The risk of disability from an unexpected injury is a sad but ever-present fact of life; when it strikes near retirement it can lead to stark financial decisions. Many people opt to dip into savings to cover the unexpected expenses from the injury or illness in addition to maintaining their standard of living. Then, the remaining investments tend to be moved into low risk, and low yield, retirement plans which further pressures the health of the savings. Instead, keep retirement funds in plans that outpace inflation and slash expenses with anticipatory cuts if it is clear that a standard of living downgrade is inevitable. This strategy will help prevent the loss of retirement money down the line and put the individual in control of the new circumstances.
See Kyle Krull, When a Disability Derails Your Retirement Plans, Wealth Managements, May , 2015.
Special thanks to Jim Hillhouse for bringing this article to my attention.
