The risk of becoming disabled is real; yet, Americans continue to underestimate that risk. According to the Council for Disability Awareness, 64% of wage earners believe they have a 2% or less chance of being disabled for three months or more during their working career. The actual odds for a current worker are about 30%. One-in-eight workers will be disabled for five years or more during their working careers.
And while disability insurance is designed to cover an employee’s wages if they become disabled, most plans stop paying out when the worker turns 65. Philip Davis, president of Corporate Compensation Plans, Inc., says the prevalence of 401(k) plans has put millions of Americans at a potentially catastrophic risk because when disability occurs, 401(k) contributions stop.
