What is Disability Retirement?

Malcolm Tatum

Disability retirement is a form of retirement benefit that is granted to individuals who are no longer able to work due to the onset of a debilitating illness or an injury that is anticipated to either prevent the employee from working for the long-term or even permanently. Disability benefits of this type are sometimes provided by employers but may also be granted as part of a government-sponsored benefit package. The idea behind this type of retirement option is to provide the disabled individual with at least some amount of income that can be used to aid in meeting basic living needs and possibly help with the costs of medical care.

Businessman giving a thumbs-up
Businessman giving a thumbs-up

In some jurisdictions, there are specific classes of disability retirement that help to define the scope of benefits provided to qualified candidates. When this is the case, a distinction is usually made between industrial disability benefits and the broader disability benefits. A general disability retirement applies when the cause of the disability occurs outside the workplace. When the disability comes about due to an issue that is job-related, the retirement is classified as an industrial disability.

The scope of benefits included in a disability retirement will vary. Most will provide a fixed monthly income that is provided as long as the recipient retains the status of being disabled. When the recipient is found to have a permanent disability, the monthly support continues until the individual passes away. This monthly stipend is sometimes based on a percentage of the individual’s average salary or wages over a specified period of time. The amount may also be fixed by current governmental regulations, using schedules and tables designed for use in this type of situation.

In some cases, disability retirement benefits will also include some type of ongoing assistance with medical care costs, access to home care such as meal preparation, and even the ability to enjoy some type of physical therapy at reduced costs. The range of benefits provided will often be based on the type of injury or illness involved, and the ability of the recipient to manage expenses related to the health issue using other resources, such as dividends from investments.

Qualifying for disability retirement normally requires confirmation that an illness or injury has made it impossible for the individual to continue in the workplace. As part of this process, examination by one or more medical professionals is required. In some jurisdictions, periodic evaluations are required from time to time to determine if the individual still meets the criteria for receiving disability benefits, a strategy that helps to make it somewhat more difficult for unworthy individuals to receive benefits to which they are not entitled.

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