When we think about risk, many of us think about skydiving, skiing accidents, or injuries from a dangerous work environment. And many of us imagine thrill seekers and men as the most at risk for disability. The scary reality is that the opposite is true.

Research I conducted as professor and director of the Center for Women and Financial Services at The American College found that women are more likely to face disability than are men. Yet only 20% of Americans know this. (1) And the majority of disabilities aren’t caused by risky undertakings or accidents that occur at work. Currently, the leading cause is arthritis (which women are twice as likely to get as are men), followed by back and spine problems. Together these conditions are responsible for more than one-third of all disabilities.

Even more alarming, the U.S. Social Security Administration estimates that one in four of today’s 20-year-olds will become disabled before they retire – a much higher probability than most realize. (2)

None of this is meant to scare you. Rather, I want it to empower you to understand the risks we may experience in life, and the importance of being prepared should something happen. Being unaware of risks means we unintentionally assume them.

What Would Happen Next?

Death and disability are two topics many of us would prefer to avoid talking about.  But just as we create wills and develop an estate plan, it’s important to consider what you would do if you experienced a disability.

Ask yourself this, how would you manage financially if you were impacted by a disability? What is your game plan? Should you be unable to work for three months or longer, how would you supplement your income? For most people, the answer is, they couldn’t. In The American College study I mentioned earlier, 62% of people are not confident their family would have enough money to maintain their current lifestyle, 42% worry they would not be able to afford the medical care they need, and 30% are unsure if they would have enough money to cover even basic expenses. (3)

Among women, there’s even greater concern. Women are almost twice as likely as men to think their cash reserves would last less than one month in the event of a disability. Single women are especially vulnerable, with more than one in four believing the consequences of disability would be totally devastating.

The Great American Protection Gap

For most people, their greatest asset is their ability to earn an income. To illustrate, say you earn $50,000 per year. Over a career of 40 years, you would potentially earn more than $2 million (without any adjustments for inflation or pay increases). If you couldn’t work for five years, you’d potentially lose $250,000.

Despite potentially devastating financial consequences of a disabling illness or injury, many people don’t consider disability income insurance or other strategies designed to help protect them. Less than half of Americans own disability income insurance (4), and other research shows that 61% of women have never done any research on disability coverage. (5) As a result, this lack of protection has become a significant gap in women’s financial plans.

Without an adequate disability game plan in place, many people are forced to rely on cash reserves to fund their disability expenses. While your health insurance may cover your medical expenses, it won’t cover your lost income. Do you have enough in your savings to fund at least three months of lost income? And even if you did, this could mean halting your savings for retirement, a child’s college education, or basic living expenses.

Those who are fortunate to have disability insurance through work often have a false sense of security about their coverage.  Most do not realize that group coverage generally includes only a percentage of base salary (usually 50 – 60%) and excludes income from bonuses or the value of employer-paid benefits (like health insurance, retirement plan matching or life insurance). The majority of group plans also have other important limitations to be aware of, like no provisions for inflation, broad definitions of disability and integration with Social Security. Last, it is essential to know if your company’s benefit will be subject to income taxes.  If the employer pays all or part of the premium, chances are the benefit is taxable.  These limits can potentially erode the value of benefits or likelihood of payment.

Potential Solutions

One thing women can do immediately is to learn more. The Council for Disability Awareness is a great resource (www.disabilitycanhappen.org). Education and knowledge are essential for feeling empowered and in control of your finances and important decisions. A trusted advisor can also shed light on disability income insurance policies, as well as if they are appropriate for your situation.

As a proponent of comprehensive, holistic financial planning, I always discuss risk management with my clients and how it integrates with all other elements of their financial plan. This includes also examining how to build a reserve fund, how to cover expenses in retirement, planning for tax reduction, investing, and estate transfers.

Remember, what you don’t know can hurt you. There are major knowledge gaps and misperceptions about the very real risks of disability. Starting the conversation with your advisor today can help you start planning for tomorrow. If you’d like to discuss how disability income may play a role in your financial plan, I encourage you to reach out to us by emailing info@moneyweave.com.

Next, it’s time to test your knowledge! Stay tuned for our quiz to see how much you know about women and the truths about their disability risks.

About Mary

Mary Quist-Newins, MBA, MSFS, Certified Financial Planner® is the President and Founder of Moneyweave LLC, a financial education company dedicated to helping women improve their financial well-being. With over three decades of experience, Mary is nationally recognized for groundbreaking efforts in financial services research, awareness generation and content-development. Beyond her past experience as a financial advisor, she is a sought-after instructor, speaker and passionate advocate for sound financial planning strategies. Mary also serves as Past-President and Treasurer of the National Association of Women Business Owners for the state of Minnesota (NAWBO-MN). To learn more, visit www.moneyweave.com or connect with her on LinkedIn. © Copyright 2019 Mary Quist-Newins.


(1) https://womenscenter.theamericancollege.edu/sites/womenscenter/files/Disability_Fact_Sheet.pdf

(2) https://www.ssa.gov/disabilityfacts/facts.html

(3) https://womenscenter.theamericancollege.edu/sites/womenscenter/files/Disability_Fact_Sheet.pdf

(4) http://www.insurancejournal.com/news/national/2011/06/08/201752.htm

(5) http://info.diservices.com/blog-disability-insurance/bid/345438/Surprising-Facts-About-Women-and-Disability-Insurance

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