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Financial Steps Everyone Needs to Know to Prepare for a Disability

Belleville, IL (PRWEB) April 04, 2012

Most financial experts advise to have at least six months of income in a rainy-day fund in case of an emergency or job loss. But even that isnt enough for someone unable to return to work due to a serious disability or illness, according to Allsup, a nationwide provider of Social Security disability representation and Medicare plan selection services.

A 20-year-old worker has about a three in 10 chance of suffering a disability before reaching retirement age, according to the Social Security Administration (SSA). More than 8.57 million people rely on Social Security Disability Insurance (SSDI) benefits because they are unable to work. However, the average monthly benefit was just $ 1,072, and the average time to be approved benefits for those appealing to the Appeals Council was more than two years in 2011.

Many people underestimate the financial severity of a disability, said Paul Gada, personal financial planning director for the Allsup Disability Life Planning Center. With little savings of their own, they have to rely on others for support.

The Allsup Disability Finance poll for 2012 found that friends and family continued to be the leading resource for support while awaiting SSDI benefits. An Allsup Disability poll in 2010 was conducted on the same topic. However, 2012 poll results indicate that friends and family, along with credit options and charitable assistance, may be tapped outforcing more people to sell personal items or raid their retirement savings.

Resources Tapped while Awaiting SSDI Benefits (June 2010 / April 2012)

Friends or family providing support (42% / 37%)

Spouses income (33% / 34%)

Government assistance (such as Supplemental Security Income or food assistance) (33% / 33%)

Sale of personal items (26% / 31%)

Personal savings (20% / 21%)

401(k), IRA or other retirement savings (15% / 18%)

Credit cards (17% / 15%)

Home equity line of credit (7% / 4%)

Private charitable assistance (10% / 3%)

Planning and Preparing For Disability

Its important for people to plan financially for a disability while they are still working, Gada said. This should include:

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