Free disability insurance quotes in minutes

Your information is kept secure.

Retirement and disability insurance: What to know

As you approach retirement age you’ll have to decide whether to drop your disability insurance or keep your policy until you stop working.

Headshot of Andrew Hurst

By

Andrew HurstSenior Editor & Licensed Auto Insurance ExpertAndrew Hurst is a senior editor at Policygenius who has spent his entire career writing about life, disability, home, auto, and health insurance. His work has been featured in The New York Times, The Wall Street Journal, the Washington Post, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, and Property Casualty 360.

Edited by

Anna SwartzAnna SwartzSenior Managing EditorAnna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.

Published|3 min read

Policygenius content follows strict guidelines for editorial accuracy and integrity. Learn about our editorial standards and how we make money.

Disability insurance replaces your income if you can’t work because of an unexpected injury or illness. While having disability insurance is important in your peak earning years, things can change as you approach retirement.

Ready to shop for disability insurance?

You may find that at a certain point, it’s no longer worth it to keep paying for disability insurance — the closer you get to no longer working, the less you stand to gain from your disability insurance policy.

Do you still need disability insurance after you retire?

It depends on when you plan to retire. Say you have a long-term disability policy and you plan to retire early — in your 40s or 50s. It’s worth keeping your disability insurance even after you retire, in case you decide to start working again before you age out of your policy’s benefit period.

Assuming you have what’s called a non-cancellable rider, your rates will be locked in even for as long as you keep the policy. If you drop your disability insurance but go back to work later on, getting disability insurance in your 50s or 60s will be difficult — not to mention much more expensive than getting a policy when you’re younger.

But you probably don’t need to keep your disability insurance policy through retirement age, even if you keep working. Disability insurance, like most kinds of insurance, means you’re paying for a protection you may never actually need. If you only plan on working for five or ten more years, the money you spend on your policy could probably go to better use.

When should you drop your disability insurance?

“It really depends on [your] specific situation,” says Pat Hanzel, certified financial planner and advanced planning specialist at Policygenius. “Generally it probably doesn’t make sense to keep your policy into your 60s. It’s usually better to put those premium dollars elsewhere.”

Can you keep your disability insurance after you turn 65?

Your policy’s benefit period, or the maximum length of time you can get payments if you become disabled, will tell you how long you can keep your policy. Some common benefit periods are 1, 2, 5, or 10 years, or until you’re 65 or 67.

You can’t keep your disability insurance after your turn 65 if your policy will only pay benefits until your 65th birthday. 

You may be able to keep your policy longer if your benefit period goes past 65 — but at that point you may be better off dropping the policy and putting the money towards retirement savings instead.

Can you drop your disability insurance before you retire?

You can drop your disability insurance before you retire, but it’s not always a good idea. Before you give up your disability insurance policy, consider both your savings and expenses before making a decision.

Savings

You may want to drop your disability insurance if you have enough saved up for retirement. If you can support yourself with your savings, you can drop your disability insurance and even put what you planned to spend on your policy towards other accounts.

Expenses

Calculate how much you spend and also how much an emergency might cost you. Even if you have a lot of money saved up, you may overestimate how long your savings would last if you have high expenses or lots of outstanding debt — in this case it’s worth continuing to protect your income.

Could you stop working right now and live the life you’re used to? If the answer is no, it’s probably worth keeping your disability insurance for as long as you keep working.

What to do instead of dropping disability insurance

There are good reasons for dropping your disability insurance, but if you’re thinking about dropping your disability insurance just to save money, there are other things to try first.

  • Lower your benefits: You can lower your premiums by decreasing your benefit amount as your coverage needs change.

  • Reduce your benefit period: Another way to lower your premiums is by reducing your benefit period once you’re older and closer to retirement and your savings goals, but it’s a bad idea to scale it back when you’re younger.

  • Switch from graded premiums: You can change a policy with graded premiums (premiums that get more expensive as you age) to one with a single premium if you find your rates are getting too high.

Ready to shop for disability insurance?

What about Social Security?

Depending on your age, you might qualify for benefits through Social Security or Social Security Disability Insurance (SSDI). You can’t qualify for both of these programs at the same time once you reach retirement age.

But you can qualify for benefits from SSDI and your private disability insurance policy at the same time. In fact, your disability insurance company may require you to apply for SSDI benefits if you make a disability insurance claim. Any benefits you get from SSDI will offset those you get from your policy.

→ Read more about SSDI and long-term disability insurance

What happens to employer-sponsored disability insurance when you retire?

When you retire you lose your work-sponsored disability insurance. The policy is tied to your employer, so your coverage ends when you leave your job.

If you’re collecting disability insurance benefits through a work plan and you retire, your coverage would also end. In that case, it’s worth holding off on retiring until the end of your benefits period.

How to cancel your disability insurance

If you’re close to retirement or meeting your savings goals and you decide it’s time to drop your disability insurance, you can cancel your policy in a few simple steps.

  1. Contact your insurance company Let your insurance company know about your plans to cancel your policy, they’ll tell you what paperwork is required.

  2. Fill out any necessary forms Complete the forms, which may ask for your policy number, the date you want to cancel your policy, and other details.

  3. Stop paying your premiums Don’t forget to turn off any automatic payments you have set up. You should also make sure to get a prorated refund if you cancel your policy after making a payment.

Ready to shop for disability insurance?

Frequently asked questions

Can you collect a pension while on long-term disability?

Yes, you can collect a pension while on long-term disability insurance. This might happen if you retire from one job with a pension and start another full-time job. If you’re hurt or injured, your policy would cover the income from your new job while you collect the pension from the first job.

What kind of insurance do you need after retiring?

You probably still need health, life, auto, and home insurance even after you’re done working, but it depends on when you retire, if you have any dependents, and what your savings and expenses are.

When should you get disability insurance?

It’s better to get disability insurance early in your life when your rates are still cheap. Since disability insurance rates go up as you age, getting coverage while you’re young allows you to lock in lower rates.

Author

Andrew Hurst is a senior editor at Policygenius who has spent his entire career writing about life, disability, home, auto, and health insurance. His work has been featured in The New York Times, The Wall Street Journal, the Washington Post, Forbes, USA Today, NPR, Mic, Insurance Business Magazine, and Property Casualty 360.

Editor

Anna Swartz is a senior managing editor who specializes in home, auto, renters, and disability insurance at Policygenius. Previously, she was a senior staff writer at Mic and a writer at The Dodo. Her work has also appeared in Salon, HuffPost, MSN, AOL, and Heeb.

Questions about this page? Email us at .