Why Gen Z Will Receive Social Security Retirement Benefits

By Melissa Thomas, Vice President, Strategic Partnerships at Citizens Disability INTEGRATION.

Many people who are part of Generation Z (individuals born between 1995 and 2010) believe Social Security retirement benefits won’t exist when they’re ready to leave the workforce. And, they’re wrong. Chances are high that Social Security will survive for future generations — and that’s in large part thanks to the individuals who make up this generation and are contributing payroll taxes to the program.

A 2018 report from Morgan Stanley says it is more optimistic about the impact of Gen Z than the Congressional Budget Office. Its positive assessment of labor-force participation translates into a rosier view of the potential gross domestic product by 2040 (2.4 percent to 4.3 percent above the CBO). Morgan Stanley says the CBO is understating potential labor force growth by 0.2 percent to 0.3 percent per year between now and 2040.

If this analysis is accurate, the Social Security Trust Fund may not become depleted until 2062. It likely will delay the date of depletion for Medicare funds as well.

However, the most obvious benefit from millennials and Gen Z is their impact on corporate sales growth and earnings. “To the extent the rise of Gens Y and Z in the labor force supports a higher potential GDP growth rate in the U.S., this relationship would indicate a modestly higher potential longer-run growth rate for corporate sales and earnings,” the report said.

Sean Williams of The Motley Fool, like Morgan Stanley, believes Social Security Retirement is in no danger of going bankrupt, but that it’s highly likely that what Generation Z will receive each month will be less than what their parents or grandparents received on an inflation-adjusted basis.

Williams also cautions that there’s a pretty good chance that Gen Z will have to wait longer to collect their full retirement benefit than their parents or grandparents did. Since 1960, the average life expectancy in the U.S. increased by about nine years. Meanwhile, the full retirement age – the age where you become eligible to receive 100 percent of retirement benefit, as determined by your birth year – will have increased by just two years, to age 67, between 1983 and 2022. With the American public living longer, it’s only logical to expect the full retirement age to increase over time.

Concerns about Social Security’s solvency goes well beyond Gen Z. More than three-quarters of Americans are concerned Social Security will not be there for them when they are ready to retire, according to a June 2018 Transamerica survey. Another 41 percent of workers are planning to work in retirement or past age 65 because they are concerned their Social Security benefits will be less than expected.

But, in recent months, lawmakers introduced numerous bills to fix Social Security, including Connecticut Democratic Rep. John Larson’s Social Security 2100 Act. The 2100 Act would ensure Gen Z’s receipt of Social Security retirement benefits and increase Social Security benefits across the board by switching to a more accurate measure of inflation. Not surprisingly, this bill would be funded by increasing related payroll taxes.

Kathleen Romig, senior policy analyst at the Center on Budget and Policy Priorities, a progressive think tank, believes allowing Social Security’s trust funds to fall short would create massive chaos, and affect all retirees, as well as widows, children whose parents have died, and those with disabilities. “Even if it comes down to the eleventh hour, they’d fix it at the eleventh hour,” Romig said.

Gen Z workers can get an idea of how much they should expect to receive in Social Security by creating an account with the Social Security Administration.

Keep in mind that Social Security benefits are only expected to replace about 40 percent of working wages. This means Social Security should be nothing more than a Plan B in your retirement strategy, and that saving and investing should become one of your top goals during your working years.




Podcast: What Every Employer Should Know About Social Security Disability Insurance



Introduction

Carol Harnett: [00:00:00] Hello, this is Carol Harnett. I’m the president of The Council for Disability Awareness. Welcome to our podcast, which is called The Financial Health and Income Network. Today we are going to talk specifically to employers about how Social Security Disability Insurance works and how it can help protect employees who can no longer work due to an illness or an injury.

What is important for employers to know in a grounding basis, around disability insurance products is that in the group insurance market, there is a product that most employers are probably familiar with called long term disability insurance. About one third of employees — according to the Bureau of Labor Statistics — in the United States have what’s called an LTD policy — a long term disability insurance policy — that’s either fully paid by the employer, or partially paid by the employer.

In addition to that, about half of Americans have some form of disability coverage, most of which makes up the difference. It is either a group policy that the employee pays all of the premium for instead of getting assistance from their employer, or they may be doing something called an individual disability insurance policy that they secure working directly with an agent or an advisor and an individual disability carrier.

Today we are going to focus on this very specific type of coverage that is provided by the federal government but has a very well-defined process, including a very well-defined approval process, application process, and review process. This is Social Security Disability Insurance.


You can hear the full podcast or if you’d rather read than listen, we captured the transcript from the conversation below.


Introducing Ted Norwood from IBI, Inc.

I’m really pleased to have a subject matter expert with us on the show today. My guest is Ted Norwood. He’s the general counsel and director of representation at Integrated Benefits, Inc. We are very pleased that IBI, which is their acronym, is a member of The Council for Disability Awareness and supports us. So we thank them for that. Welcome Ted. We’re so pleased to have you here with us today.

Ted Norwood: [00:02:21] Thanks Carol. It is a pleasure to be here. I’m really excited to let people know about how all this works because it is a frequently misunderstood system.

Carol Harnett: [00:02:36] If you don’t mind, I’m going to kick you off in the most basic of all things, which is: we assume that everybody understands what SSDI is, and with them we use the acronym all the time, and A, nobody even understands what the acronym means and B, really doesn’t understand what the coverage is. Can you go right to the basics and ground our employer listeners in that?

What is SSDI?

Ted Norwood: [00:03:08] Sure. SSDI– commonly just referred to as Social Security Disability– is a disability program through the federal government’s social security system that you pay into from your paycheck through your taxes.

It covers anyone that pays in. It doesn’t cover lots of federal employees, people that don’t pay those taxes. For instance, lots of teachers aren’t covered– they’re covered by different things. Railroad workers are covered by a separate policy, but they must pay in, and that differentiates it from the other social security disability program that people often combine with it or get confused by, which is SSI, or supplemental security income. This is a disability program for people that don’t have the work history or haven’t paid in. It’s a much smaller benefit.

SSDI is a better benefit; it’s a pretty strong benefit with an average payout of $1,600 a month. After being disabled for twenty-nine months, you become Medicare-eligible, and it will last until Social Security finds that you are no longer disabled or until you hit full retirement age. And they do reviews every two to five years of your case to see if you’re still disabled.

Although social security policy can bore some people– the big takeaway is that Social Security Disability is designed to work with long term disability to provide the best policies. A combination is the most important thing.

Carol Harnett: [00:05:08] That’s really well said and it’s a great basic summary. One thing I’d like to ask is– and I think some of our listeners are not familiar with — is I’ve often heard that you have to pay quote-unquote a certain amount of quarters into Social Security before you would become eligible for SSDI. What does that mean when people say that?

What is Elligibility for SSDI?

Ted Norwood: [00:05:35] It means you have to work a certain amount. You know, if you just go out and get a job and then claim disability right away, you haven’t really paid in enough to qualify. The rule is about 40 quarters, which is about 10 years of work. If you’re younger than that, there are formulas for adjusting that. When people are applying for Social Security disability, they usually have a significant amount of work history, and if they don’t have the work history, then they have to apply for the SSI. So most of your applicants are people that have a strong work record, but they’re not able to do the job that they’ve been doing anymore.

Carol Harnett: [00:06:32] Those are good points. When you say a strong work record, is that a nice way of saying that these are people who are older, who have worked for a period of time? If so, do you happen to know what the average age might be for a typical applicant?

Applicant Profile

Ted Norwood: [00:06:51] Uh-oh, I think I’m busted here because I don’t know what the average age of the typical applicant would be, but I would say it would skew older. Young people are covered. If you’re working at a salary job, odds are you’re probably covered if you’re going through, or if you have a steady job, or even steady seasonal work, but the average applicant is older. That’s probably mostly a factor of the wear and tear that goes on to your body after years of working. You know in your 20s and 30s you’re going to be stronger and more flexible, with better recovery and stuff, and less likely to have those over time injuries. So I would say that average applicant is probably around 50 if I had to guess.

Carol Harnett: [00:07:52] Okay, that seems fair. When I think about what I know about long term disability claims, we do know when people are younger that is often when we’ll see more accident related reasons for being out of work, while illness is usually the major reason why people are out on long term disability. Accidents will play a larger role the younger you are and then the older you are obviously illness tends to play the biggest role.

Now you just made a point that I think is really important for employers to understand, which is a big differentiator between long term disability insurance and SSDI, and that is this idea of what type of work are you disabled from? Are you disabled from your ability to do your own occupation, or your own job, or are you disabled from being able to do any kind of work? And can you shed some light for listeners on the requirements around your inability to work when you apply for SSDI?

Clarify the Inability to Work

Ted Norwood: [00:09:05] Absolutely. This is a critical difference between the private disability and this public disability. When people think that they’re disabled, and they can’t work as an engineer anymore, or they can’t work in their factory anymore, or as a teacher, they think: well, “I’m disabled.” If you have a private policy, then that’ll mean you will be disabled, probably for a couple of years at least.

Social Security is different. Social Security I call a “catastrophic” disability policy– that’s an unofficial term– but it only covers you if you’re disabled from any work. The language of the Act says from being able to perform jobs that exist in significant numbers. Once upon a time they liberally interpreted that and they’d cut you some slack, but over the last 15 or more years, they’ve really cracked down, and when they say significant numbers, I mean almost any job.

So, if you are, let’s say you’re 49 and and you had a really good job at a Ford plant, and you have some back problems. Maybe you had some cancer, something going on, something severe, you no longer can do that job. But if Social Security thinks that you can be a ticket taker at the movie theater on a full-time basis– which I don’t even know what movie theaters employ those people– they’re going to deny your case.  They use a lot of outdated information, which isn’t necessarily their fault, but it’s difficult and they’re very tough.

An important thing to understand is that if you’re relying on Social Security, you have to be really, really limited.  If you can’t do hard physical work, but you could do a sit-down job, there’s a really good chance you won’t get your Social Security. The terrible thing about that is that if you’re used to doing hard work, and then you want to transition to a sit-down job, it might be really hard, especially if you’re older, to transition to that. So you end up in this gap where Social Security says, “you’re not disabled, you’re capable of performing some jobs. You’re just unemployed.”  Meanwhile, unemployment says yeah, you’re unemployed; but you know, our insurance only lasts for so long, and it’s really tough for people to find the resources to be able to make those transitions and get those jobs.

Job Function Differentiation

Carol Harnett: [00:12:00] That’s a really fair point. In long term disability insurance– provided, both by an employer and bought individually by the consumer, does somebody quote-unquote meet the definition of disability? We don’t expect someone who’s done a job like a physician, for example, or a senior executive in a company, to do a job that goes outside of their knowledge, skills, and abilities. We don’t expect them to be that ticket taker at a movie theater. It’s a much closer alliance to work, that either is exactly like what they used to do, or similar to what they used to do, using transferable skills.

Sometimes, a surgeon may no longer be able to do surgery because she has a hand tremor, but she could do medical reviews for an insurance company. She could also see patients and screen them for whether they’re a candidate for surgery. That is big difference between a private disability insurance policy and a public one like SSDI, is that correct?

Accommodations for Work: Private vs. SSDI

Ted Norwood: [00:13:28] Yes, and I would add that lots of private policies that I’ve seen factor in income. For instance, you are a successful surgeon who develops a hand tremor. Although you might make several hundred thousand dollars a year, you will go to an insurance review physician position, and you are probably not going to come close to that salary.

The policies on the private side will lots of times accommodate that. They might say: “Hey, this is an offset– because you’re capable of doing this or we expect you to try to find this,” but they make up the difference. Social Security says that if you have a really solid job making $60,000 a year, but they think that you might still be able to do this job, which is minimum wage,  they expect you to go do it.

Carol Harnett: [00:14:34] Yes, I think that’s that is probably not on their radar.

Ted Norwood: [00:14:42] No. When I’ve talked to employers and when I talk to claimants and people in general, they really don’t know anything about it, I always tell them that that’s fine. Hopefully you don’t have to really ever know about the details of Social Security Disability. You find if you have to go through it, that’s really unfortunate, but once you become an employer, and you’re making decisions about whether or not to offer policies to your employees, it’s then it becomes important to understand what they’re really facing. If you think that someone will, they can just get on Social Security, you know, if they can’t work here– that’s not as easy as it may sound. Unfortunately. I wish it were.

Carol Harnett: [00:15:36] You mentioned an average benefit, but because we’re talking about the monetary side of Social Security now, can you help listeners understand the range of payments? And can you also clarify, is there a cap or a maximum that somebody might receive on Social Security Disability?

Payments

Ted Norwood: [00:16:02] Well sure. Once you go on Social Security Disability, your payment depends on your work history and your payment history. When I say your work history, that means what you’ve paid in. You don’t pay into Social Security if you make over a certain salary or income per year; you only pay up to a cap. The max benefit, what does it end up being? I think I want to say it’s about three thousand dollars, and it can go up if you have dependents because it gives you extra benefits if you have minor dependents during the same time you’re out. But you know, you can’t replace a large salary just on Social Security disability.

Carol Harnett: [00:17:00] And if there were a minimum payment?

Ted Norwood: [00:17:05] Well, the minimum payment would be about eight hundred dollars. The SSI benefit, which varies– and that’s for people that don’t have any SSDI coverage at all– usually is somewhere between five and eight hundred depending on all the factors that go into that. So SSDI is always going to be better than that.

And I say “always.” You know, whenever as a lawyer I say “always” that really just means “almost always.” Sure enough, some lawyer’s listening saying “no, that’s not true; here is the example where it’s different.” And yes, but speaking generally, for someone to take away,I would say, $800, but that’s very low.

Carol Harnett: [00:17:56] It’s not a lot of money; this is a monthly payment, just to clarify for our listeners.

Ted Norwood: [00:18:03] Yes. It’s a monthly payment.

Attorney Required

One of the things I should mention — talking about lawyers– another difference between private insurance and Social Security is you almost need to have a lawyer to get on Social Security [Disability]. If you have a terminal illness, you probably don’t, but you’re taking a risk doing it yourself. To use the Social Security’s Disability program, it’s strongly encouraged that you use an attorney– even by Social Security.

Private insurance, you don’t need an attorney to get on. Sometimes there are disputes between insurers and claimants, and you might need a specific type of attorney when that comes up. But for the most part, you don’t get an attorney to activate your private disability policy; that’s a big advantage, too.

Carol Harnett: [00:19:04] Yes. You’re leading right into the next question, which is: What is the process? How do you apply and when do you apply for Social Security disability? How does the process work and how quickly might you receive a decision?

The Application Process

Ted Norwood: [00:19:22] Social Security only covers disabilities that arise from a medically identified problem that will last for 12 months or more.

If you break both your legs, but you’re probably going to be better in six to eight months, then you won’t qualify. If there are complications with that and it ends up taking 12 months before you can go back to work, then you could qualify. However, Social Security’s going to look at that very suspiciously.

Once you are out, or once you know you’re probably going to be out for a year and facing a kind of a grim diagnosis — there’s a lot of really grim stuff we deal with in disability, obviously– then you should apply. Once you’re sure you’re not going to be able to do this for a long time, then you want to apply.

You can file online. Everyone should be online creating their My SSA Account, even if they’re not about to apply.  It’s good that Social Security’s trying to expand their online presence and getting that set up helps them out.  You can go online and apply. You can also go up to your district office; the same place where you get your Social Security card, and file an application. Social Security will take it, make sure you have coverage for SSDI. Then, they send it out to the state agency, which is a federally-funded state agency.

Evaluation

They will evaluate you. The first step takes somewhere between two and six months, and this depends on how quickly they get your doctor’s records, how backed up they are, how difficult your case is, and if they have to send you to an exam.

After the initial evaluation, there’s about a 35% chance of being awarded– which means a 65% chance of being denied. The next step is to then file a reconsideration, which is just a review by that same state agency. There are certain regions in the country currently where you don’t have to file for reconsideration, but Social Security just changed that and they’re moving to everyone going back to reconsideration.


Annual Chart for SSDI’s Overall Award/Denials at Each Level


Reconsideration

Reconsideration. It’s the exact same process again, but they have someone else at the agency look at it. Obviously since it’s the same agency, they’re not going to have the same award rate of their own denial, so it’s about a 15% chance they’ll pay that case. So an 85% chance you’re going to be denied.

Now you are 6 to 12 months into your application and you still don’t have benefits. Now you request a hearing with an administrative law judge. Your case gets back to the federal Social Security program. They’ll assign your case to a hearing office, which is different than your district office, and there’s a long wait for that. It’s somewhere between 12 and 20 months. Depending on where you are, there are a few offices that are under 12 months, and there are some offices that are getting close to 30 months of waiting time.

Building a Case

Now you wait and you build your case. Hopefully you keep going to the doctor. You don’t get any benefits, or any insurance, and you wait until you get in front of a judge. You explain your case to the judge, and you’ll give him all of you medical records that you can get a hold of, and he’ll make a decision. Hopefully you have a good attorney.

At that point you have about a 45 percent chance to be awarded. If you’re denied by an ALJ you do have an appeal within Social Security to their Appeals Council. It’s another year usually and they don’t send many cases back because they’re really trying to not add to that backlog they already have and they basically dare you to take your case to Federal Court.

Appeals in Federal Court

If you talk to your attorney and they want to take your case to Federal Court, you can do that. The courts love this because courts are ALWAYS looking to have lots of cases– that’s a lawyer joke!  Social Security floods the courts with these cases. At that point, your case is no longer actually in the agency, it’s in federal court, and you’re actually suing Social Security and saying, “hey, you guys didn’t follow your own rules, and you wrongfully denied my disability.”


Click to get average wait time for a hearing in your area.


The odss are 50/50 in the federal courts, but it’s important to remember that most attorneys will only take very strong cases to federal court. It’s a really long, difficult process and you can’t just take your chances up there. You’ve got to have a really good case now. I will say this: most attorneys only take really good cases to begin with.

One thing that’s important is there’s a myth of disability fraud, It doesn’t really exist, because you have to work so long to get coverage to even qualify. If you haven’t worked enough, your scam isn’t going to work, because you just can’t get benefits. You get awarded, only after a long, difficult process. That is, if you work long enough to qualify. You go two years without income, and then all you get is $1,800 a month, which is certainly less than you were making before. So it’s a really, really bad scam. But people continue to think there’s a lot of fraud, when most of the rot is actually on the inside.

Carol Harnett: [00:26:00] I would ask a clarifying question: you’ve mentioned having an attorney help you with your case. Is there a charge for people when they have an attorney help?

Associated Attorney Fees

Ted Norwood: [00:26:11] Social Security has really set some strict rules on on fees, and your fee always has to be approved by Social Security. You cannot charge a fee up front. All fees are– if the claimant is paying it– your fee has to be contingent, and the max you can get is 25 percent. If you use Social Security’s fee agreement, the cap is $6,000. An attorney can charge their fees and expenses to a claimant. Most do, but some don’t though, and some attorneys will ask for money up front to hold to cover expenses and stuff, but most don’t. It’s pretty much free for you to get the attorney to do their work, but they’ll only take your case if they think they can win. If they don’t think you have a case then it’s not a sound business decision for them.

Carol Harnett: [00:27:08] Great. Well, I can’t believe how fast this time is going. We have a little less than three minutes.

Ted Norwood: [00:27:14] I saw that.

Carol Harnett: [00:27:16] I had to look at my list of questions and I think the best one to choose at this point is: in your experience what final closing words of advice would you give to employers when you think about disability in general and Social Security disability insurance on top of that?

Final Word to Employers

Ted Norwood: [00:27:35] Group private disability insurance is a pretty affordable benefit, and it is a lifesaver for your employees if they go out of work. Fighting with Social Security is so hard. Everyone we represent that has LTD says, “that $10 a month was the best decision I ever made.” They get their benefits quicker. They still have to go through the Social Security process, because there’s an offset to that LTD, but they have money, they’re getting something. They’re not scrambling.

Social Security– if you have to wait for Social Security, it doesn’t just decimate your spirit and your income; it decimates your insurance coverage; your ability to pay for the doctors, who eventually stop seeing you. It ruins marriages and relationships and strains your family because people lose their houses. And it is long and difficult and tragic. It’s so affordable and such a good benefit to give to your employees. When they go out sick, or they get cancer, they wear down– and they’re better-taken care of. I believe in it,  and it was not even on my radar when I came out of law school; I hope employers at least look into it.

Carol Harnett: [00:29:08] Well said. I’ve known a gentleman by the name of Dick Mucci who currently runs the group insurance operation at Lincoln Financial. He has worked in and around individual disability and group disability, the private industry, his whole career. He has always said he couldn’t imagine why employers wouldn’t provide long-term disability coverage. It’s difficult for an employer to lay someone off after three or six months and leave them without some form of an income to help them get through long term disability.

So with that, Ted, I’m going to say, thank you so much for the information you shared. It’s been a privilege to have you on this show.

Ted Norwood: [00:29:54] Thanks for having me; I appreciate it. Good luck, everyone.

Carol Harnett: [00:29:57] Thank you, everyone. Bye-bye.


Click below for more articles from Ted Norwood about Social Security Disability Insurance.




An Employer’s Guide to Understanding Social Security Disability Insurance



Introduction

Carol Harnett: [00:00:00] Hello, this is Carol Harnett. I’m the president of The Council for Disability Awareness. Welcome to our podcast, which is called The Financial Health and Income Network. Today we are going to talk specifically to employers about how Social Security Disability Insurance works and how it can help protect employees who can no longer work due to an illness or an injury.

What is important for employers to know in a grounding basis, around disability insurance products is that in the group insurance market, there is a product that most employers are probably familiar with called long term disability insurance. About one third of employees — according to the Bureau of Labor Statistics — in the United States have what’s called an LTD policy — a long term disability insurance policy — that’s either fully paid by the employer, or partially paid by the employer.

In addition to that, about half of Americans have some form of disability coverage, most of which makes up the difference. It is either a group policy that the employee pays all of the premium for instead of getting assistance from their employer, or they may be doing something called an individual disability insurance policy that they secure working directly with an agent or an advisor and an individual disability carrier.

Today we are going to focus on this very specific type of coverage that is provided by the federal government but has a very well-defined process, including a very well-defined approval process, application process, and review process. This is Social Security Disability Insurance.


You can hear the full podcast or if you’d rather read than listen, we captured the transcript from the conversation below.


Introducing Ted Norwood from IBI, Inc.

I’m really pleased to have a subject matter expert with us on the show today. My guest is Ted Norwood. He’s the general counsel and director of representation at Integrated Benefits, Inc. We are very pleased that IBI, which is their acronym, is a member of The Council for Disability Awareness and supports us. So we thank them for that. Welcome Ted. We’re so pleased to have you here with us today.

Ted Norwood: [00:02:21] Thanks Carol. It is a pleasure to be here. I’m really excited to let people know about how all this works because it is a frequently misunderstood system.

Carol Harnett: [00:02:36] If you don’t mind, I’m going to kick you off in the most basic of all things, which is: we assume that everybody understands what SSDI is, and with them we use the acronym all the time, and A, nobody even understands what the acronym means and B, really doesn’t understand what the coverage is. Can you go right to the basics and ground our employer listeners in that?

What is SSDI?

Ted Norwood: [00:03:08] Sure. SSDI– commonly just referred to as Social Security Disability– is a disability program through the federal government’s social security system that you pay into from your paycheck through your taxes.

It covers anyone that pays in. It doesn’t cover lots of federal employees, people that don’t pay those taxes. For instance, lots of teachers aren’t covered– they’re covered by different things. Railroad workers are covered by a separate policy, but they must pay in, and that differentiates it from the other social security disability program that people often combine with it or get confused by, which is SSI, or supplemental security income. This is a disability program for people that don’t have the work history or haven’t paid in. It’s a much smaller benefit.

SSDI is a better benefit; it’s a pretty strong benefit with an average payout of $1,600 a month. After being disabled for twenty-nine months, you become Medicare-eligible, and it will last until Social Security finds that you are no longer disabled or until you hit full retirement age. And they do reviews every two to five years of your case to see if you’re still disabled.

Although social security policy can bore some people– the big takeaway is that Social Security Disability is designed to work with long term disability to provide the best policies. A combination is the most important thing.

Carol Harnett: [00:05:08] That’s really well said and it’s a great basic summary. One thing I’d like to ask is– and I think some of our listeners are not familiar with — is I’ve often heard that you have to pay quote-unquote a certain amount of quarters into Social Security before you would become eligible for SSDI. What does that mean when people say that?

What is Elligibility for SSDI?

Ted Norwood: [00:05:35] It means you have to work a certain amount. You know, if you just go out and get a job and then claim disability right away, you haven’t really paid in enough to qualify. The rule is about 40 quarters, which is about 10 years of work. If you’re younger than that, there are formulas for adjusting that. When people are applying for Social Security disability, they usually have a significant amount of work history, and if they don’t have the work history, then they have to apply for the SSI. So most of your applicants are people that have a strong work record, but they’re not able to do the job that they’ve been doing anymore.

Carol Harnett: [00:06:32] Those are good points. When you say a strong work record, is that a nice way of saying that these are people who are older, who have worked for a period of time? If so, do you happen to know what the average age might be for a typical applicant?

Applicant Profile

Ted Norwood: [00:06:51] Uh-oh, I think I’m busted here because I don’t know what the average age of the typical applicant would be, but I would say it would skew older. Young people are covered. If you’re working at a salary job, odds are you’re probably covered if you’re going through, or if you have a steady job, or even steady seasonal work, but the average applicant is older. That’s probably mostly a factor of the wear and tear that goes on to your body after years of working. You know in your 20s and 30s you’re going to be stronger and more flexible, with better recovery and stuff, and less likely to have those over time injuries. So I would say that average applicant is probably around 50 if I had to guess.

Carol Harnett: [00:07:52] Okay, that seems fair. When I think about what I know about long term disability claims, we do know when people are younger that is often when we’ll see more accident related reasons for being out of work, while illness is usually the major reason why people are out on long term disability. Accidents will play a larger role the younger you are and then the older you are obviously illness tends to play the biggest role.

Now you just made a point that I think is really important for employers to understand, which is a big differentiator between long term disability insurance and SSDI, and that is this idea of what type of work are you disabled from? Are you disabled from your ability to do your own occupation, or your own job, or are you disabled from being able to do any kind of work? And can you shed some light for listeners on the requirements around your inability to work when you apply for SSDI?

Clarify the Inability to Work

Ted Norwood: [00:09:05] Absolutely. This is a critical difference between the private disability and this public disability. When people think that they’re disabled, and they can’t work as an engineer anymore, or they can’t work in their factory anymore, or as a teacher, they think: well, “I’m disabled.” If you have a private policy, then that’ll mean you will be disabled, probably for a couple of years at least.

Social Security is different. Social Security I call a “catastrophic” disability policy– that’s an unofficial term– but it only covers you if you’re disabled from any work. The language of the Act says from being able to perform jobs that exist in significant numbers. Once upon a time they liberally interpreted that and they’d cut you some slack, but over the last 15 or more years, they’ve really cracked down, and when they say significant numbers, I mean almost any job.

So, if you are, let’s say you’re 49 and and you had a really good job at a Ford plant, and you have some back problems. Maybe you had some cancer, something going on, something severe, you no longer can do that job. But if Social Security thinks that you can be a ticket taker at the movie theater on a full-time basis– which I don’t even know what movie theaters employ those people– they’re going to deny your case.  They use a lot of outdated information, which isn’t necessarily their fault, but it’s difficult and they’re very tough.

An important thing to understand is that if you’re relying on Social Security, you have to be really, really limited.  If you can’t do hard physical work, but you could do a sit-down job, there’s a really good chance you won’t get your Social Security. The terrible thing about that is that if you’re used to doing hard work, and then you want to transition to a sit-down job, it might be really hard, especially if you’re older, to transition to that. So you end up in this gap where Social Security says, “you’re not disabled, you’re capable of performing some jobs. You’re just unemployed.”  Meanwhile, unemployment says yeah, you’re unemployed; but you know, our insurance only lasts for so long, and it’s really tough for people to find the resources to be able to make those transitions and get those jobs.

Job Function Differentiation

Carol Harnett: [00:12:00] That’s a really fair point. In long term disability insurance– provided, both by an employer and bought individually by the consumer, does somebody quote-unquote meet the definition of disability? We don’t expect someone who’s done a job like a physician, for example, or a senior executive in a company, to do a job that goes outside of their knowledge, skills, and abilities. We don’t expect them to be that ticket taker at a movie theater. It’s a much closer alliance to work, that either is exactly like what they used to do, or similar to what they used to do, using transferable skills.

Sometimes, a surgeon may no longer be able to do surgery because she has a hand tremor, but she could do medical reviews for an insurance company. She could also see patients and screen them for whether they’re a candidate for surgery. That is big difference between a private disability insurance policy and a public one like SSDI, is that correct?

Accommodations for Work: Private vs. SSDI

Ted Norwood: [00:13:28] Yes, and I would add that lots of private policies that I’ve seen factor in income. For instance, you are a successful surgeon who develops a hand tremor. Although you might make several hundred thousand dollars a year, you will go to an insurance review physician position, and you are probably not going to come close to that salary.

The policies on the private side will lots of times accommodate that. They might say: “Hey, this is an offset– because you’re capable of doing this or we expect you to try to find this,” but they make up the difference. Social Security says that if you have a really solid job making $60,000 a year, but they think that you might still be able to do this job, which is minimum wage,  they expect you to go do it.

Carol Harnett: [00:14:34] Yes, I think that’s that is probably not on their radar.

Ted Norwood: [00:14:42] No. When I’ve talked to employers and when I talk to claimants and people in general, they really don’t know anything about it, I always tell them that that’s fine. Hopefully you don’t have to really ever know about the details of Social Security Disability. You find if you have to go through it, that’s really unfortunate, but once you become an employer, and you’re making decisions about whether or not to offer policies to your employees, it’s then it becomes important to understand what they’re really facing. If you think that someone will, they can just get on Social Security, you know, if they can’t work here– that’s not as easy as it may sound. Unfortunately. I wish it were.

Carol Harnett: [00:15:36] You mentioned an average benefit, but because we’re talking about the monetary side of Social Security now, can you help listeners understand the range of payments? And can you also clarify, is there a cap or a maximum that somebody might receive on Social Security Disability?

Payments

Ted Norwood: [00:16:02] Well sure. Once you go on Social Security Disability, your payment depends on your work history and your payment history. When I say your work history, that means what you’ve paid in. You don’t pay into Social Security if you make over a certain salary or income per year; you only pay up to a cap. The max benefit, what does it end up being? I think I want to say it’s about three thousand dollars, and it can go up if you have dependents because it gives you extra benefits if you have minor dependents during the same time you’re out. But you know, you can’t replace a large salary just on Social Security disability.

Carol Harnett: [00:17:00] And if there were a minimum payment?

Ted Norwood: [00:17:05] Well, the minimum payment would be about eight hundred dollars. The SSI benefit, which varies– and that’s for people that don’t have any SSDI coverage at all– usually is somewhere between five and eight hundred depending on all the factors that go into that. So SSDI is always going to be better than that.

And I say “always.” You know, whenever as a lawyer I say “always” that really just means “almost always.” Sure enough, some lawyer’s listening saying “no, that’s not true; here is the example where it’s different.” And yes, but speaking generally, for someone to take away,I would say, $800, but that’s very low.

Carol Harnett: [00:17:56] It’s not a lot of money; this is a monthly payment, just to clarify for our listeners.

Ted Norwood: [00:18:03] Yes. It’s a monthly payment.

Attorney Required

One of the things I should mention — talking about lawyers– another difference between private insurance and Social Security is you almost need to have a lawyer to get on Social Security [Disability]. If you have a terminal illness, you probably don’t, but you’re taking a risk doing it yourself. To use the Social Security’s Disability program, it’s strongly encouraged that you use an attorney– even by Social Security.

Private insurance, you don’t need an attorney to get on. Sometimes there are disputes between insurers and claimants, and you might need a specific type of attorney when that comes up. But for the most part, you don’t get an attorney to activate your private disability policy; that’s a big advantage, too.

Carol Harnett: [00:19:04] Yes. You’re leading right into the next question, which is: What is the process? How do you apply and when do you apply for Social Security disability? How does the process work and how quickly might you receive a decision?

The Application Process

Ted Norwood: [00:19:22] Social Security only covers disabilities that arise from a medically identified problem that will last for 12 months or more.

If you break both your legs, but you’re probably going to be better in six to eight months, then you won’t qualify. If there are complications with that and it ends up taking 12 months before you can go back to work, then you could qualify. However, Social Security’s going to look at that very suspiciously.

Once you are out, or once you know you’re probably going to be out for a year and facing a kind of a grim diagnosis — there’s a lot of really grim stuff we deal with in disability, obviously– then you should apply. Once you’re sure you’re not going to be able to do this for a long time, then you want to apply.

You can file online. Everyone should be online creating their My SSA Account, even if they’re not about to apply.  It’s good that Social Security’s trying to expand their online presence and getting that set up helps them out.  You can go online and apply. You can also go up to your district office; the same place where you get your Social Security card, and file an application. Social Security will take it, make sure you have coverage for SSDI. Then, they send it out to the state agency, which is a federally-funded state agency.

Evaluation

They will evaluate you. The first step takes somewhere between two and six months, and this depends on how quickly they get your doctor’s records, how backed up they are, how difficult your case is, and if they have to send you to an exam.

After the initial evaluation, there’s about a 35% chance of being awarded– which means a 65% chance of being denied. The next step is to then file a reconsideration, which is just a review by that same state agency. There are certain regions in the country currently where you don’t have to file for reconsideration, but Social Security just changed that and they’re moving to everyone going back to reconsideration.


Annual Chart for SSDI’s Overall Award/Denials at Each Level


Reconsideration

Reconsideration. It’s the exact same process again, but they have someone else at the agency look at it. Obviously since it’s the same agency, they’re not going to have the same award rate of their own denial, so it’s about a 15% chance they’ll pay that case. So an 85% chance you’re going to be denied.

Now you are 6 to 12 months into your application and you still don’t have benefits. Now you request a hearing with an administrative law judge. Your case gets back to the federal Social Security program. They’ll assign your case to a hearing office, which is different than your district office, and there’s a long wait for that. It’s somewhere between 12 and 20 months. Depending on where you are, there are a few offices that are under 12 months, and there are some offices that are getting close to 30 months of waiting time.

Building a Case

Now you wait and you build your case. Hopefully you keep going to the doctor. You don’t get any benefits, or any insurance, and you wait until you get in front of a judge. You explain your case to the judge, and you’ll give him all of you medical records that you can get a hold of, and he’ll make a decision. Hopefully you have a good attorney.

At that point you have about a 45 percent chance to be awarded. If you’re denied by an ALJ you do have an appeal within Social Security to their Appeals Council. It’s another year usually and they don’t send many cases back because they’re really trying to not add to that backlog they already have and they basically dare you to take your case to Federal Court.

Appeals in Federal Court

If you talk to your attorney and they want to take your case to Federal Court, you can do that. The courts love this because courts are ALWAYS looking to have lots of cases– that’s a lawyer joke!  Social Security floods the courts with these cases. At that point, your case is no longer actually in the agency, it’s in federal court, and you’re actually suing Social Security and saying, “hey, you guys didn’t follow your own rules, and you wrongfully denied my disability.”


Click to get average wait time for a hearing in your area.


The odss are 50/50 in the federal courts, but it’s important to remember that most attorneys will only take very strong cases to federal court. It’s a really long, difficult process and you can’t just take your chances up there. You’ve got to have a really good case now. I will say this: most attorneys only take really good cases to begin with.

One thing that’s important is there’s a myth of disability fraud, It doesn’t really exist, because you have to work so long to get coverage to even qualify. If you haven’t worked enough, your scam isn’t going to work, because you just can’t get benefits. You get awarded, only after a long, difficult process. That is, if you work long enough to qualify. You go two years without income, and then all you get is $1,800 a month, which is certainly less than you were making before. So it’s a really, really bad scam. But people continue to think there’s a lot of fraud, when most of the rot is actually on the inside.

Carol Harnett: [00:26:00] I would ask a clarifying question: you’ve mentioned having an attorney help you with your case. Is there a charge for people when they have an attorney help?

Associated Attorney Fees

Ted Norwood: [00:26:11] Social Security has really set some strict rules on on fees, and your fee always has to be approved by Social Security. You cannot charge a fee up front. All fees are– if the claimant is paying it– your fee has to be contingent, and the max you can get is 25 percent. If you use Social Security’s fee agreement, the cap is $6,000. An attorney can charge their fees and expenses to a claimant. Most do, but some don’t though, and some attorneys will ask for money up front to hold to cover expenses and stuff, but most don’t. It’s pretty much free for you to get the attorney to do their work, but they’ll only take your case if they think they can win. If they don’t think you have a case then it’s not a sound business decision for them.

Carol Harnett: [00:27:08] Great. Well, I can’t believe how fast this time is going. We have a little less than three minutes.

Ted Norwood: [00:27:14] I saw that.

Carol Harnett: [00:27:16] I had to look at my list of questions and I think the best one to choose at this point is: in your experience what final closing words of advice would you give to employers when you think about disability in general and Social Security disability insurance on top of that?

Final Word to Employers

Ted Norwood: [00:27:35] Group private disability insurance is a pretty affordable benefit, and it is a lifesaver for your employees if they go out of work. Fighting with Social Security is so hard. Everyone we represent that has LTD says, “that $10 a month was the best decision I ever made.” They get their benefits quicker. They still have to go through the Social Security process, because there’s an offset to that LTD, but they have money, they’re getting something. They’re not scrambling.

Social Security– if you have to wait for Social Security, it doesn’t just decimate your spirit and your income; it decimates your insurance coverage; your ability to pay for the doctors, who eventually stop seeing you. It ruins marriages and relationships and strains your family because people lose their houses. And it is long and difficult and tragic. It’s so affordable and such a good benefit to give to your employees. When they go out sick, or they get cancer, they wear down– and they’re better-taken care of. I believe in it,  and it was not even on my radar when I came out of law school; I hope employers at least look into it.

Carol Harnett: [00:29:08] Well said. I’ve known a gentleman by the name of Dick Mucci who currently runs the group insurance operation at Lincoln Financial. He has worked in and around individual disability and group disability, the private industry, his whole career. He has always said he couldn’t imagine why employers wouldn’t provide long-term disability coverage. It’s difficult for an employer to lay someone off after three or six months and leave them without some form of an income to help them get through long term disability.

So with that, Ted, I’m going to say, thank you so much for the information you shared. It’s been a privilege to have you on this show.

Ted Norwood: [00:29:54] Thanks for having me; I appreciate it. Good luck, everyone.

Carol Harnett: [00:29:57] Thank you, everyone. Bye-bye.


Click below for more articles from Ted Norwood about Social Security Disability Insurance.




How Employer-Provided Disability Insurance Can Help When SSDI Falls Short

Important details about employer paid insurance to help fill the gap when social security income is delayed or falls short

Half of American workers have some sort of disability coverage: either employer-paid long term disability insurance, one they pay for through an agent, and/ or one funded by the federal government called Social Security Disability Insurance (or SSDI). Below are facts regarding SSDI and LTD. It is important for employers to know that SSDI is designed to work with long term disability to provide the best policies for employees.

The following content has been provided to the CDA by Ted Norwood, the General Counsel and Director of Representation, at Integrated Benefits, Inc.

The Relationship Between SSDI and Private Group Insurance


  • According to the Council for Disability Awareness, half of those who don’t work for the government have some form of employer-paid disability insurance. This could be short-term disability only, long-term disability only, or both STD and LTD. These benefits are important because 25 percent of today’s 20-year-olds will at some point miss a year or more of work due to medical problems.
  • As companies become leaner, employees become even more vital to the organization’s success and more difficult and expensive to replace. In the long term, losing employees is difficult. Certainly, an increasing number of employers recognize the value of employee well-being. In fact, many companies now recognize the value of caring for employees as people, not just assets.  Therefore, private disability insurance benefits in the workplace is an important way for employers to care for employee financial health.
  • About half of workers in the private sector do not have income-replacement benefits. If they’re unable to work for an extended period of time, they must rely on the Social Security Administration’s Disability Income (SSDI) program – if they qualify – to partially replace their salaries.


Facts About SSDI


  • You must have worked to qualify and made Social Security contributions. (Teachers often do not make Social Security contributions.)
  • You must qualify medically and vocationally.
  • SSA does not consider income in its evaluation of disability.
  • The SSA only evaluates whether an individual could perform the function of a job that exists.
  • SSDI Application Process – The wait is long (15 months or more). It can be challenging to get approved, and it lacks good recovery resources.


Group Long Term Disability Policies Protect Employees from the Disadvantages of SSDI


  • These LTD policies usually start with an own-occupation period of two years. As a result, the employee receive benefits immediately on completion of the elimination period (3 or 6 months).
  • Group LTD policies usually pay higher benefits than SSDI does. They typically treat SSDI benefits as an “offset” which means the additional coverage is available at an affordable price.
  • Group insurers typically require claimants to apply for SSDI benefits, but most of them will also provide a lawyer to assist with the applications.
  • Group LTD policies have better opportunities to provide vocational rehabilitation and return to work services.


For more from Ted Norwood on SSDI check out the following articles:





Your Disability Insurance Options

Your Disability Insurance Options

You’ve recently learned some troubling statistics, namely:

  • One in four of today’s 20-year-olds will become disabled before reaching age 67.
  • The average individual disability claim lasts nearly 32 months.
  • Nearly one-third of respondents to a 2015 survey indicated they would not be able to cover three months of living expenses (even by borrowing) if a financial disruption occurred.

And now you’ve decided to protect yourself and your family. You want the peace of mind that comes with income replacement. What disability insurance sources do you have?

Sources for Disability Insurance

Most people who have disability insurance get it through their employer. But as we shall see, there are several other sources of disability insurance.

A word of warning, it may be somewhat counterproductive to have certain combinations of disability insurance. One source’s benefits may reduce the chance you have to receive benefits from another.

As a general rule, if you add up all your disability payments, they will not exceed 80 percent of your average lifetime earnings (NOT your current earnings) before the disability.

Also, disability benefits from an individually purchased policy are usually not taxed. Benefits from an employer policy are often purchased with pre-tax dollars, which means the benefits will be considered taxable income.

Disability Insurance Options 

Workers’ Compensation Insurance

If someone suffers a disabling illness or injury related to work, workers’ compensation insurance may provide a portion of salary. Normally, workers’ comp pays around two-thirds of your pre-disability income. Important note: 73 percent of long-term disabilities are non-work related, which disqualifies income replacement via workers’ compensation.

State Disability Insurance Programs

New Jersey, Hawaii, New York, California, Rhode Island, and Puerto Rico all provide short-term disability coverage. For people in these states, this is a valuable source of income replacement which can last up to six months.

Social Security 

The Social Security Administration (SSA) administers disability benefits. SSA disability eligibility is determined by the inability to perform ANY gainful employment (as opposed to the inability to perform the specific job at the time of the disability). Social Security disability is federally taxed as income.

Employer Sponsored Disability Insurance

Employers, especially larger ones, may offer short-term and/or long-term group disability insurance. One of the greatest features of employer-sponsored coverage is all employees automatically qualify. However, if you have a pre-existing condition when you start a new job, there may be a waiting period of 12 months. This type of coverage may come with a benefit of increasing your coverage, but be advised that additional coverage can come with the price of answering some questions about your health. 

Individual Disability Insurance

An individual disability insurance policy is one you personally purchase. It offers the most flexibility of all the disability insurance we have listed. An individual policy travels with you, regardless of career or job change. Most individual plans replace between 40 percent and 65 percent of gross salary. These benefits are income tax free.

Take a Long Hard Look at These Opportunities

You have health insurance, car insurance, renter’s insurance, and perhaps other types of insurance. So you may be well-covered for the hospital tending to your disability, but where will you get the money to live on once you leave the hospital? Disability insurance protects your income. Without it, you could easily burn through your savings and put those who depend on you in jeopardy. Before this happens, investigate these options and gain a sense of responsibility and peace of mind.




Time to Debunk These Persistent Disability Insurance Myths

Time to Debunk These Persistent Disability Insurance Myths

When you think of disability insurance, do you think about insurance that covers disability due to a relatively severe accident? Many people do. What about the chance of a disability happening to you? You are a careful person and you have a desk job. No need for disability insurance, right? Well, the preceding scenarios make up two of the larger disability insurance myths. Read on to see how many disability insurance myths you believe.

Myth: I won’t ever need it

You, disabled? You are as strong and healthy as an ox. So the chances of a disability must be pretty slim, right?

Actually they are likely higher than you might guess.

Just over one in four of today’s 20 year-olds encounter a disabled before they retire.

Are you prepared if it happens to you? Probably not. Most Americans don’t have disability insurance, nor enough emergency savings to last the duration of the average long-term disability claim, which is 34.6 months. Ouch. Don’t fall prey to this disability insurance myth.

Myth: Catastrophic, one-time events, such as serious accidents or injuries create most disabilities

Illnesses rather than accidents cause approximately 90 percent of disabilities.

Common chronic conditions are the top causes of disability, including:

  • Back problems
  • Joint pain
  • Muscle pain
  • Muscle and bone disorders

Myth: Disability insurance is the same as worker’s compensation

When you are injured at work, you receive workers’ compensation benefits. Most state laws require employers to carry workers’ compensation to cover injured employees.

One does not have to be injured on the job or worksite to receive Individual disability coverage benefits.

Myth: Disability is not taxed

There are several types of disability insurance that are non-taxable, but there is no inclusive exemption for disability.

Disability benefits paid by an insurance company for lost wages, loss of limb, loss of sight (etc.) may or may not be taxable, depending on the circumstances, such as if:

  • The premiums were paid by your employer and were not included in your taxable income, the disability benefit income is taxable.
  • You paid the premiums out of your own pocket or with payroll deductions from after-tax income, the disability benefit is generally not taxable.
  • You and your employer jointly paid premiums and you paid your share with after-tax income, only the amount covered by your employer’s payments is taxable.

Myth: Social security covers my disability

Social Security provides small benefits to disabled workers ($1,166 in June of 2016) and getting approval for coverage is very difficult.

Only 32 percent of workers who applied for social security disability benefits in 2015 were approved; the lowest ratio since 1982.

Also, you can’t collect Social Security disability benefits until the end of your fifth full month of disability–and only if you are expected to be out of work for 12 months or longer.

Reality: Disability insurance is income protection

Disability insurance is not a luxury. In today’s day and age, it is a requirement for most working adults—a majority of whom must find a way to protect your greatest financial asset—your ability to earn a paycheck.

Image Credit: Shutterstock




What Exactly Is the Definition of Disability?

What Exactly Is the Definition of Disability?

So often people use terms freely and quickly without even considering if the word in use means the same thing to all people. A quick Google search reveals that the definition of disability lacks simplicity and consistency. Here is a survey of various. definitions.  Far from simple.

Dictionary Definition of Disability

By far, the simplest definition of disability comes from the dictionary. Merriam-Webster defines disability as:

: a condition (such as an illness or an injury) that damages or limits a person’s physical or mental abilities

: the condition of being unable to do things in the normal way: the condition of being disabled

: a program that provides financial support to a disabled person

American with Disabilities Association DA Definition of Disability

It is important to remember that in the context of the ADA, disability is a legal term rather than a medical one.

A person with a disability is a person who has a physical or mental impairment that substantially limits one or more major life activity. This includes people who have a record of such an impairment, even if they do not currently have a disability. It also includes individuals who do not have a disability but are regarded as having a disability.

Social Security Administration Definition of Disability

The definition of disability under Social Security is different than other definitions because it determines who qualifies for Social Security Disability benefits.

To meet our definition of disability, you must not be able to engage in any substantial gainful activity (SGA) because of a medically-determinable physical or mental impairment(s):

  • That is expected to result in death, or
  • That has lasted or is expected to last for a continuous period of at least 12 months.

The Social Security Administration uses the term “substantial gainful activity” to describe a level of work activity and earnings.

Work is “substantial” if it involves doing significant physical or mental activities or a combination of both. For work activity to be substantial, it does not need to be performed on a full-time basis. Work activity performed on a part-time basis may also be SGA.

“Gainful” work activity is:

  • Work performed for pay or profit; or
  • Work of a nature generally performed for pay or profit; or
  • Work intended for profit, whether or not a profit is realized.

Who Has The Last Say on The Definition Of Disability?

“Hello, I’m calling to request proof of disability that I filed when I was on Social Security.”

“What do you mean when you WERE on Social Security?”

“I’m no longer receiving benefits because I’m working full time.”

“Then why do you need proof of disability? If you’re working, you are no longer disabled.”

“……. (( um….. what??? )) ……”

The above phone call actually happened between the Social Security office and Wheeler Wife, which is related in the blog Rolling Without Limits.

It begs the question. Who tells who who is disabled or not? Who has the authority and right to determine the definition of disability?

Definition of Disability by People with Disabilities

I am vocal about having a disability because I don’t want other people defining what having a disability means for me. Whether you’re active most days, or spend most of your time in bed, you have the right to define that for yourself.                                                                                          

                                                                                                                               -Maya Brown-Zimmerman

There are many things I can do that I enjoy, things that bring me great pleasure such as writing, but I envy the freedom of choice that able people have.  I don’t have that and I haven’t had it for as long as I can remember, even if I look like I could.

I didn’t choose this life but it is the life I have so please do not discount it.

So, how do you define disability now?

-Claire Barnier

You personally can’t define your disability. Your body does. Whether it be a mental or a physical illness, it’s your body that leads the way and you have no choice but to follow. I could fight my illness as long as I want, but at the end of the day I’m going to still have trouble living a “normal” life. I have no choice but to live with a bunch of medication in my pocket and a thing that I have to check my blood sugar with once a day. I’m no longer free to do whatever I want.

-ottobot93

 In Conclusion

Of course there are reasons for every definition listed above. Each person, organization, or entity defines disability within the context of what aspect of disability each is attempting to address.

Nonetheless, we end with the most uplifting of definitions. It was written by Wheeler Wife on the same website where her phone call with the Social Security Administration was related above. Her definition of disability reads:

Empowered, Strong, Valued, Unique, Beautiful, Interesting, are just some of the ways I would describe the members of the disabled community. It is more important than ever to remember that the more we use positive labels, the greater the influence we can make on the definition of disability.

Image Credit: Shutterstock




The Advantages and Disadvantages of Early Retirement

The Advantages and Disadvantages of Early Retirement

It would be understandable if some people’s definition of the American Dream included early retirement. Perhaps certain American dreamers look to move to a warm locale, near their families, or near a great golf course to experience the glory of an extended retirement.

Early retirement isn’t possible for all workers, but for those who have the choice, what are the potential advantages and disadvantages of early retirement? Are there any disadvantages?

ADVANTAGES OF EARLY RETIREMENT

IT COULD BE GOOD FOR YOUR HEALTH

A landmark study led by University of Sydney found that people become more active, sleep better, and reduce their sitting time when they retire.

“A major life change like retirement creates a great window of opportunity to make positive lifestyle changes—it’s a chance to get rid of bad routines and engineer new, healthier behaviors,” the lead researcher said.

The data revealed that retirees:

  • Increased physical activity by 93 minutes a week
  • Decreased sedentary time by 67 minutes per day
  • Increased sleep by 11 minutes per day
  • Stopped smoking (50 percent of female smokers)

YOU’LL ENJOY MORE TIME FOR TRAVEL.

The earlier you retire, the more years you’ll have before health issues begin to limit your mobility.

IT’S AN OPPORTUNITY TO START A NEW CAREER.

If you feel boxed in to your current career, early retirement may provide the opportunity to break away and move into a field you love or even start your own business. Sooner is better than later.

And if you want to be your own boss, you’ll have more time to get your business off the ground. A business you launch at age 60, for example, could easily keep you intellectually challenged for another 20 years or more.

DISADVANTAGES OF EARLY RETIREMENT

IT COULD BE BAD FOR YOUR HEALTH

In May 2013, the Institute of Economic Affairs published a report on retirement. According to the report, one disadvantage of early retirement is that it can increase the chances of depression and despair by 40%.

It has also increased the prospect of developing at least one physical disorder by approximately 60%. The report is vividly explained by the BBC.

YOUR SOCIAL SECURITY BENEFITS WILL BE SMALLER 

Another disadvantage to early retirement is the fact the sooner you start to take Social Security, the lower your benefits will be. For example, if you were born in 1960 or later and you start taking benefits at age 62, the earliest age at which you’re eligible, your monthly benefits will be 30 percent less than if you wait until age 67.

For each year you postpone from age 67 to 70, you’ll receive an additional 8 percent of your monthly benefit. After age 70, there’s no further bonus for delaying.

YOUR RETIREMENT SAVINGS WILL HAVE TO LAST FOR MORE YEARS 

If you retire at age 62 and live to 90, your IRAs and other savings will have to cover you for 28 years. If you retire at 70 and live for the same length of time, however, your savings will only have to last for 20 years.

Working longer also means you’ll have more years to contribute to a 401(k) or other retirement plan, and the money in your plan will have more time to compound.

YOU’LL NEED TO FIND HEALTH INSURANCE

Unless your ex-employer provides it, you’ll have to pay for health insurance on your own until you’re eligible for Medicare at age 65.

YOU MIGHT GET BORED AND MISS WORKING

Many retirees find one disadvantage of early retirement is the tough transition from the daily routines to the unstructured life of retirement. They may want to return to work; unfortunately it isn’t easy to get back into the workforce once you’ve left it, voluntarily or otherwise.

A 2012 report by the U.S. Government Accountability Office noted that people over age 55 generally need more time to find new jobs than their younger counterparts do.

YOUR FRIENDS AND COLLEAGUES MAY STILL BE WORKING

This means they will have limited time to spend with you, and they may still talk about work while you are around. In some cases, you might find yourself out of place in these conversations. This has more bearing on the emotional, psychological, and social aspects of early retirement rather than physical and financial aspects.

ADVANTAGES 3, DISADVANTAGES 5

For those people out there who love numbers, advantages of early retirement scored a three, and the disadvantages of early retirement scored a five. However, one could assume that even though the disadvantages of early retirement scored higher than advantages, many would take the risk. Especially once they know what to look out for.

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Social Security Disability Insurance Made Simple

Social Security Disability Insurance Made Simple

The cost of the Social Security Disability Insurance program has risen exponentially in recent years. Costs have ballooned so much that the $140 billion program was—until a November 2015 budget deal was reached—on pace to run out of money in 2016.

Despite the recent budget deal, which will reallocate payroll tax revenues to beef up the Social Security Disability Insurance fund, the program’s benefits and qualifications are by no means set in stone.

Here’s a bit more about how Social Security Disability Insurance works, and how big changes may still be on the horizon. The benefits of nearly 11 million people are at stake.

How Social Security Disability Insurance is funded

In government speak: OASI + DI = OASDI

The Social Security program, consisting of both retirement (Old-Age Survivors Insurance or OASI) and disability insurance (DI), is funded through separate payroll tax and self-employment tax contributions—not through regular federal income taxes.

The DI portion of the program is much smaller and less well known. Both are administered by the Social Security Administration. By law, these funds are maintained separately from the U.S. government’s general fund.

The contribution rate to these funds are set by Congress. The current contribution rate is 12.4 cents per dollar earned, up to a taxable maximum, which is currently $118,500. Employees have their contribution split equally between them and their employer, so it’s 6.2% each. (Self-employed individuals pay the full rate themselves.)

The funds are then allocated either to the retirement or disability program. Currently, 1.8 cents per dollar go to the disability fund, with the remaining 10.6 cents going to retirement.

Lingering effects of the post-2008 crash

Despite the cash infusion from the November budget deal, the Social Security Disability Insurance trust fund is still not inexhaustible. Have a look at the net decrease in assets since 2009 on this table (and keep in mind those numbers are in millions).

The depletion in the trust fund is simply caused by expenditures being higher than costs. While both have been rising steadily, expenditures have risen at a lower rate than revenues.

The fund had previously seen annual surplus from 1994 to 2008. At the end of 2008 the fund held nearly $216 billion in reserves. Since 2008 (and the brutal post-2008 recession), expenditures have exceeded revenue by an average of $25 billion a year.

Rising beneficiary numbers

The increase in expenditures has a simple explanation–more people receiving payments, or “beneficiaries.” This in turn is caused by the number of “new” beneficiaries exceeding the number who return to the workforce and stop receiving benefits. (The percentage of people who go on disability and then return to the workforce is quite low.)

During the post-2008 recession, the number of new beneficiaries rose sharply. The number of terminations also rose, but not at the same rate.

Since 2010, the number of new beneficiaries has been falling, but has still exceeded the number of terminations, and this means that the total number of beneficiaries has continued to rise, albeit at a slower rate. America’s aging workforce is a primary factor in the increase. In 1980, there were roughly 100 million workers covered by SSDI, and about 30 percent were over 45. In 2013, there were roughly 150 million covered workers, with 45 percent over 45. As we age, we tend to experience more health problems, and thus are more likely to file an SSDI claim.

What the future holds … who knows?

For those depending on Social Security Disability Insurance, or who one day will, the future is unclear. Will the government let the SSDI fund dry up a few years down the road? What happens then? Will our leaders make a move to avert such a situation?

The only certainty, really, is that there’s a lot at stake, and that some sort of change to the program is inevitable. So stay tuned, and stay informed!

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5 Reasons Why Millennials Should Care About Disability Insurance

5 Reasons Why Millennials Should Care About Disability Insurance

Ah, to be a millennial. So young, so invincible … until you’re not. Regardless of your current vigor and vitality, it’s important to consider the possibility that you might not always be able to work. If you rely on working to pay the bills, to eat, and to just generally survive, you need to think about disability insurance.

If you’re skeptical consider this fact: More than one in four of today’s 20-year-olds will experience some sort of disability before they retire. Think about that. How would it affect you and your loved ones if you were suddenly unable to work?

Here are five reasons why even millennials in fine fettle should care about disability insurance.

Because Momma Loves You

Mom loves you. She’s proud of you. But she worries. She wishes you’d start planning for the future and making some grown-up decisions.

We can’t help you with Mom’s nudging about grandchildren, or moving closer to home, but we can help you display what a mature, responsible, wise adult you’ve become by protecting your future with disability insurance.

She’ll be so proud!

Because You’re Not Invincible

Even if you’re into the CrossFit, Fitbit, never-sit lifestyle, you are not invincible. We’re all just an accident or illness away from being out of commission for a long period of time.

And yet despite the serious potential consequences, millennials continue to “resist any kind of insurance.” It’s a shame because a little bit of planning and protection can go a long way to avert financial ruin.

Because Drake Does

We actually have no idea if Drake has made the wise decision to purchase disability insurance (you can’t count on making hits like “Hotline Bling” forever, Drake!), but we did just see a study that people are more likely to buy insurance when they see other people “like them” doing it. So be like Drake (or like Drake should be) and buy it too.

Because You Might Not Qualify for Social Security Disability

If you are holding off on purchasing disability insurance because you think you’ll be able to get Social Security Disability Benefits, you might want to reconsider. Social Security denies about 70 percent of all initial disability claims. Your age also plays a role in whether or not you qualify—and millennials are not at the front of the line.

To learn more about how Social Security determines who qualifies for benefits, click here.

Because Disability Insurance Protects Your Most Important Asset—Your Income

“It’s better to be safe than sorry” might be a cliché, but that doesn’t make it untrue. Even if you are an exceedingly cautious person who has enjoyed robust health, you never know when you might need disability insurance to cover a short or long-term absence from work. It can be a lifeline in your time of need and get you through a period without a paycheck.

If you’re working, please, go speak with your employer to see what disability insurance coverage they offer. You can also check our list of member companies and speak with an insurance agent who can walk you through the process of purchasing individual disability insurance.

No matter what age you are, it pays to have peace of mind.

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