If you've recently been diagnosed with a medical condition that is likely to force you into an involuntary early retirement in the next few years, you may be reeling at this news and wondering how you'll ever be able to physically and financially prepare yourself. Fortunately, even having just a year or two of lead time can often be enough to take many of the preparatory steps that will make your transition much easier. Read on for some of the steps you can take to prepare for a forced medical retirement:
Estimate your disability benefits
If you've worked a sufficient number of "quarters" and have earned a sufficient income to qualify for Social Security retirement benefits, you may qualify for Social Security Disability (SSD) after you're no longer able to work. You may want to look over the SSD application to see what supporting documentation will be required and begin gathering this documentation now. This will ensure that you can postmark your SSD application the day you stop working, rather than spending weeks or months without an income while you attempt to round up this information.
Those who don't qualify for SSD but whose income or assets are very low may still be able to receive Supplemental Security Income (SSI), another type of federal disability benefit designed for disabled children and adults who have never been able to hold down a job due to their disability (or who have worked in a job that didn't collect and remit Social Security taxes). SSI benefits are usually lower than SSD benefits but can provide you with enough of an income to cover the cost of food, rent payments, and other necessary expenses.
Arrange for healthcare
Paying for healthcare can be one of the biggest challenges for many retirees, even those who had decades longer than you to prepare to shoulder this expense. As a result, it's important to begin investigating your healthcare options post-retirement to ensure you're setting enough aside now.
If you're approved to receive Social Security Disability payments, you may qualify for Medicare once these benefits begin, even if you're under age 65. Those who instead qualify for Supplemental Security Income are likely to qualify for Medicaid benefits available to low-income Americans. Those who are unable to qualify for either type of disability benefit may be able to purchase health insurance on the private market through the Affordable Care Act exchanges or even take advantage of COBRA to continue your current policy after you've retired.
By estimating the cost of healthcare now and pursuing your available options, you'll be in a much better position to make choices once you've left the workforce, rather than scrambling to pay for health insurance after you've already begun to experience some serious (and potentially expensive) medical problems.
Contact a financial planning service near you for more information and assistance.