Remember writing paper checks? Balancing a checkbook? Mailing in a bill payment and hoping it got there in time? It wasn’t that long ago. But these days, I know very few people who carry checks. And starting next year, neither will the IRS.
I won’t get into the details now, but rest assured – I’ll be giving you and all my Milwaukee clients the scoop on what this change means for you in an upcoming blog.
And as Wall Street takes a breath for Juneteenth, the gates of U.S. National Parks are swinging wide open with free admission.
My advice? Get some fresh air. Let nature help you zoom out a bit. It’s hard to make wise financial decisions when your head is constantly down in the grind (or caught up with the many happenings in our country right now).
When you’re back in the swing of things, I want to put something on your radar that could actually save you some future stress (and money)… if you’re involved in buying and selling crypto.
The IRS and Treasury have just announced a delay in enforcement tied to Form 1099-DA requirements. Specifically, if you’re a crypto broker dealing in digital assets, you now have an extra year before you face penalties for not withholding backup taxes on certain transactions.
So, now is the time to double-check how your crypto trading platform is handling reporting. And if you’re unsure what kind of records you should be keeping, or whether you’re even in the clear on your past transactions, let’s talk about it – before the IRS comes knocking: 414-325-2040
Preparation could save you stress (and money) down the line — a principle that stands true for nearly every area of your financial life. Which brings me to my topic for today’s writing: disability insurance… another means of safeguarding yourself from (avoidable) emotional and financial problems.
Let me be super clear here: I’m not in the business of selling disability insurance. But I am in the business of helping you build a sustainable financial life.
I talk to you a lot about the nitty gritty of tax strategy, but I don’t want to neglect the building blocks of a strong foundation. Because when illness or injury hits, disability insurance can be what keeps your bills paid and your goals on track.
So, if you’ve ever asked yourself, Do I need disability insurance? Read on…
“Do I Need Disability Insurance?” – A Question Milwaukee Workers Need to Answer
“The time to repair the roof is when the sun is shining.” – John F. Kennedy
Life has a way of shifting suddenly, right under your feet. Maybe it’s a car accident. A cancer diagnosis. Or something less visible, like a severe mental health crisis.
What happens when those events mean you can’t work for weeks or months (or even longer)?
Without disability insurance, the financial side of your life – mortgage, utilities, car payments, groceries – doesn’t hit pause just because you do.
And losing your income (whether for a few months or a few years) can create financial consequences that spiral fast.
So, when you ask Do I need disability insurance?, here are my reasons why it isn’t just a good idea to get coverage – it’s critical for your financial longevity.
Reason #1: Your ability to work is your most valuable asset.
Most people insure their car. Their house. Their life. But they overlook the thing that makes all those other things possible: their ability to earn a living.
Disability insurance (DI) is designed to replace a portion of that income (typically 40-60 percent) if you can’t work because of a qualifying injury or illness. Some policies even factor in commissions or self-employment income.
Reason #2: The odds for developing a disability are higher than you think.
We all like to think, “That won’t happen to me.” (I’m guilty of it, too.)
But statistically, injury and illness happen to a lot of people. 1 in 4 20-year-olds will experience a disabling condition before they reach retirement age – and will be out of work for at least a year.
I don’t say this to make you paranoid, but to make you prepared. If you had to go without your income for 3, 6, or 12 months… could your savings handle that?
That’s why disability insurance exists.
Reason #3: Social Security Disability isn’t enough (and isn’t guaranteed)
Some folks assume that if they ever become disabled, they’ll just file for Social Security Disability Insurance (SSDI). But SSDI benefits are extremely limited and hard to qualify for.
The average monthly payout is just over 1.4K, and approval can take months (sometimes over a year) with high denial rates and required appeals. And even if you do qualify, that amount likely won’t cover your actual living expenses.
Reason #4: Employer disability coverage may not be enough
If you’re employed full-time, you might already have some disability coverage through your job. Group DI plans are common, but they’re often bare bones. The benefit might only replace a portion of your base salary – leaving out bonuses, commissions, or equity compensation.
And if your Southeastern Wisconsin employer is footing the bill for the policy, the benefits you receive will likely be taxable income.
Reason #5: The financial fallout of disability can be devastating
Without coverage, your income dries up the moment you stop working. Disability insurance gives you the breathing room you need to preserve your savings and avoid going into debt.
And yes, the cost of an individual long-term DI policy can feel steep — often 1-3 percent of your annual income (with premiums depending on a wide range of individual factors). But compared to the cost of losing your income altogether, it’s well worth it.
Still asking, “Do I need disability insurance?”
If you earn income (that supports your lifestyle, your family, and your financial goals), then yes. Especially if you don’t have a massive emergency fund or another source of replacement income ready to go. The odds and potential costs of going without coverage are too great.
I have seen how unplanned life events can throw off your big financial picture AND your tax picture. Because, besides the obvious “yes” to Do I need disability insurance?, I would also say “yes” to a query about disability insurance’s effect on your tax strategy. There are very real tax implications you need to understand upfront, and we’re happy to talk through them with you:
414-325-2040
Keeping you steady when life isn’t,
Jon Neal