- Personal Finance
Hidden Secrets about Aging and Retirement - Part 2 of a 3 Part Series
Little did we know what was ahead of us just 12 days after this picture was taken
“Thank God we planned on 70, so we would be ok at 60.”
Little did we know just how close to the rocking chair that we were during our vacation that we titled; “The Great Adventure” that September evening. As a result of the accident that happened only twelve days after the picture above was taken, it brought to our attention many misperceptions and expectations that employees have about their employer’s.
It catapulted us into unfamiliar territory that we hadn’t planned on for another 10 years. However, the plans that we had made although they were important and did help, we had no idea that the benefits offered through many employers, auto insurance carriers and even banks would turn out to be so valuable.
Our new mantra became: “Thank God we planned on 70, so we would be ok at 60.”
However, soon we discovered that with just a little tweaking, we could have had so much more help. We call it “leaving money on the table that we didn’t even know about”, which started our crusade to inform as many people as we could about the lessons that we learned.
Hoping that through our lessons and failures, you will be able to better protect you and your family in case of an accidental injury or death. Or like our situation where it was forced retirement due to a job site injury that left my husband disabled, unemployed, and unemployable.
Our mission is to inform you from a personal perspective so you and your family are protected.
No hype, just facts that we have discovered through the process of our continued “Great Adventure” now called life, aging, and retirement.
If your only insurance is through your employer, you have placed All your financial eggs into one basket!
Why are we intent on keeping all our eggs in one basket?
In the world of business, diversification is an important key to maintaining the health and growth of a company or brand. This is also the one key that seems to be missing in most of individual’s daily and financial lives. Many have failed to remember or were never taught a key element to beginning settlers of a new area or era.
- Don’t keep all your eggs in one basket!
Since the industrial revolution we have become more and more reliant on our employers. Employees expect that their employers, who many employees have given 20, 30, even 40 years to. Somehow we have mistakenly thought that our employers have become our parents when it comes time to retire. Where did this idea ever come from?
Think about this for a moment. We grow up, we were told to go about getting an education and then a career or set out directly to a job. We were told that we would be rewarded for working for the same company all our lifetime. We were told longevity is what will get you to a comfortable retirement.
- We’ve gotten lulled into placing ALL of our Eggs into one basket, call our “jobs”.
Changing Times and Seasons requires multiple baskets
Just like the farmer has different crops for different seasons throughout the year, we must employ the same strategy with our industrialized lives. At the beginning of the industrial revolution, employers took advantage of their employees, and placed them in hazardous working conditions.
The then government stepped in and provided the Workman’s Compensation Acts protect workers from financial ruin due to an on-the-job accident or death.
- Most employees are under the mistaken notion that if something should happen to them while at work, that they and their families will be properly provided for.
Depending on your income at the time of your on-the-job injury, more than likely you will experience a significant loss of income. Our loss was in the neighborhood of about 50% of our income. It is a guarantee that in most states the injured worker and their family will lose at a minimum of 20% of their income when an on-the-job accident occurs.
How much thought have you ever given to Buying Up during your employer's open enrollment period each year?
Our Top 11 lessons that we learned about Workman’s Compensation, private or employer funded disability insurance, and Social Security Disability benefits:
- Regardless of how bad of shape you are in after your accident, a Workman’s Compensation insurance adjuster will call the hospital room within 24 hours of the accident.
This one really upset me because my husband was trying to understand and answer questions about his accident while in major pain and confined to the bed.
When I asked the adjuster about this, since Don didn’t even remember talking to her, and I was told that they had to make contact with the employee within 48 hours after an accident.
- In most states, and Texas is one of them that Workman’s Compensation only pays 70 – 80% of your income of your pre-injury income.
- Depending on how the office personnel at your company answers the employer questions about a Workman’s Compensation claim will affect how much an injured employee will be paid.
Example: Sick time and vacation pay can count differently against what Workman’s Compensation pays out, not to mention other benefits your employer may provide.
- Long-Term Care insurance and employer/employee paid disability insurance can reduce your Workman’s Compensation weekly payments and any Social Security disability benefits as well can and will be reduced as well.
- You will be let go from employment when you run out of your accrued benefits from your employer, and you will no longer have access to the medical insurance of the company unless you choose the Cobra plan… your insurance premium just doubled, but you can only have it for 18-24 months and then you have to find other insurance.
- Workman’s’ compensation will only cover your medical bills as they are determined to be are as a result of your injuries. Any other medical expenses for any other medical issues you will be responsible for.
- Only 1 in 5 people knows that 1 in 3 people will become injured and disabled in their working lifetime.
- Social Security Disability will not start immediately.There is a waiting period as well as your injury must be significant enough that you will be off work for at least one year after the waiting period in most cases.
- Your monthly Social Security payment will be reduced for a time against what Workman’s Compensation will be paying you.
- Oh, and don’t get the bright idea to have Workman’s Compensation pay you off in a lump sum…you will lose most if not all your income from your private disability insurance that you may have, and lump sum payments reduce your Social Security payments.
- Oh, and interestingly enough, if you are injured and are thinking about hiring an attorney, YOU will pay them 25% right off the top of each and every check you will receive after hiring them that they help you receive.
One out of three employee in the Rat Race of Life will end their working careers with a long-term disability.
Here are the recommendations that we have learned and share with everyone who will listen:
- Whatever benefits that your company offers, Buy UP on everything as you can. (We lost about $9,000 a month because we didn’t Buy Up on our Disability and Long-term care insurance.) The buy up would have only cost us about $20.00 per check.
One time each year employers have an open enrollment period where you can make changes to your benefits.
- Typically this is done in the last quarter of each year, and must be turned in according to your human resource department of your company.
Be sure to go over each benefit and have your budget handy to make yearly increases as you can to your benefit package at work.
While we didn’t have parents to give us this advice ahead of time, we did have an “other mother” named Mary P. that gave us some sage advice years ago. She told us to quit worrying about trying to save money while we were still raising our 5 children. She said that we would be able to save more after the children are grown and raising their own families.
While that seems to go counter to what most financial planners will advise, however it is true. When the children leave home, you will get a raise!
- The more benefits that you pay for yourself can reduce your taxable income during a disability.
Check with your tax professional on this one. Depending on what type of Long-Term Disability policy you purchase or Buy Up on can possibly affect your taxable income.
Example: If your employer pays for all these benefits, then you can expect that if you should need to use your Long-term disability insurance or your long-term care benefits, they will be taxable income to you. However, if you pay the premiums it will be tax-free income in most cases.
- Just because you may not be able to walk or function like you did before an accident, doesn’t mean that Workman’s Compensation or Disability Insurance will pay you for the rest of your lifetime.
Example: Don’s medical diagnosis and prognosis is that he is a fall risk because he cannot stand or balance while standing for any length of time. He is considered to be an Incomplete Quadriplegic. Workman’s compensation and disability insurance companies only consider Quadriplegia when you have lost ALL MOVEMENT and function, not just partial loss. Even when that partial loss doesn’t allow you to use your dominate hand in your daily functions.
Your sunset years could come soon that you might expect.
There is not a company or risk management department around that would allow him back on a job site or office position because of his disabilities.
He isn’t bad enough to be confined to a wheelchair, but still requires daily supervision and care.
Remember I shared with you that the accident left him with limited movement on one side of his body, and no sensory feelings on the other side.
He needs someone around him 24/7 to help with normal daily activities and neither his employer (the one he was injured with) nor do any of the insurance company policies pay for his daily care.
Thank God we were in a position that I could be a home with him, otherwise we would have to pay an Adult Daycare to assist him, and there again the insurance companies don’t pay for this since he is not totally paralyzed.
We do hope that you have learned a few things from our mistakes and personal experience of being injured on the job. While I hope that you haven’t seen this article as a scare tactic, I do hope that you have learned some things that will help you should you ever be injured in an accident, whether on the job or off.
While we did make some mistakes regarding how well we were protected if something should and did happen.
While we are thankful that we are ok at age 60 when the accident happened, we have seen how things could have been make a little easier through the transition from employed to unemployable.
The small financial plans that we made, had they been tweaked just a little better we would be better able financially to deal with the care that is required.
In part 3 of this article we will be discussing Life, Aging and Retirement. I will be dispelling some of the HYPE surrounding getting older and moving into the retirement years of life.
We are living it NOW, and we can tell you first hand, Don’t Believe the Hype about your money and retirement. You won’t want to miss reading it.
We will also help take some of the mystery out of Medicare and provide some solid advice regarding its benefits.
Has this article helped you make a decision about your insurance needs or adjustment that you might need to make?
© 2015 Cammy Walters