Ensuring Your Retirement and Your Child’s Future Through Special Needs Financial Strategies
Are you investing and financial planning in a way that your money will stretch across two lifetimes: your retirement and the life of your child?
As parents and caregivers of individuals with disabilities, we engage in special needs planning to provide a pathway of support for their lifetime. To do that, we have to make sure our money is going to stretch across two lifetimes. The funds must be there for our retirement as well as for our child’s lifetime. This is accomplished through an investment strategy, cost-calculating, and estate planning.
An investment strategy for families with children with disabilities can differ from traditional approaches as the funds have to stretch across two lifetimes. One example is a dividend focus that can provide income to the parents in retirement while preserving the principal for the child over the course of their lifetime. Any investment strategy should take into consideration the costs of the child’s care for their lifetime. This is a process we call cost-calculating.
In many families, parents are providing the majority of care to their loved one with a disability. As a result, the real costs of care are often assumed in the overall household expenses. Meaning, when we buy groceries, we buy them for everyone. When we pay the electric bill, it covers everyone’s use. Sure, we can divide those bills by the number of family members. But what about the cost of our care? When we get to a point where we can’t provide care ourselves, what will the cost be to pay someone else to provide support? Support tasks such as making a doctor’s appointment for our loved one, driving them to their therapy, or assisting them as they get their haircut happen all the time. Those hidden costs aren’t usually known and if we aren’t intentional about understanding them, they aren’t planned for either.
In all of those examples, there is not only a cost to the service, but also an added cost of staffing the support need around the service. We call this a “cost calculating” exercise and it is a critical part of special needs financial planning.
Once the resource needs are understood and established, you will want to capture the pathway of assets in your family’s estate plan, which includes a special needs trust for your disabled family member.
It is possible to plan for two lifetimes. You can address your retirement and long term care supports as well as your child’s future through a comprehensive special needs planning. Make it your goal to set aside time to put your plan into action.
