Even if you’ve been on top of financial planning your entire life, a disability or sudden limited mobility can throw you for a loop. You may not be able to work anymore and certainly will have trouble keeping up with day-to-day life, not to mention the medical expenses associated with your condition.
For some, this may be the motivation to hire a financial advisor to help navigate bills and take on bigger planning like retirement financials and end-of-life wishes. Others may try to navigate these waters on their own.
There is no doubt financial and medical planning can be overwhelming. Consider the points below when you begin coordinating medical expenses, investments, and planning for retirement with a disability.
Why Should You Start End-of-Life Planning?
The population of elderly Americans is continuously rising. It is expected to double by 2060. Long-term care costs have also continued to increase. For those in the disability community, end-of-life care can be even more expensive because they may require specialized care. However, many are still failing to plan and prepare.
While having a disability doesn’t mean you’re knocking on death’s door, it’s never a bad thing to start thinking about ahead of time for anyone. Without a plan for the end of your life, you may lose agency over your wishes and how you want to be taken care of, along with possible undue financial stress on those in charge of your care. A survey of more than 1,400 patients quoted that some of the more critical points in planning for end-of-life expenses are pain and symptom management, preparation for death, and other health treatments. All of these things are problems individuals with disabilities already face and at the end of life, planning ahead for these costs is even more crucial.
For individuals with disabilities, end-of-life planning can offer security in knowing you’ll be taken care of without burdening your friends and family. You can plan ahead for home versus hospital flexibility as well as public versus private institution selections.
Planning ahead will also give you the ability to save more money, providing you with more options. You’d be surprised how simply planning ahead can preserve a longer quality of life and give you a sense of independence.
Can You Withdraw Your IRA Funds Early?
If you are looking at your retirement or end-of-life planning options, you might be thinking about your IRA or other retirement funds you have in place. Individuals who become disabled or find themselves with limited mobility may need to cash in their retirement funds early to continue making regular bill payments, especially if they are no longer able to work. Good news: it is possible to withdraw these funds early.
Should you need to withdraw funds from your 401K or IRA before the age of 59 and a half, you’ll be subjected to a 10% IRS penalty. Unlike 401K plans, however, IRAs actually have a number of exceptions that will allow you to avoid the 10% penalty, including becoming disabled.
Individuals put on permanent disability are able to withdraw funds from their IRA penalty-free. You can also withdraw funds from your IRA if you have had to cover medical expenses that are more than 10% of your adjusted gross income. This money can also be used to cover the cost of insurance for you and your family. In the event of your death, the funds will be passed on to your beneficiaries penalty-free.
Consider Hiring a Financial Advisor
Financial advisors can assist in helping you make decisions that will best benefit your financial future, including whether or not you should consider withdrawing from your IRA early. Having someone specifically trained to aid you in this decision-making can help provide you with the peace of mind that you’re making the right decision for yourself and your family.
Advisors can help provide you with a sense of financial security. For individuals with disabilities, this can make a world of difference. Knowing that you won’t be a burden on your family and having the knowledge that you’re making the right decisions in planning for your financial future will take a weight off your shoulders. Some financial advisors are also known to provide special pricing for individuals with disabilities.
Those in the disability community have to plan ahead more than most in all aspects of life, and retirement and end-of-life planning are no exceptions. They can be more involved because you’ll likely require specialized care and necessitates more forethought into how to properly use your retirement and savings accounts.
When making these plans, consider the points above, and remember that end-of-life planning is essential to lessening the burden on yourself and your family. It’s also imperative to try your best to take great care of your body now, thus saving you money on these expenses in the long run. You always have options.
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