The Hidden Value of Social Security Disability Insurance: Why It’s Important During Benefits Enrollment
As a woman planted firmly in the sandwich generation, I’m happily helping my 80-year-old mom when she needs it, while also encouraging my youngest kids on their journeys to leave the nest. Across three generations, it’s no surprise that our family gatherings feature a variety of opinions on just about everything. We embrace the chaos and the discussion.
This is why I was so interested in the results of Lincoln Financial’s recent generational study — it suggests there’s a topic that resonates across all age groups. And as a member of the Council for Disability Income Awareness board, it’s a topic close to my heart: disability insurance.
In the recent Consumer Sentiment Tracker study, Lincoln surveyed U.S. workers across four generations, from Boomers to Gen Z, about which benefits they consider very important or a must-have. Across every segment, approximately six out of 10 respondents named disability insurance as a benefit they prioritize.1
Top financial concerns include disability
While there were noticeable differences between generations in their preferences for benefits, such as life insurance, paid family leave, student loan assistance, and health savings accounts, disability insurance was something they could all agree on. Employees told us that supporting themselves or their families in case of disability or chronic illness ranks fifth among the top 10 financial concerns. Other top 10 concerns, such as paying off or reducing debt, having enough money to cover large purchases, and having sufficient income in retirement, also reflect the potential impact of losing income due to a disability.2
With the average long-term disability lasting almost three years, it’s likely that an employee without the income protection provided by disability insurance may fall behind on current costs and saving for future financial goals, such as retirement.3
The top financial concern, inflation, is the common thread connecting all concerns mentioned by survey respondents.2 Both everyday and large purchases such as housing and education have become less affordable and are requiring a higher percentage of an employee’s income. Currently, housing is one of the most rapidly rising expenses. The average purchase price of a house in the U.S. has increased by 147% since the turn of the century, and the average mortgage payment is now $2,883 on a 30-year mortgage.4, 5
Another significant expense is the average cost of college in the U.S., which has more than doubled in the 21st century. Now totaling $36,436 per year, the average student borrower spends about 20 years paying off their loans, making college a larger, longer-term expense that can impact the financial plans of more than just the youngest generation in the workforce.6
In addition to housing, other everyday expenses such as car insurance and energy are main contributors to inflation, and overall, prices have risen by more than 20% since February 2020.7
The value of disability insurance
Despite being considered one of the more important benefits that an employer can provide, there’s evidence that disability insurance still isn’t being prioritized. Although 54% of employees indicated that they’re concerned about the financial effects of disability or illness, less than half (49%) have actually discussed or researched ways to address their concerns.1 Does this indicate that they may not fully understand the impact that disability insurance can have on their ability to keep up with costs and savings? Do they realize that disability can include both short- and long-term coverage? The answers to these questions will likely vary for each company’s workforce, but this study response highlights the importance of not only offering a robust range of employee benefits, but also ensuring that employees are fully educated about how each product can contribute to their financial wellness and security.
Each company’s workforce may look different — comprising different generations, economic levels, and financial priorities — but a shared concern among all employees is being able to support themselves or their families if they become disabled or experience a chronic illness. Up to one in four Americans (27%) has some kind of disability or illness that could impact their ability to perform major life activities, including their ability to earn a living.8 For today’s workers, disability insurance isn’t just protection against an unlikely occurrence; it’s an essential benefit that helps employees handle a very common and potentially financially damaging situation.
Your planning will be unique to you. But here’s your reminder to make sure you understand your options and your priorities when you’re reviewing your own coverage needs.
1 Lincoln, Consumer Sentiment Tracker, March 2023 – January 2024.
2 Lincoln, Consumer Sentiment Tracker, January 2024.
3 “Chances of Disability: Me, Disabled?,” Council for Disability Awareness, 2024, https://disabilitycanhappen.org/overview/.
4 “Average Sales Price of New Homes Sold in the United States from 1965 to 2023 (in 1,000 U.S. Dollars),” Statista, February 16, 2024, https://www.statista.com/statistics/240991/average-sales-prices-of-new-homes-sold-in-the-us/.
5 Knueven, Liz and Grace, Molly, “Average Mortgage Payment by State, City, and Year,” Business Insider, January 2, 2024, https://www.businessinsider.com/personal-finance/average-mortgage-payment.
6 Hanson, Melanie, “Average Cost of College & Tuition,” Education Data Initiative, November 18, 2023, https://educationdata.org/average-cost-of-college.
7 Foster, Sarah, “Inflation is No Longer at a 40-year High but Still Stubborn: These are the Items Still Expensive,” Bankrate, April 26, 2024, https://www.bankrate.com/banking/federal-reserve/latest-inflation-statistics/.
8 “Disability Impacts All of Us,” Centers for Disease Control and Prevention, May 15, 2023, https://www.cdc.gov/ncbddd/disabilityandhealth/infographic-disability-impacts-all.html.
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