A reddit friend asked me to comment since I’ve walked this journey already. I had a brief illness when I was 30 and then another long term disability hit when I was 38. The first illness was my wake-up call to prepare for the future. Luckily I did.
- regardless of insurance you will be expected to apply for SSDI (non need based social security i.e. you can have assets.
- Pay down all your debts, if you can.
- Try and live off of 1/2 your earnings now (including debt paydown) and bank the rest in 401K, Roth IRA, Stock Options (anything that has a match or a tax advantage.)
- Buy a house you can afford now as if you made 1/2 of what you earn – you can always rent out rooms for extra money or to offset the cost. Owning a home is often the only thing that keeps one from poverty.
- If you have an insurance buy-up at work, do it! Short-term disability pays 40-70% of your earnings tax free and is up to a year. Long-term disability pays 20-70% of earnings until 65 but is difficult to get or maintain and is taxed as income. Settlements by insurance companies are about 10-20% of what you expect i.e instead of 1 Million you will be offered $100K…
- Any monies you receive put in to passive income sources rental properties, mutual funds, CDs, bonds etc. $40K in an investment and $200 a month income forever is better than money in the bank depreciating.
- Deduct, deduct, deduct. Study tax deductions medical, investment, home etc.
- Remember all the things you used to do for yourself, you may need cash to pay someone else to do for you, so you’ll need more income.
- Medicare – you qualify for the same insurance as old people. You can switch plan A & B annually…but be careful you only have 12 months to choose the premium extended plans C, D Etc. then you’ll be locked out until you are 55 unless you move which may or may not trigger the ability to change all the plans. I really wanted a premium plan but thought I would try the lesser for a year and then got stuck with only A & B. There are free advocates that help with choosing a medicare plan, use them BEFORE your year is up! Also, lock in a good Doctor during sign-up. Many do not take Medicare at all.
- Once you own a home, if you have to choose between paying creditors or putting money away, put the money away.
- As long as your expenses meet your income, you’ll be ok.