Prepare for Both a Disability and Retirement

Retirement is a time of choices and a time to do what we have looked forward to for years.

Many of us are taking the right steps - gauging our risk tolerance, investing early, dollar cost averaging, diversifying and rebalancing assets and focusing on the long term.

Retirement planning is necessary for two reasons – our earned income stops when we retire and many of our preretirement expenses continue.

When retirement finally arrives, the hope is we'll have sufficient income from our savings and investments to meet our expenses and realize our desired lifestyle.

Many people spend a lot of time preparing to achieve that goal, and the time spent preparing for a disability shouldn't be any different.

Disability Income: The Other Type of Income Preparation
Retirement planning and disability income planning are interdependent. Each process helps to replace a portion of lost earned income, to meet monthly living expenses and to achieve a certain lifestyle.

You may think the two scenarios are much different, but from a cash flow standpoint, they are almost the same. If you become disabled, two things will happen. Your earned income will stop, but many of your pre-disability expenses will continue - just like in retirement.

Your monthly household expenses - rent/mortgage, property taxes, car and house maintenance expenses, utilities, food, clothing, loans, insurance and health care - during retirement are almost identical to what your monthly household expenses would be during a disability.

If sufficient income during retirement is a primary goal, then sufficient income during a disability is equally as important.

Savings Probably Not Enough
If you had to draw from your savings and retirement assets during a disability, how long would those assets last? To determine when they would run out:

1. Calculate your monthly household expenses during a disability.
2. Total your savings and retirement account balances.
3. Divide that number by your monthly household expenses.

Like many, this number may surprise you. Think about the impact on your retirement goals.

Plan with Purpose
Make sure you have adequate disability insurance in place to protect your ability to earn an income if you become disabled.

Since a disability can have a permanent impact on your home, business, education and retirement, Northwestern Mutual offers a diverse line of disability insurance products to help replace income for household expenses and the overhead expenses within your practice or business.

These products also can help you preserve your long-term investments for education and retirement.

Depending on the products and/or services being recommended or considered, refer to the appropriate disclosure brochure for important information on the Northwestern Mutual Wealth Management Company, its services, fees and conflicts of interest before investing or engaging in financial planning services. To obtain a copy of one or more of these brochures, contact your representative.

Northwestern Mutual Financial Network is the marketing name for the sales and distribution arm of The Northwestern Mutual Life Insurance Company, Milwaukee, WI (NM), and its subsidiaries and affiliates. Brendan A Meagher is a Representative of Northwestern Mutual Wealth Management Company®, Milwaukee, WI (WMC), a wholly-owned company of NM and limited purpose federal savings bank. WMC is not a broker-dealer or insurance company. All WMC products and services are offered only by properly credentialed Representatives who operate from agency offices of WMC. Representative is an Insurance Agent of NM (life insurance, annuities and disability income insurance), and a Registered Representative of Northwestern Mutual Investment Services, LLC (NMIS), 575 S Charles St Ste 300, Baltimore, MD 21201-2428, 410-539-0084, a wholly-owned company of NM, registered investment adviser, broker-dealer and member FINRA (www.finra.org) and SIPC (www.sipc.org). Representative may also be an Investment Adviser Representative of NMIS. NM and the Northwestern Mutual Financial Network - Maryland are not broker-dealers, registered investment advisers or federal savings banks. There may be instances when this agent represents insurance companies in addition to NM or its affiliates.

Investment products are not insured by the FDIC, are not deposits or other obligations of, or guaranteed by, NMWMC or its affiliates and are subject to investment risks, including possible loss of the principal amount invested.

The products and services referenced are offered and sold only by appropriately appointed and licensed entities and Network Representatives. Network Representatives and their staff might not represent all entities shown or provide all the services discussed on this Web site. Not all products and services are available in all states.

Brendan A Meagher is primarily licensed in Maryland and may be licensed in other states.

Certified Financial Planner Board of Standards Inc. owns the certification marks CFP, Certified Financial Planner and CFP (with flame logo)®, which it awards to individuals who successfully complete initial and ongoing certification requirements.