Research by the Standard Reveals the Longer a Person Stays out on Disability Leave, the Greater the Impact on Their Ability to Retire
A study from Standard Insurance Company (The Standard) shows that many Americans are concerned about retirement and the financial impact of lost wages, but they have no idea how going on disability leave — at any age — can significantly impact their ability to retire.
The Standard’s Total Wellness Eco-system study reports 70% of respondents are worried about having money for retirement. But what happens if they lose the ability to work? What happens if they have a medical issue or develop a disability that results in lost wages? In that case, saving for retirement, even at below suggested levels, becomes difficult, if not impossible.
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“Fifty-one million working adults are without disability insurance beyond basic Social Security. Without a bigger safety net, an employee’s financial stability could quickly collapse due to an unexpected illness,” said Tom Foran, vice president of Underwriting and Product Development at The Standard.
More than one in four of today’s 20-year-olds can expect to be out of work for at least a year because of a disabling condition before they reach the normal retirement age, according to the Council for Disability Awareness. Moreover, the average duration of a long-term disability is 31.2 months. With most employers suspending retirement contributions during an employee’s leave, retirement savings are often put on hold.
Financial stress leads to poor health, lost workdays
The fear of lost wages is a top concern to 71% of those surveyed in The Standard’s study. And 25% of survey respondents reported that financial concerns caused them health problems. Moreover, financial concerns caused 15% to miss work. In fact, Salary Finance reports that financially stressed employees lose nearly one month of productive workdays per year.
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“Money concerns affect health and health issues impact finances,” says Rob Baumgarten, vice president of Retirement Plan Sales at The Standard. “These strong connections make clear the need for a total wellness ecosystem that keeps employees healthy, productive and saving for retirement.”
From millennials to boomers — health insurance is not enough
The Standard’s study found that most employees rely on health insurance and preventative care to protect them financially from the unexpected. They are unaware of the limitations of their health insurance plan when it comes to covering the significant non-medical costs that can arise from unexpected medical events.
“Everybody talks about credit card and student loan debts, but no one — especially younger workers – expects to be diagnosed with an injury or illness that forces them to miss work for a significant amount of time,” said Foran.
“Unless they’re prepared, it can be devastating financially in the short term just to pay monthly bills, and in the long term to retire comfortably,” said Baumgarten.
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