Shortfall against your goal
By age 65 you'd be $1,080,000 short of your goal. Your $80,000 of cash and investments would cover part of that, leaving a gap of $1,000,000 (in today's dollars).
Steve has no disability coverage, so that income would stop.
By age 65 you'd be $996,000 short of your goal. Your $80,000 of cash and investments would cover part of that, leaving a gap of $916,000 (in today's dollars).
Holly has no disability coverage, so that income would stop.
Your ability to earn is likely the largest financial resource your household has. An illness or injury can take it away for years, not months.
What would happen to the household's income if one of you could not work, from the first month to age 65.
How families protect against this. Disability insurance protects your paychecks over the rest of your working life. Few households could save enough to replace years of income. Disability insurance pays part of your income if illness or injury keeps you from working.
If one of you could not work for a long time, what should the household's income keep covering?
We count the lost income up to age 65.
We spread the saving to build a reserve over 24 months.
Your goal: keep essential spending and retirement saving going — $9,500 a month.
If Steve could not work: $5,000 a month of income keeps coming in and there are no disability benefits.
| $9,500 a month goal − $5,000 a month income that keeps coming in | $4,500 a month short |
| The goal: $9,000 a month of essential spending + $500 a month of Steve's retirement saving | $9,500 a month |
All figures in today's dollars.
How the gap adds up from the first month, and how much cash and investments would be left (in today's dollars).
| If it lasted | Gap so far | Savings left |
|---|---|---|
| 1 year | $54,000 | $26,000 |
| 3 years | $162,000 | $0 |
| 5 years | $270,000 | $0 |
| 10 years | $540,000 | $0 |
| to age 65 | $1,080,000 | $0 |
By age 65 you'd be $1,080,000 short of your goal. Your $80,000 of cash and investments would cover part of that, leaving a gap of $1,000,000 (in today's dollars).
You'd be $4,500 a month short of your goal.
Your cash and investments would run out in month 18.
Steve's take-home of $7,000 a month would stop, and no benefits would replace it.
The household would be $4,000 a month short of even essential spending.
Figures in today's dollars.
| If it happened… | The gap then |
|---|---|
| Today | $1,000,000 |
| In 5 years | $595,867 |
| In 10 years | $424,678 |
| In 20 years (when Steve would be 65) | age 65 or older — not counted |
These figures include future price rises. We assume pay and spending go up 3% a year, but disability benefits stay the same — so a gap can open later. We assume your savings keep up with prices and you don't add to them. “No gap” means your savings would cover the whole shortfall.
If Steve could not work: the shortfall so far vs savings
Your goal: keep essential spending and retirement saving going — $9,400 a month.
If Holly could not work: $7,000 a month of income keeps coming in and there are no disability benefits.
| $9,400 a month goal + $2,500 a month household help − $7,000 a month income that keeps coming in | $4,900 a month short |
| The goal: $9,000 a month of essential spending + $400 a month of Holly's retirement saving | $9,400 a month |
All figures in today's dollars.
How the gap adds up from the first month, and how much cash and investments would be left (in today's dollars).
| If it lasted | Gap so far | Savings left |
|---|---|---|
| 1 year | $58,800 | $21,200 |
| 3 years | $176,400 | $0 |
| 5 years | $294,000 | $0 |
| 10 years | $588,000 | $0 |
| to age 65 | $996,000 | $0 |
By age 65 you'd be $996,000 short of your goal. Your $80,000 of cash and investments would cover part of that, leaving a gap of $916,000 (in today's dollars).
You'd be $4,900 a month short of your goal.
That is while the household help is needed (about 14 years). After that: $2,400 a month short.
Your cash and investments would run out in month 17.
Holly's take-home of $5,000 a month would stop, and no benefits would replace it.
The household would be $4,500 a month short of even essential spending.
Figures in today's dollars.
| If it happened… | The gap then |
|---|---|
| Today | $916,000 |
| In 5 years | $470,665 |
| In 10 years | $247,281 |
| In 20 years (when Steve and Holly would be 65) | age 65 or older — not counted |
These figures include future price rises. We assume pay and spending go up 3% a year, but disability benefits stay the same — so a gap can open later. We assume your savings keep up with prices and you don't add to them. “No gap” means your savings would cover the whole shortfall.
If Holly could not work: the shortfall so far vs savings
Each one shows how your result would change if something were different. They are not advice about what you should do.
Try your own what-if
If Steve couldn't work for 2 years
The household would be about $28,000 short over those 2 years, in today's dollars.
If Steve could go back to work after 1 year
There would be no gap instead of $1,000,000. See it on its own
If Steve could go back to work after 5 years
The gap would be $190,000 instead of $1,000,000. See it on its own
If Holly worked half time to help care for Steve
The gap would be $1,600,000 instead of $1,000,000. See it on its own
If Holly stopped working to care for Steve
The gap would be $2,200,000 instead of $1,000,000. See it on its own
If Holly could go back to work after 1 year
There would be no gap instead of $916,000. See it on its own
If Holly could go back to work after 5 years
The gap would be $214,000 instead of $916,000. See it on its own
If Steve worked half time to help care for Holly
The gap would be $1,756,000 instead of $916,000. See it on its own
If Steve stopped working to care for Holly
The gap would be $2,596,000 instead of $916,000. See it on its own
This would make your result more accurate.
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