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Forced into very early retirement
Old 07-21-2011, 01:48 AM   #1
Confused about dryer sheets
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Forced into very early retirement

I had injuries to my neck that does not allow me to continue to work. However I have a guranteed pension income but want some more opinions that I'm hoping to get here.

Im 34 and my wife is 26. We have 2 children who are physically disabled. My wife is no longer able to work and stays home to care for our disabled children. With my job and my injuries being work related the kids are able to attend any state college for free including books, meals and housing. So college is taken care of. I'm waiting for them to send me my final numbers but I expect my pension to be about 3600.00 a month and is not subject to taxes. I'm waiting to see the papers to know the actuarial reduction of the 3600.00 to leave my wife a half benefit when I die. The 3600.00 will go up depending on how the pension system does at 3% cost of living increases per year.

I have an additional disability insurance that will pay me roughly 1,500 a month that is also not taxable. This is paid until I'm 65. I have no idea how it will be calculated but eventually after a legal fight workers comp will have to also pay me a supplemental income for the rest of my life.

My wife and I have some real estate investments but other thana few thousand in our account all of our savings is tied up in the real estate with no other investments other than the real estate and pension.

We are able to live comfortably on the 3600.00. My plan was to take the 1500.00 a month and invest it for my wife when I pass as she will lose the 1500 a month from the disability insurance and her 3600 or its new figure with cost of living increases will be cut in half when i die. So I want to invest the 1500 a month so she can draw on it when she gets older to supplement the pension.

Will the 1500 be enough or what are some thoughts regarding this?

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Old 07-21-2011, 05:44 AM   #2
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You need to build a long-term financial plan... You can model the outcomes.

I would recommend that you be conservative in the modeling. I like to use 3 scenarios (albeit realistic scenarios). Best case outcome, worst case outcome, and likely outcome.

Don't forget to model the risk elements. One element is mortality.

You probably should look at your disability income as a job.... how does your family lose that job (income)? if you die!

For example: If you died in 5 years, how would your family sustain their income needs? How would your DW be prepare for retirement?

If you die early, the accumulation will not happen. This is where products like Life Insurance are used. But you would need to be insurable.

If you decide you need life insurance.... remember Life Insurance Agents' have a motivation to sell insurance.... Make sure you understand the products and how they fit into your plan.

Term Life Insurance seems to be the lower cost approach. One can get term policies for up to a 30 year term.

Personally, I would not take anyone's advice blindly... (i.e., without understanding it and that it makes sense in the context of the plan).

If your are a DIY person... there are plenty of books in the library that can help you develop your plan.

One other thing to consider. It could be that your DW needs to work. I would recommend that you look at all options.When you were working, you made a decision that your DW needs to stay home because of the children. Have the more recent events (your disability) changed the circumstances and made other options possible.

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Old 07-21-2011, 08:59 AM   #3
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Another option for your wife could be to get additional education now to enable her to get a better qualified job when she needs to or when the kids need less care at home. This might provide better return of investment than investing in life insurance, even more so if the insurance could reject you for high risk.

But I find it difficult to recommend anything without knowing how much you are handicapped by your injury in handling the kids or how much care they will need long term.
It might also be wise to outsource part of the daily tasks at home to prevent burn out of your wife and yourself.

All the best and take good care!
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Old 07-21-2011, 10:55 AM   #4
Confused about dryer sheets
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Thanks for the replies. I will check into a life insurance option if it is possible. If I were to die then she would be possibly reduced to half of the 3500.00 and whatever was invested at the time so you are correct to cover all bases a life insurance policy would solve that issue. We do have the investment property that will also provide income however im trying to leave that as a back up and not consider it into the equation.

Her return to work will not be anywhere in the near future and my back issues do not allow me to lift the kids and care for them so she is still needed here. We have very little debt other than a house mortgages on our home and the rentals which isnt very high motgages. I may also be able to consider ssi and have left that out of the equaton all together.

I have spoken with her about a return to school as part of my job related disability perk allows her to also attend college at no cost. So I think that will be something she does now or in the future when the kids need less care.
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Old 07-21-2011, 11:08 AM   #5
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Consider the option of leaving your wife the entire $3600 benefit, if possible, especially compared to saving the $1500 disability benefit. I have a pension and left my wife the entire monthly amount. Even doing that and at such a young age, which drives up the cost since they could be paying her for 50 years if I died today, it was only 7 percent or so of my total. Much less than $1500 and my pension is third larger or so than yours. Could be the less expensive way to provide for your family.
Retired July 4th, 2010 at age 43
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Old 07-21-2011, 03:46 PM   #6
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Just because you are disabled doesn't mean that you can't get a life insurance policy, which it sounds like your wife would definitely need if something happened to you. It will depend on the nature of the injury, whether you need assistance with daily activities, and if there is any follow-up treatment still left to be done.

Stories like this make me glad that I offer disability insurance to all of my clients. Many people balk at the price and say they can't afford it, but most couldn't afford to live on SSDI either. Easily the most underbought type of insurance. Even those with group disability are often uninformed as to what it actually covers and probably in for a big surprise if they become disabled. Good luck with everything.
Disclaimer - I am an independent insurance agent. If the above message contains insurance-related content, it is NOT intended as advice, and may not be accurate, applicable or sufficient depending on specific circumstances. Don't rely on it for any purpose. I do encourage you to consult an independent agent for insurance-related advice if you have a question that is specific in nature.
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Old 07-21-2011, 04:13 PM   #7
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Look into whatever support networks are are available to help with the children.
ie) special education programs, and state help including respite and in home support. Also research how much social security your wife would receive if something happened to you. Likely the children would qualify and if they are permanently and totally disabled they will qualify as adults. Special education is available for disabled childen younger than normal school ages.

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