budget Reconciliation Act (COBRA) can connect citizens with health insurance at a group rate if they held insurance previously under an employer.

The Affordable Care Act created Pre-Existing Condition Insurance Plans (PCIPs) which will be in effect until 2014 and help provide insurance to citizens who have been denied coverage based on pre-existing conditions. To qualify for PCIPs, seniors will need to be uninsured for six months preceding the application.

If your relative does not have insurance, the financial risk of a fall or accident can increase. A medical alarm system from Bay Alarm can bring peace of mind to you and your relative. With the push of a button, a medical alarm system can allow the senior in your life to reach out to emergency staff who can help in the event of an emergency.