Off the keyboard of RE
Published on the Doomstead Diner on May 10, 2015
Discuss this article at the Medicine & Health Table inside the Diner
As I mentioned in my last article RE's Excellent Spinal Surgery Adventure, I am currently in the midst of a Health Catastrophe that only a very expensive surgery can hope to do anything to fix up. Bad as it is having to deal with that, you get an ancillary problem when one of these catastrophes strikes, you lose your income pretty much instantaneously if your income comes from having a Job, as most folks besides the Filthy Rich need for a source of income.
Generally speaking, people in the FSoA believe we have a Social Safety Net that keeps you from falling off the cliff right away if you can't work. Unemployment Insurance is supposed to cover you for 6 months to begin with, right? Wrong.
In order to be eligible for UI, you have to be READY, ABLE & WILLING to take a job. If you can't do that, you can't receive UI Bennies. So if say you were a Tree Trimmer and lost your arm in the Wood Chipper, obviously right after it occurs you're not going to be ready to work at ANYTHING for quite a while, and never Tree Trimming again. Once you get your prosthesis and heal up, you might be able to work as an IT Developer, but you don't have those skills or experience, so you're not going to get a job like that requiring only one good arm. So you don't get UI.
Clearly, you have become DISABLED, so you should be eligible for SSDI, Social Security Disability Insurance. However, it takes minimum 4-6 months for Social Security to determine whether to hand you those Bennies, and this is only if you do all the filing correctly and quickly, which you probably don't do right away because you're too busy getting your medical problems fixed up. After this 4-6 month waiting period, SS approves currently around 40% of the applications the first go round, and another 40% on a second go round, which of course takes an appeal and a few more months to finally get it if you're not one of the 20% that get left twisting in the wind in perpetuity.
Now, for the Wood Chipper, if his accident happened on the job, in theory he should be eligible for Workman's Compensation. This assuming he is not Self-Employed and has an Employer to file a Workman's Comp claim against. Employers have Insurance Companies that get called in when a WC claim drops in, and of course they don't want to pay up unless they absolutely have to, which brings in the State Labor department when they "Contravert" the claim, which basically is for some reason they deny the responsibility to pay up. This then goes into an arbitration proceedure, and you better have a good Lawyer to represent you for that one. Even with a real good case like the Wood Chipper probably has here, you don't even get your fist Pre-Hearing for 6 weeks, and then it is another 6 before the first Hearing, and meanwhile you are twisting in the wind and racking up the medical bills too.
So basically, far as a Social Safety Net goes, there really isn't one that is effective if you get hurt or have a medical problem that keeps you from taking a job, even temporarily, which is in many senses worse than a problem which makes you permanently disabled. If you're permanently disabled, at least after 6 months you should start receiving your SSDI bennies. Calling this an "Entitlement" is absurd, you paid into this insurance fund for precisely such an occurence. If it was just a temporary problem, like say the Wood Chipper just broke his arm but didn't cut it off, he isn't eligible for SSDI once he heals up, which he does before SS even makes a determination on his condition. His employer replaced him while he was laid up, so now he needs to find a new Wood Chipping job. He IS now eligible for UI, but this will only last him 6 months once he finally gets it rolling, but if he didn't have at least enough savings to carry him through the 6 weeks or so while his arm was healing he may already be Homeless, his Cell Phone cut off and living in his car. Even if there are any other Wood Chipper jobs available, it's tough to get a job when you have fallen this far off the cliff.
So, how much Emergency Savings do you really need? Here's some estimates from Business Insider on what your Emergency Savings Fund should be:
Your emergency fund is the cash you have set aside in case of — you guessed it — an emergency.
Ideally, you're storing this cash in a separate savings account, in order to draw a mental and logistical barrier between this money and your other savings, so you don't accidentally spend it on a trip to Aruba or a comfy new mattress.
This money is specifically for emergency situations, like a medical emergency, a death in the family, or to cover your living expenses should you lose your job and income. "If you also have an investment portfolio, you don't want to have to liquidate things at an inopportune time to raise a little money," explains Jonathan Meaney, a certified financial planner. "It's good to have some cash on hand that's not exposed to the ups and downs of the market."
But how much, exactly?
Emergency savings aren't usually measured in terms of dollars — rather, it's months of living expenses that money could cover. For that reason, everyone will have a different dollar amount, and everyone will have a different need.
The most basic emergency fund, for a healthy person without dependents who lives well within their means, is three months of living expenses.
"If you lost your job, you could presumably find another one within this window," explains Meaney. "Although in the current job market, it's been a bit of a challenge."
Dual-income families, people with dependents, or individuals with variable or commission-based income might want to think more in terms of having at least six months of living expenses stored in their emergency savings.
Some experts even recommend that every person blow straight past three months, and sock away at least six months' worth of savings no matter their situation.
Again, the amount of savings you need is highly personal. "What does your overhead look like? Are your only expenses every month your utilities, or do you also have a $600 car note?" Meaney asks.
When calculating your month's living expenses, you'll want to include costs like your child's tuition, any debt payments you need to make, or any other expenses you'd have to cover should your income be interrupted. The number you come up with shouldn't be a surprise, if you know how much you're spending every month. "You're starting from your budget," Meaney explains.
Single-income families, families with health problems, and older and/or retired people will most likely want more months' worth of cash stored away — at least eight months, or even an entire year.
While no one expects an emergency, those who are bringing in less income or who are at a higher risk for some sort of upset (like older individuals) will want to make sure they have enough money to cover them for a considerable period of time, or a series of very large bills.
It may sound like a lot of money, but amassing your emergency fund is just like saving for a vacation or a new car: Set up a regular auto-deposit from your paycheck into your emergency fund, and let it grow quietly in the background, hopefully never to be needed.
Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event, according to the survey of 1,000 adults. Meanwhile, 50% of those surveyed have less than a three-month cushion and 27% had no savings at all.
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