Carrie Schwab Pomerantz

Dear Carrie, I'm turning 55 next year and starting a new job. At this age, do I need disability insurance? --A Reader

This is a question more people would be wise to ask. According to the Social Security Administration, a 20-year-old worker has a one in three chance of becoming disabled before retirement. Yet, SSA also reports that only 31 percent of the private sector workforce has long-term disability insurance. These are sobering statistics for anyone who depends on earned income for their livelihood.

Disability insurance provides a portion of your income if you can't work because of an illness or non-job-related injury. To me, being over 50 doesn't lessen the need for it. On the contrary, it may increase it.

Many people in their 50s are in their peak earning years and are building their retirement nest eggs. An extended disability at this time of life could completely derail their financial futures.

So ask yourself, how long could you survive without your income? If you have an emergency fund in place, that would carry you for a while. But what will you do when that's gone? The last thing you want to do is tap into your retirement funds -- that would be raiding your future to pay for the present.

Depending on what your new employer offers, you may or may not need private disability insurance, but it's worth the time and effort to figure it out. Here are some things to help you decide.

Start With Your Employer

If you happen to live in California, Hawaii, New Jersey, New York or Rhode Island, you're in luck. These states (as well as Puerto Rico) require employers to provide short-term state disability insurance.

In some states, it's provided through an insurance company; in others, it's provided by the state and paid for through payroll taxes. On average, benefits are offered for six months, with California providing benefits up to a year. The percentage of salary covered varies by state.

Even if it's not required, many employers (especially large companies) offer some type of short-term disability coverage for a specified period of time -- a few weeks or months and possibly up to two years. With any short-term policy, there may be a waiting period before benefits begin.

Long-term disability is a different story. There's no requirement for employers to provide long-term coverage. If yours does, that's a plus. Long-term benefits begin once short-term benefits run out. Coverage can be anywhere from two to five years, or even up to age 65.

Carrie Schwab Pomerantz

Carrie Schwab Pomerantz is a Motley Fool contributor.

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