Most people say a market crash. The more accurate answer tends to surprise them. Cook Pierce explains the single greatest risk to retirement savings that most financial plans overlook entirely.
What is the greatest threat to your retirement savings before you retire?
Most people say a market crash. The more accurate answer is losing your income before you get there.
The statistical likelihood of experiencing a disability that prevents you from working for ninety days or more before age 65 is significantly higher than most people assume. Studies consistently show it is more likely than dying during your working years, yet far fewer people have disability income protection than have life insurance.
Here is why it matters specifically to retirement savings. A prolonged period without income does not just pause the accumulation of retirement assets. It reverses it. Savings that took years to build get drawn down to cover living expenses. Contributions to retirement accounts stop. The compounding that was supposed to happen in those years does not. And because compounding is most powerful in the final decade before retirement, the years lost to an income disruption are disproportionately costly.
The households best protected against this risk are not necessarily the ones with the largest portfolios. They are the ones with an income replacement structure that activates when earned income stops. A disability income policy that replaces a meaningful percentage of salary. A financial foundation that does not require continuous contributions to remain functional.
This week's news about weakening institutional protections is a reminder that the systems most people assume are protecting them deserve a closer look. Disability income protection is one of the most commonly overlooked gaps in that picture. It is also one of the most straightforward to address before it is needed.
