Disability Income Gap: If You Couldn't Work for 6 Months, How Long Would Savings Last?

Why this is the most-overlooked coverage gap

The Council for Disability Awareness estimates ~25% of today's 20-year-olds will be disabled before retirement — a meaningfully higher probability than the ~14% chance of dying before age 65 (SSA actuarial life tables). Yet most working-age households have life insurance and not long-term disability coverage. The result: the income shock that's more likely to happen is the one most people are least prepared for.

Employer LTD usually replaces 50-60% of base salary (not bonus or RSU), capped, and starts 90-180 days into the disability. SSA SSDI averages around $1,500/month in 2024 data — well below most professionals' essential expenses — and requires a mandatory 5-month waiting period plus often a 3-24 month approval process. So the realistic first 6 months of a disability is largely covered by spouse income + savings, full stop.

How the math works

The tool walks month-by-month through the disability period, summing income against essential expenses:

1. Elimination period (typically months 1-3): spouse income only. LTD hasn't started yet.
2. LTD begins, SSDI still waiting (months 4-5): spouse + LTD.
3. SSDI begins (month 6 onward): spouse + LTD + SSDI.
4. Monthly shortfall = max(0, essentials − inflow). Sum across the duration = total shortfall.
5. Compare total shortfall to current savings. If shortfall > savings, you'd run out before recovery.

Source data: SSA SSDI program rules (5-month waiting period, average benefit ~$1,500/month per 2024 statistics), Council for Disability Awareness 'Chances of Disability' statistics (25% lifetime probability for current 20-year-olds), and BLS Employee Benefits Survey data on typical employer LTD elimination periods and benefit percentages.

What this tool doesn't model (yet): short-term disability (STD) policies that bridge the LTD elimination period, state-mandated disability programs (CA SDI, NY DBL, NJ TDI, HI TDI, RI TCI), workers' compensation (which only covers work-related injuries), federal taxation of SSDI (varies with household total income), private disability insurance riders (COLA, residual disability), and the income tax treatment of LTD payments (taxable if employer-paid premiums, generally not if employee-paid post-tax).

Math runs locally. Inputs never leave your browser. Source on github.

When the tool's estimate will be too optimistic

• SSDI approval takes longer than 5 months. The 5-month waiting period is mandatory plus the 3-24 month application/appeal process. SSA data shows median approval at initial application is below 40%; many cases require reconsideration or an Administrative Law Judge hearing, adding 12-24+ months. Set the SSDI waiting period higher in Advanced if you want to stress-test this.
• LTD definition of "disability" is stricter than you'd guess. Many policies pay only 24 months under "own occupation" (can't do your specific job), then switch to "any occupation" — a much higher bar. If your disability lets you do any work at all, payments may stop after 24 months even if you can't return to your professional role.
• Bonus and RSU income disappear. LTD typically covers base salary only. If meaningful chunk of your comp is variable (sales commission, year-end bonus, RSU vest), the tool's 50-60% LTD assumption overstates real replacement vs your actual take-home.
• Healthcare premiums change when you stop working. Employer-paid health insurance often ends 1-30 days after leaving. COBRA continuation is full premium (employer share + employee share) + 2% admin fee — often $1,500-2,500/month for a family. Factor this into essential expenses if your job goes away.

What to actually do with this number

1. Run the calculator at 6-month, 1-year, and 2-year durations. The 2-year number is the one that matters — it's the average claim length per industry data.
2. If your 6-month total shortfall exceeds your liquid savings, you have a gap. Three ways to close it: bigger emergency fund (see Emergency Fund calculator), supplemental private LTD policy, or a paid-up STD bridge policy.
3. Check your benefits portal for your actual LTD elimination period and replacement percentage — most people don't know theirs. Compare to the tool's 90-day / 60% assumption.
4. If you have variable comp, ask your benefits admin whether your LTD policy covers the variable portion. Many don't, but private supplemental policies can.
5. Verify your SSDI eligibility quickly at my Social Security — you need ~40 quarters of work credits (10 years) and 20 within the last 10 to qualify. Self-employed people sometimes find they have fewer credits than expected.