Long Term Illness, where to put equity I may need to draw from

[steviaq]

Hi all --

Mid 30s, unfortunately am experiencing a long term illness that precludes my ability to work indefinitely. I also don't have a definitive understanding of when or if it may improve.

I became ill while unemployed so unfortunately I do not have access to medical leave or any employer sponsored short or long term disability income. I have exhausted unemployment benefits. I currently purchase healthcare through my state's health insurance exchange.

Fortunately, I was prepared for this by maintaining a significant emergency fund and by being able to significantly cut expenses. However, as time has gone on, I may need to draw from my taxable retirement portfolio to pay the bills.

I currently have approximately $260k in my Vanguard Portfolio across VTSAX/VTIAX/VBTLX (75/15/10). I am trying to understand what types of investment options I could move some of this equity into. I have seen references here to Money Market Funds, CDs, TIPS, etc. but I am unfamiliar with these investment types. My illness affects my energy and cognitive ability, so I'm hoping to get some pointers here on what to look into as simple options to preserve this money for expenses as opposed to thinking about the long term.

Thanks!

[goodenyou]

Hi all --

Mid 30s, unfortunately am experiencing a long term illness that precludes my ability to work indefinitely. I also don't have a definitive understanding of when or if it may improve.

I became ill while unemployed so unfortunately I do not have access to medical leave or any employer sponsored short or long term disability income. I have exhausted unemployment benefits. I currently purchase healthcare through my state's health insurance exchange.

Fortunately, I was prepared for this by maintaining a significant emergency fund and by being able to significantly cut expenses. However, as time has gone on, I may need to draw from my taxable retirement portfolio to pay the bills.

I currently have approximately $260k in my Vanguard Portfolio across VTSAX/VTIAX/VBTLX (75/15/10). I am trying to understand what types of investment options I could move some of this equity into. I have seen references here to Money Market Funds, CDs, TIPS, etc. but I am unfamiliar with these investment types. My illness affects my energy and cognitive ability, so I'm hoping to get some pointers here on what to look into as simple options to preserve this money for expenses as opposed to thinking about the long term.

Thanks!

SSDI?

[PoppyA]

Any life insurance you could redeem?

[Retired@58]

Sorry to hear,

Conservator while you are able to help decide who that might be? Somebody you trust.

Agree with goodenyou, is SSDI something that you will qualify for?

My best regards,

Retired@58

[InMyDreams]

Elder law attorney?
When/do you qualify for Medicare?
Preserving cash and capital seem like a priority, so cutting living expenses, including by using charities, may be a good idea. Food banks, public transit subsidies, subsidized housing, etc.
Connecting with others who have your illness (both social media and by charitable organizations for that illness) may give you roads to assistance.

Best wishes to you.

[steviaq]

SSDI?

I am in the early phases of determining what the SSDI process would entail -- however, from my understanding it is an arduous process and may take multiple years to receive approval, especially given my age. However, this is good input to validate taking more action in this area.

Any life insurance you could redeem?

I do have a very basic life insurance policy, but I don't think this would cover anything but actually dying?

Sorry to hear,

Conservator while you are able to help decide who that might be? Somebody you trust.

Agree with goodenyou, is SSDI something that you will qualify for?

My best regards,

Retired@58

Thanks for your kind words. +1 to SSDI. I am leaning on family to assist with things so I'm not sure what a conservatorship would do, but I am unfamiliar with the process.

Elder law attorney?
When/do you qualify for Medicare?
Preserving cash and capital seem like a priority, so cutting living expenses, including by using charities, may be a good idea. Food banks, public transit subsidies, subsidized housing, etc.
Connecting with others who have your illness (both social media and by charitable organizations for that illness) may give you roads to assistance.

Best wishes to you.

What do you mean by elder law attorney? I am in my 30s but presumably they would be able to assist with something that you are referring to that applies to my situation.

I currently qualify for Medicaid but am using an ACA Plan as it helps with access to treatment options. I don't think I would qualify for Medicare unless I was approved for SSDI after which my understanding is you are automatically enrolled into Medicare after a certain amount of time.

Food banks and food stamps are not something I have looked into but is a good suggestion. I do not have significant expenses with travel, and my housing is low cost by living with family members.

Good suggestion on reaching out to support groups for advice.

[SFAtty]

So sorry to hear this.

As others have noted, there are a few different considerations. First, there are sources of income and support, such as food stamps, medicaid, SSI. Almost every state/county has social services resources that can help you navigate these and maximize the benefits. If you haven't yet contacted them, that would be a start. These can both bring in income (SSI) and cut expenses (food stamps, etc.). A lawyer can help, but I'd try to exhaust free services first.

Second, you say you have an emergency fund and then the Vanguard portfolio on top of that? What is the expected timeline for when you expect to need to dip into the Vanguard portfolio - 1 year, 5 years? That affects how conservative you need to be with the portfolio in the immediate term. For example, if the emergency fund will last only a year, you really need to preserve against downside risk, i.e. perhaps move more into cash/money market and bond funds. If the emergency fund will last you a longer time, you may be able to hold off on such moves.

Third, and related, you do not say what your anticipated expenses are, and (a difficult factor) whether you expect to have a limited number of years - i.e. how long do these savings need to last? If they can cover, say, 10 years of expenses and that's all you expect to need them to cover, that warrants different measures than if they can only cover 5 years but you expect to live another 30 before social security kicks in.

Best of luck, and one thing to keep in mind is that we do live in a society that has lots of resources available to help, although it can be quite difficult to navigate them. As an example, I have a relative who has been living on SSI and food stamps for 25 years.

[quantAndHold]

Absolutely apply for SSDI, as soon as possible. If you are approved, you will get Medicare after a 2 year waiting period. The 2 year waiting period is based on when you apply, not when you’re approved. You can apply on your own, without an attorney. Depending on your illness, you might just get approved, or not. If you are turned down on the first try, you’ll probably need a disability law attorney for the appeals process.

You don’t say what illness you have (and I don’t want to know), but if it is affecting your cognitive ability, ask your medical providers if they have a social worker who can help walk you through the process of applying for whatever benefits you might qualify for. If you need a conservatorship, or might at some point in the future, a social worker can help you arrange that as well.

[secondopinion]

So sorry to hear this.

As others have noted, there are a few different considerations. First, there are sources of income and support, such as food stamps, medicaid, SSI. Almost every state/county has social services resources that can help you navigate these and maximize the benefits. If you haven't yet contacted them, that would be a start. These can both bring in income (SSI) and cut expenses (food stamps, etc.). A lawyer can help, but I'd try to exhaust free services first.

Second, you say you have an emergency fund and then the Vanguard portfolio on top of that? What is the expected timeline for when you expect to need to dip into the Vanguard portfolio - 1 year, 5 years? That affects how conservative you need to be with the portfolio in the immediate term. For example, if the emergency fund will last only a year, you really need to preserve against downside risk, i.e. perhaps move more into cash/money market and bond funds. If the emergency fund will last you a longer time, you may be able to hold off on such moves.

Third, and related, you do not say what your anticipated expenses are, and (a difficult factor) whether you expect to have a limited number of years - i.e. how long do these savings need to last? If they can cover, say, 10 years of expenses and that's all you expect to need them to cover, that warrants different measures than if they can only cover 5 years but you expect to live another 30 before social security kicks in.

Best of luck, and one thing to keep in mind is that we do live in a society that has lots of resources available to help, although it can be quite difficult to navigate them. As an example, I have a relative who has been living on SSI and food stamps for 25 years.

SSI is not available to those with considerable investment assets; if I remember right. Some of these programs consider assets.

[steviaq]

So sorry to hear this.

As others have noted, there are a few different considerations. First, there are sources of income and support, such as food stamps, medicaid, SSI. Almost every state/county has social services resources that can help you navigate these and maximize the benefits. If you haven't yet contacted them, that would be a start. These can both bring in income (SSI) and cut expenses (food stamps, etc.). A lawyer can help, but I'd try to exhaust free services first.

Second, you say you have an emergency fund and then the Vanguard portfolio on top of that? What is the expected timeline for when you expect to need to dip into the Vanguard portfolio - 1 year, 5 years? That affects how conservative you need to be with the portfolio in the immediate term. For example, if the emergency fund will last only a year, you really need to preserve against downside risk, i.e. perhaps move more into cash/money market and bond funds. If the emergency fund will last you a longer time, you may be able to hold off on such moves.

Third, and related, you do not say what your anticipated expenses are, and (a difficult factor) whether you expect to have a limited number of years - i.e. how long do these savings need to last? If they can cover, say, 10 years of expenses and that's all you expect to need them to cover, that warrants different measures than if they can only cover 5 years but you expect to live another 30 before social security kicks in.

Best of luck, and one thing to keep in mind is that we do live in a society that has lots of resources available to help, although it can be quite difficult to navigate them. As an example, I have a relative who has been living on SSI and food stamps for 25 years.

Good idea to contact social services.

I suspect I wouldn't need to dip into the portfolio for 2 years. However, there is some degree of uncertainty as that could change significantly due to medical costs; otherwise, my fixed costs of daily living (shelter, food, etc.) are minimal and low variance. I think part of the uncertainty around decision making stems from the unclear nature of my illness; in comparison to say, a confirmed terminal disease, the prognosis is unclear. One thought would be to trade upside over the next year or two to minimize risk, and hope that by that point in time having more certainty around the possibility of recovery and return to work, access to benefits like SSDI, etc.

From my understanding, preserving against downside risk as you have suggested would be to shift money into cash/money market funds/bonds?

Good point regarding the availability of resources. I previously worked in a hospital and was very appreciative of the role our social workers played in access to care, and it is a good reminder that it exists. I think it is difficult in my current state to remember that (the whole "you don't think it could happen to you until it does").

Absolutely apply for SSDI, as soon as possible. If you are approved, you will get Medicare after a 2 year waiting period. The 2 year waiting period is based on when you apply, not when you’re approved. You can apply on your own, without an attorney. Depending on your illness, you might just get approved, or not. If you are turned down on the first try, you’ll probably need a disability law attorney for the appeals process.

You don’t say what illness you have (and I don’t want to know), but if it is affecting your cognitive ability, ask your medical providers if they have a social worker who can help walk you through the process of applying for whatever benefits you might qualify for. If you need a conservatorship, or might at some point in the future, a social worker can help you arrange that as well.

Thank you for your input around the expediency of SSDI application. I was unaware that that the waiting period was based off of application date. And also for the additional emphasis on social work assistance.

[steviaq]

SSI is not available to those with considerable investment assets; if I remember right. Some of these programs consider assets.

Yes, SSI is limited to having less than a few thousand in assets from what I recall. Fortunately, I have work credits to qualify for SSDI.

[secondopinion]

Hi all --

Mid 30s, unfortunately am experiencing a long term illness that precludes my ability to work indefinitely. I also don't have a definitive understanding of when or if it may improve.

I became ill while unemployed so unfortunately I do not have access to medical leave or any employer sponsored short or long term disability income. I have exhausted unemployment benefits. I currently purchase healthcare through my state's health insurance exchange.

Fortunately, I was prepared for this by maintaining a significant emergency fund and by being able to significantly cut expenses. However, as time has gone on, I may need to draw from my taxable retirement portfolio to pay the bills.

I currently have approximately $260k in my Vanguard Portfolio across VTSAX/VTIAX/VBTLX (75/15/10). I am trying to understand what types of investment options I could move some of this equity into. I have seen references here to Money Market Funds, CDs, TIPS, etc. but I am unfamiliar with these investment types. My illness affects my energy and cognitive ability, so I'm hoping to get some pointers here on what to look into as simple options to preserve this money for expenses as opposed to thinking about the long term.

Thanks!

Sorry to hear. I know I am at high risk of being in a similar boat; so, I can relate.

I would definitely seek SSDI. Remember that while SSDI greatly reduces the amount you can earn per month from work, it does not stop all work. Keep this in mind if you happen to have some energy to earn a little bit of money later on.

As far as the portfolio, hold off two years worth of expenses in cash. If you are at Vanguard, the settlement fund is a money market fund; so, you might already have your solution by selling some of your portfolio.

Beyond this, what is done with your portfolio will be greatly affected by your expected lifespan and how much SSDI covers of your expenses. It is likely that expenses will need to be cut significantly.

[secondopinion]

Absolutely apply for SSDI, as soon as possible. If you are approved, you will get Medicare after a 2 year waiting period. The 2 year waiting period is based on when you apply, not when you’re approved. You can apply on your own, without an attorney. Depending on your illness, you might just get approved, or not. If you are turned down on the first try, you’ll probably need a disability law attorney for the appeals process.

You don’t say what illness you have (and I don’t want to know), but if it is affecting your cognitive ability, ask your medical providers if they have a social worker who can help walk you through the process of applying for whatever benefits you might qualify for. If you need a conservatorship, or might at some point in the future, a social worker can help you arrange that as well.

Do you have a reference? I thought it was based on the first SSDI payment: https://www.ssa.gov/disabilityresearch/ ... 20coverage

Everyone eligible for Social Security Disability Insurance (SSDI) benefits is also eligible for Medicare after a 24-month qualifying period. The first 24 months of disability benefit entitlement is the waiting period for Medicare coverage.

[InMyDreams]

Elder law attorney?
When/do you qualify for Medicare?
Preserving cash and capital seem like a priority, so cutting living expenses, including by using charities, may be a good idea.

What do you mean by elder law attorney? I am in my 30s but presumably they would be able to assist with something that you are referring to that applies to my situation.

I currently qualify for Medicaid but am using an ACA Plan as it helps with access to treatment options. I don't think I would qualify for Medicare unless I was approved for SSDI after which my understanding is you are automatically enrolled into Medicare after a certain amount of time.

From FAQ about Elder Law:
What Is Elder Law?

Elder law is the practice of law affecting clients as they age and plan for elder life. It also involves planning for and facilitating the protection and preservation of assets for people of all ages with special needs without threatening their eligibility for Medicaid and other public benefits.

Emphasis added

https://www.getelderlaw.com/faq/

Others would know more, but I would hope that an elder law attorney would know about getting a client onto Medicare via disability.

[quantAndHold]

Absolutely apply for SSDI, as soon as possible. If you are approved, you will get Medicare after a 2 year waiting period. The 2 year waiting period is based on when you apply, not when you’re approved. You can apply on your own, without an attorney. Depending on your illness, you might just get approved, or not. If you are turned down on the first try, you’ll probably need a disability law attorney for the appeals process.

You don’t say what illness you have (and I don’t want to know), but if it is affecting your cognitive ability, ask your medical providers if they have a social worker who can help walk you through the process of applying for whatever benefits you might qualify for. If you need a conservatorship, or might at some point in the future, a social worker can help you arrange that as well.

Do you have a reference? I thought it was based on the first SSDI payment: https://www.ssa.gov/disabilityresearch/ ... 20coverage

Everyone eligible for Social Security Disability Insurance (SSDI) benefits is also eligible for Medicare after a 24-month qualifying period. The first 24 months of disability benefit entitlement is the waiting period for Medicare coverage.

You’re correct. Unless you have ALS, the first payment will be 5 months after the date you became disabled. So it’s 29 months, not 24. Your disability date is based on your application date.

If it takes more than 5 months to get approved, you would get back pay, and the clock for Medicare will be back dated.