Three in 10 workers entering the work force will become disabled before retiring, according to the Social Security Administration, impacting their ability to earn an income in the near-term and significantly affecting their retirement income.

Yet although 80% of Americans recognize the impact a disability will have on their earning ability and ability to save for retirement, only 10% over the age of 21 said they have purchased a disability insurance policy, according to a Northwestern Mutual study in December.

An analysis released Monday by Northwestern Mutual indicated that investors who experience a disability and have individual disability income insurance lose substantially less of their retirement nest egg than those who don’t have any insurance at all.

“Disability insurance protects an individual’s most valuable asset – the ability to earn an income,” said Stephen Frankl with Northwestern Mutual’s disability insurance division. “It’s important for individuals to understand that they are not immune from the risk of disability, but they do have the power to soften the impact it would have.”

A scenario described in “Will Your Retirement Program Work As Intended?” shows that an investor with a two-year disability at the age of 50 may reduce his or her total investment accumulation by 30% at 65, a loss of approximately $1 million in value. For an investor with similar income and investment assumptions who has a disability insurance policy, the investment portfolio is reduced by only about $230,000, or 8%.

“As we can see from this scenario, even a near-perfect investment approach can be thrown completely off-track by a disability event,” Frankl said. “That is why disability insurance is such a critical tool in your financial toolbox. Retirement planning and disability income planning are interdependent, and together each process helps replace a portion of lost income, meet monthly living expenses and achieve a certain retirement lifestyle.”