We talk a lot about earning a living on this site but one thing that we haven’t covered – that we desperately need to – is what to do if you are the primary provider for your family, or at least a major contributor, and you are hurt on the job. It matters even if your injury is not employment related, but if it is, it carries special considerations.
This is a more complicated topic than it would’ve been 10 or 20 years ago. Back then, a full benefits package from your employer would likely have covered most of your financial survival issues. But today, with so many people working on a contract basis (no benefits), or working for employers who offer only limited benefits, it’s not so simple anymore.
What this means is that everyone who works for a living in just about any capacity needs to have a game plan established that will provide an intelligent strategy for how to survive a career-interrupting (or career-ending) injury. Yes, that can happen even in office jobs.
Here’s a loose strategy:
Apply for Disability As Soon As Possible
Applying for short-term disability is the obvious first step in the event that your employer offers this benefit. Of course, if you are a contract worker, it probably won’t be an option at all. You probably also won’t have it if you are a part-time or seasonal worker. But at this point, you should leave no stone unturned.
If it looks like you have sustained an injury that will put an end to your career, then you need to apply for long-term disability through the Social Security Administration (SSA) as soon as possible. Having your case approved can take months or even years, and there are strict rules in regard to qualifying (from SSA):
- You cannot do work that you did before;
- We (SSA) decide that you cannot adjust to other work because of your medical condition(s); and
- Your disability has lasted or is expected to last for at least one year or to result in death.
You can get help determining if you qualify by using SSA’s Benefit Eligibility Screening Tool or BEST (it’s a government program, which means that it has to have a cute moniker).
Be forewarned that this is not an open-and-shut situation. I’ve personally seen people with crippling injuries turned down for long-term disability benefits, while others seem to get them fairly easily based on mysterious emotional problems. I’ve heard – though I’ve not been able to verify – that SSA turns down an application for benefits on the first request as a matter of course. You may even need an attorney to help you win your claim. This isn’t to discourage you from applying, but rather to prepare you for the fact that it is a difficult process.
Failing to succeed with a long-term disability claim you will need to have other options…
Budget Your Savings Carefully
If you are injured and can’t work, my opinion is the same as it is when you become unemployed – always assume that it will last a lot longer than you think. That means that you must have a plan to avoid blowing through your liquid savings too quickly. Budget what you have to last as many months as possible. In order to do this, you will have to cut your living expenses significantly and immediately (don’t underestimate the importance of this step!).
Try to avoid tapping into tax-sheltered retirement plans for as long as you can. There will be tax consequences and penalties for doing so, so it’s best left as a last resort. If you do have to raid your retirement, try to time the withdrawal for a year in which you expect very low income. The lower that your income will be, the lower the tax on early retirement withdrawals will be.
So for example, if you become disabled in October, and have worked for the nine months into the year, try to delay taking a retirement plan withdrawal until after January 1st. If you are unable to work for most of the new year, you will be in a lower income tax bracket, so the tax on any retirement plan withdrawals will be lower.
Also be aware that the IRS provides relief from the 10% early withdrawal penalty tax if the retirement withdrawal is necessitated by certain types of disability. If you qualify for the waiver, and you take the early withdrawal in a low income year, your tax bite will be minimal.
Everyone in the Household Who’s Able Needs to Contribute
The loss of income from anyone in a household, especially the primary breadwinner, will impact the entire household in a negative way. Anyone who’s able to help take up the slack needs to be able to do so. That might require that a stay-at-home spouse returns to work, at least on a part-time basis. It may also mean that children who are old enough will need to find some form of income, even if they have never worked in the past.
It should also be understood that certain activities and spending plans will need to be abandoned, at least on a temporary basis. For example, summer camp, braces for one of the kids, or the family vacation may need to be canceled until further notice. When a primary household income has been lost, all bets are off. And that needs to be clearly understood from the very beginning by everyone member of the household.
I recognize that this sounds harsh. But I only include this point because I’ve seen families live in denial of a radical change in their financial status. The ability to survive such a disruption will depend heavily on how quickly the severity of the situation is recognized and adjusted to. The survival of the household should take clear precedence over any extracurricular activities. It’s a time to draw a sharp dividing line between wants and needs.
Look for Work-at-Home Opportunities for an Income Supplement – Or More
Even though a physical disability might make it impossible to obtain employment outside the home, you might still be able to find a work-at-home situation that will help to pay the bills, or even create one yourself. There are employers who offer legitimate work at home opportunities. And failing that, you might be able to develop your own.
For example, I started freelance blog writing as a way to supplement my income when I started this blog. Though it started as a side venture, the income it produced continued to grow. It is now my primary source of income. You might be able to the same with this or some other activity. And you can maintain it as either an income supplement, or as the start of a whole new career – but one that you do from home if your disability will be permanent.
Understand of course that this recommendation applies only if you’re unable to secure long-term disability through SSA. If you are on disability, and you are able to earn an income, you will lose your claim. Of course, if you want to get off disability, this can be the perfect way.
Seek Legal Counsel if You Are Hurt on the Job
I never like to advocate that anyone resort to confrontation as a way to solve problem, unless it is absolutely and totally necessary. If your career ending injury was sustained in connection with your employment, you may need to seek legal counsel to pursue remedies against your employer.
I claim no expert status in the area of employment law, nor do I know any attorneys to consult in this arena. However, the Chicago Injury Center has an excellent blog resource, filled with articles that can answer a lot of your questions about employment related injuries and similar topics. The site also offers an online chat (with an attorney) option. I didn’t try the online chat, but it’s an excellent option to have. It looks like the firm covers cases only in the state of Illinois, but it looks to be an excellent starting point for research into the legal aspects of an employment related injury.
In developing a strategy to prepare for a career threatening injury, you should consider several options and never rely on a single plan. Disability is often not an either/or situation, but something floating somewhere in between. Those are the situations that you will need to be prepared for, since they are the ones that will prove the most difficult.
You probably have a retirement plan in place, but do you have some sort of disability contingency plan?