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Disability Income Gap Calculator

Estimate how an entered group or individual disability benefit, policy cap, tax assumption, waiting period, essential expenses, and emergency savings could interact during a work interruption.

Quick answer: Estimate essential-expense coverage using gross policy-covered income, replacement percentage, benefit cap, waiting period, and entered tax treatment. Enter Monthly gross income covered by the policy, Essential monthly expenses, Emergency savings, and Employer disability coverage to personalize the estimate. It returns Months you could cover, Monthly shortfall, and Net monthly benefit so you can compare the impact before choosing a next step. Use it to compare long-term value, tax impact, risk, time horizon, and contribution choices.

Your decision

You have a protection gap. Your net benefit would be $3,510/mo against $4,500 of essentials — a $990/mo shortfall — and your savings would last about 5 months.

Recommended: Review options for about $990/mo of additional net benefit

Months you could cover

Watch

5 mo

How long savings plus benefits sustain essential expenses.

Monthly shortfall

Costly

$990

Essential expenses minus your net disability benefit.

Net monthly benefit

$3,510

after tax

Your employer benefit, adjusted if taxable.

Coverage gap over period

Costly

$19,290

24 mo

Total cash shortfall over your desired coverage window.

Ranked options

#1Review options for about $990/mo of additional net benefit
Closes the monthly income gap between your benefit and essential expenses.
$11,880/yr
Confidence: MediumEffort: MediumRisk: Low
#2Build a larger emergency fund to bridge the waiting period
Aim for at least the waiting period (3 months) of full essential expenses in cash so benefits can start before savings run out.
Confidence: HighEffort: MediumRisk: Low

Watch-outs

• You marked the benefit taxable, so the estimate applies your entered 22% effective tax rate. IRS treatment depends on who paid the premiums and whether employee premiums were after-tax.
• Education-only cash-flow estimate, not an insurance recommendation. Confirm covered earnings, offsets, exclusions, benefit cap, elimination period, own-occupation definition, and tax treatment in the actual policy.

Assumptions used

Monthly gross covered income: $7,500
Essential monthly expenses: $4,500
Emergency savings: $15,000
Employer coverage: 60% of income
Monthly policy cap: $10,000
Benefit taxable: Yes (22% entered rate)
Waiting period: 90 days

Estimates based on your assumptions above — roughly indicative, not financial, tax, or legal advice.

Next steps

Plan this in Money Map →

IRS disability-benefit tax guidance →

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Why this matters

The headline replacement percentage is not the whole policy. Covered earnings, a monthly benefit cap, offsets, the elimination period, and who paid the premium can materially change spendable benefits. This tool is a cash-flow stress test, not a coverage recommendation.

Frequently asked questions

How does the calculator estimate the benefit?

It multiplies entered gross covered income by the entered replacement percentage, applies the entered monthly policy cap, and then applies an entered effective tax rate if you mark the benefit taxable. Use the actual policy document for each input.

What is the elimination (waiting) period?

The time between becoming disabled and when benefits start — commonly 90 days. During that window you rely on savings, so your emergency fund needs to cover full essential expenses for at least that long.

Why is the benefit sometimes taxable?

The IRS says employer-paid benefits are generally income, employee-paid after-tax benefits generally are not, and shared-premium arrangements can be partly taxable. Confirm how premiums were paid before entering a tax assumption.

How do I respond to a disability income gap?

Review the actual policy, sick leave and government benefits; test a larger emergency reserve; and compare qualified coverage options. The displayed shortfall is a net cash-flow gap, not a recommendation to buy a particular benefit or policy.

This tool produces estimates based on the assumptions you enter. It is not financial, tax, or legal advice. Actual rates, fees, and outcomes depend on your lender, account terms, and approval.