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Protecting Your Largest Asset

Most people think about their largest asset being their house, car, jewelry or even their 401K / retirement plans. Well, how are all those things funded? They are funded by your ability to wake up in the morning with the mental and physical attributes necessary to earn an income for yourself and your family.

May is Disability Awareness Month and we want to make sure we are doing the right thing for our clients by keeping you informed. Your largest asset is the ability to earn an income, period. In the event of a disability, we want you to be able to protect the things you are working for and your future plans like buying a new home, saving for education, vacation, retirement and more. Now take a minute and think about what you are working hard for to keep and striving for as your own personal future plans or goals; is it worth protecting your largest asset?

 

Who Needs Disability Insurance?

You may think that you’re not going to become disabled, or at least, the chances are very small. Unfortunately, this is not always the case.

  • Women have nearly a one in three chance to be disabled keeping them out of work for 90 days or longer
  • Men have a slightly less chance than women being a about a one in four
  • One out of seven workers can expect to be disabled for five or more years prior to retirement.
  • 90 percent of disabilities are from an illness

 

Some Reasons Why People Do Not Buy Disability Insurance:

  • Social Security will take care of me– The average monthly benefit paid by Social Security Disability Insurance (SSDI) is $1,171, with 38% of disabled men and 57% of disabled women receiving less than $1,000 per month.1
  • It wont happen to me – In the last 10 minutes, 490 Americans became disabled.2
  • It costs too much– The average annual cost of disability insurance is about 1 -3 percent of your earned income.
  • I have coverage through my employer– Group disability insurance typically covers 60 percent of your gross income not including commissions or bonus and is usually taxable. Also, during disability your expenses typically increase. Can you afford a 40 percent taxable pay cut when your expenses increase?
  • My family and friends will help me –Are your loved ones really in a position to support you?
  • I can always buy coverage later– We are all getting older and most likely not healthier, coverage will cost more.
  • I can rely on my emergency savings –How long will that last? In most cases people that are disabled without adequate coverage are not only exhausting their emergency savings, but also from their brokerage, education saving and retirement accounts while still having trouble paying their bills.

 

Becoming disabled can make a huge impact on your financial health. It also has an enormous effect on you and your loved ones mental health. Having a conversation about disability insurance to protect your largest asset is not excited, but it is a very important piece of a strong foundation to a financial plan that needs to be addressed.

1 U.S. Social Security Administration, Disabled Worker Beneficiary Data, 2016

2 National Safety Council, Injury Facts 2010 Ed

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.
Investment Advisory Team
Hefren-Tillotson

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Hefren-Tillotson Inc. is a leading diversified financial services firm providing investment and retirement plan management and comprehensive, financial planning through MASTERPLAN® for individuals and businesses. The firm’s wealth management services are administered by Certified Financial Planner (CFP) professionals, Chartered Financial Analyst (CFA) Charter holders, attorneys, Chartered Life Underwriters, and CPA/PFS’s. Hefren-Tillotson offers corporate services including 401(k) retirement planning, executive financial counseling, fiduciary reviews and workplace financial planning seminars. Founded in 1948, the firm is headquartered in Pittsburgh and has offices located in Pittsburgh, Butler, Greensburg, North Hills, and South Hills.