Disability Insurance Observer: Retirement Income

Workers are much less likely to insure their current income against disability than against premature death, even though they are more likely to become disabled than to die, and they are less likely yet to have any protection for retirement plan contributions, he said.

“A long-term disablement often functions much like a choice not to participate in a retirement savings plan,” Fuerst said. “Although in reality it isn’t the individual’s choice, the result is the same—no savings, no employer match, and a very significant decrease in the amount available at retirement.”

Fuerst suggested that policymakers could address the problem by making employers and workers more aware of it, and of the idea of using insurance products to mitigate the risk.

My thoughts: The real problem here is that many workers have trouble preparing for the cost of next month’s rent check or mortgage payment, let alone future risk.

Improved public awareness campaigns likely would help, but the heart of any efforts to get people think more about the future has to be expanding economic activity and workers’ income; increasing workers’ sense of confidence about the economy; and increasing workers’ and policymakers’ focus on long-term thinking.

It’s hard to expect workers and employers to think much about the long-term at a time when Congress plays games of chicken with the budget every few months; Congress and the White House use gimmicks to produce a budget that looks somewhat less openly less terrifying than it would otherwise look; and the Federal Reserve Board starves the people and companies that do try to save for the long term by keeping interest rates low just to prop up the banks today and to keep customers from making a run on the banks, and rioting, today.