You may want to work until you’re 70 or older to build up your retirement savings, but that doesn’t always work out. One in four people will be out of work for at least a year because of a disability before they reach retirement age, according to the Council for Disability Awareness.
Common ailments leading to disability include cancer, heart disease, stroke, mental health issues, and long COVID. In fact, 61% of Americans underestimate the prevalence of long COVID, which has the potential to last months or years, and affects 30% of people with COVID, according to a Policygenius survey.
Up to 23 million Americans have been affected by long COVID, a million of whom may be too sick with long-COVID to continue working. 
We usually don’t think that an illness like COVID-19, can lead to a disability that impacts our ability to earn a living. Most Americans aren’t financially prepared for a disability: 72% don’t have or don’t know if they have disability insurance, according to a Policygenius survey.
If you’re worried that an unexpected health ailment might force you into early retirement, here’s how to prepare.
Get clarity on your disability insurance policy
If you’re working and your employer pays for your disability policy, be aware that the money you receive while on disability will be taxed as income, says Daniel M. Yerger, certified financial planner and president of My Wealth Planners in Longmont, Colorado. But if you pay for the disability plan the money you receive while on disability won’t be taxed, he says. “This can be a bit of gotcha,” he says. “Make sure you know what your disability payment is really going to be.”
Many employers provide short-term disability insurance, which provides benefits for a few months in the event of a disability. You can also purchase long-term disability insurance, which can replace income for years, or even decades.
Save as much as you can and pay down debts
Take a holistic view of your budget to determine if you’re overspending, house-poor or under-saving, says Blaine Thiederman, CFP and founder of Progress Wealth Management in Arvada, Colorado. As you track your spending and savings, consider the 50/30/20 rule. You shouldn't be spending more than 50% of your monthly take-home pay on needs such as housing, food, healthcare, transportation, and insurance). Spend no more than 30% on wants (dinners out, vacations, luxury items). At least 20% of your monthly take-home pay should be used to pay down high-interest rate debt or should be put in a savings account. “If your spending isn't in line with this, you're likely overspending and need to restructure your budget,” Thiederman says.
Make sure you have an emergency fund to tide you over during a short-term disability. “All long-term disabilities start out as short term disabilities,” Yerger says.
Protect your health
Prioritize going to the doctor at least once a year, even if you think you can’t afford it, Thiederman says. “Recognize that if you don't aim to prevent future issues, you'll have much bigger bills when they come and likely a shorter life,” he says. “These potentially massive, unexpected medical bills will get in the way of you saving for retirement.”
Lower your financial risk
Set up a health savings account and consider long-term care insurance, which covers the costs of a nursing home and other forms of elder care, while you’re young to help protect your financial risk later in life.
If you have a high-deductible health insurance plan, you can open an HSA. Contributions are tax deductible, and if you take the money out for a qualified medical expense, you won’t pay taxes on it, Yerger says. After age 65, you can take money out for any reason. However, if the money isn’t used for a qualified medical expense, you will have to pay income tax on its growth.
Most people wait too long to apply for long-term care insurance, Yerger says. “If you waited until a medical event that causes you to apply for long-term care insurance, you probably won’t qualify,” he says. The pricing is age based and premiums increase over time so it is wise to apply before age 60.
Develop skills that allow you to work remotely
If your disability isn’t too severe, you might consider working a remote part-time job to supplement your retirement income. “Skills like customer service, web development, sales, or relationship management are all ways to help you generate additional income post-retirement without having to drive anywhere,” he says.
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