Firefighting is one of the most physically demanding and perilous professions. The inherent risks don’t just come from flames and smoke but also from the strenuous physical activities that can lead to injuries or long-term health issues. Moreover, life outside the fire station isn’t without hazards. Off-duty accidents—like a car crash or a sports injury while snowboarding—can be just as debilitating.
The sobering fact is that more than one in four 20-year-olds will become disabled before reaching retirement age, according to the Social Security Administration. In 2023, the average monthly disability benefit was about $1,483, barely enough to keep someone above the poverty level. For firefighters accustomed to a certain standard of living, this amount may not cover basic expenses, let alone medical bills or family needs.
| Reason | Percentage (%) |
|---|---|
| Musculoskeletal disorders | 27.6% |
| Cancer | 15.0% |
| Injuries (fractures, sprains, strains of muscles and ligaments) | 12.0% |
| Mental health issues | 9.3% |
| Circulatory (heart attack, stroke) | 8.2% |
SOURCE:https://disabilitycanhappen.org/disability-statistic/
The table above highlights common reasons for long-term disability claims for the general population. As a firefighter, many of these risks are increased.
Disability’s Impact on Retirement Planning
An unexpected disability can put your finances at great risk and significantly affect your retirement readiness. Firstly, disabilities often come with increased medical expenses. From ongoing treatments to specialized equipment, these costs can quickly erode your savings and increase your chances of filing for bankruptcy.
A 2019 study on consumer bankruptcy filings revealed that 77.8% of those who filed for bankruptcy cited income loss as a contributing factor, with 44.3% specifically attributing it to medically-related work loss. Additionally, a large-scale study in western Washington state found that cancer patients were 2.65 times more likely to file for bankruptcy compared to those without cancer, with the highest bankruptcy rates observed among younger patients (under age 50).
If you’re not working, your ability to save for retirement could be significantly reduced, plus you may end up with fewer years to contribute to your pension and retirement savings. Many pension plans calculate benefits based on years of service and final salary. Retiring earlier than planned means fewer years of service and potentially a lower final salary, which can result in reduced pension payouts, putting further strain on your retirement readiness.
Tools to Protect Your Retirement in Case of Disability
While your pension plan may offer some disability benefits, it might not be sufficient. Remember, disabilities can happen off-duty as well, and not all pension plans fully cover off-duty incidents. Plus, many firefighters often don’t qualify for Social Security Disability Insurance since they typically don’t contribute to Social Security throughout their careers.
For example, Colorado’s Statewide Death & Disability Plan for Fire & Police employees provides a 70% benefit for on-duty disabilities. Ohio’s annual disability benefit for firefighters is set by the OP&F Board of Trustees and is a percentage of the firefighter’s average annual salary, but it cannot exceed 60 percent of their average annual salary.
Each state has differing payouts, but we can see from just these two states alone that you won’t get 100% of your salary if you become disabled, and what you do get may fall far short of maintaining your standard of living, especially when considering additional medical costs.
Disability Insurance
A private disability insurance policy for firefighters can replace a percentage of your pre-disability income. The percentage and duration of the payout will depend on whether it’s a short-term or long-term policy. Short-term disability may cover you until you recover, while long-term disability can provide income until retirement or even for life, depending on the policy. Also, you may want to consider a policy that comes with benefits for partial disabilities and a cost-of-living adjustment (COLA) to keep pace with inflation.
Life Insurance with Disability Riders
A disability rider on your life insurance policy may provide either a monthly income or a lump sum to cover medical expenses, rehabilitation, and daily living costs. The monthly benefit is typically a percentage of your policy’s face value, but specifics can vary by insurer. Policies often have differing rules, such as waiting periods and benefit limits, so be sure to choose a policy that aligns with your needs. Also, be aware that some riders may only cover life insurance insurance premiums, so if you’re looking for income replacement, be sure to specify this when choosing your rider.
Annuities With Disability Riders
Annuities with disability riders allow you to access your annuity payments early to cover living and medical expenses. Similar to life insurance with disabillity riders, some plans come with a disability waiver of premium, ensuring that your contributions to the annuity continue without interruption if you’re unable to work. You may be able to also tack on a disability income rider to provide extra income on top of your regular annuity payouts, helping you maintain financial stability. These features can also waive surrender charges or penalties for early withdrawals, making them especially valuable for firefighters who face heightened risks both on and off duty.
Health Savings Accounts (HSAs)
One consideration with disability insurance and riders is that if you never become disabled, the premiums paid are not recovered, similar to other types of insurance. An Health Savings Accounts (HSAs) offer a tax-advantaged way to invest for medical expenses, with contributions, growth, and withdrawals all being tax-free when used for qualified medical costs. So even if you never become disabled, you may still have your savings to use for other medical expenses. That brings us to the next point–investing is never guaranteed, so if you choose to purchase risky investments within your HSA, you may lose money rather than make money. Also, not all firefighters qualify for an HSA, and even if you do, contributing to one may not make sense based on your general health status and financial situation.
Prepare for What You Can’t Predict
Life is unpredictable, and as a firefighter, you understand that better than most. While you can’t foresee every challenge, you can prepare for them. Many benefits and protections are available, but navigating them can be complex. At Protection Red, we specialize in helping firefighters like you understand your options and create a tailored plan that safeguards your retirement against the unexpected.
If you’d like to review the options that make the most sense for you and your family, click the button below!
Sources:
https://www.ssa.gov/disabilityfacts/facts.html
https://disabilitycanhappen.org/disability-statistic/
https://disabilitycanhappen.org/disability-statistic/
https://www.healthaffairs.org/doi/abs/10.1377/hlthaff.2012.1263?journalCode=hlthaff
https://www.fppaco.org/PDF/pubs-handouts/SWDD-At-A-Glance-2020-10-20.pdf
