Retirement Planning is Possible While Caring for a Child with Autism
Without question, parenting a child with autism comes with a unique set of circumstances that can only be…
Without question, parenting a child with autism comes with a unique set of circumstances that can only be understood by others who have experienced the same highs and lows. There is a steep learning curve – one that I can’t say I’ve fully ascended, even as my 15-year-old son approaches adulthood. Even within the autism community, experiences range broadly from one family to the next based on the development of each child on the spectrum. This is true with all aspects of life, including financial and retirement planning.
The daunting checklist associated with establishing trusts and guardianship, and navigating government benefits is enough to make any parent throw their hands up and shut down their laptop. But there are a few important steps you can help your clients take today to get educated, get organized and prepare for the future:
Create a realistic budget
A study from JAMA Pediatrics puts the total lifetime cost of supporting an individual with autism in the U.S. between $1.4 million and $2.4 million.i Other studies put the lifetime cost of care even higher.iiThese estimates include lost wages, medical care and ongoing special education programming. While the Individuals with Disabilities Education Improvement Act (often referred to as IDEA), mandates that all children with disabilities receive a “free and appropriate public education,” you’ll find the definition of “appropriate” varies from county to county, and sometimes by school district. Some families even relocate to gain access to additional therapeutic and support services.
It’s important for your clients to find out what special education services will or will not be included as part of their child’s Individualized Education Program (IEP), as these costs will be out-of-pocket. Having this information will help you and your clients create a more realistic budget that allows clients to pay themselves for retirement while potentially setting aside funds to supplement their child’s public education, or perhaps pay for private school.
Understand the downside of good intentions
Conventional wisdom tells us the more we prepare, the better off we’ll be. Unfortunately, if you are the parent of a child with special needs, conventional wisdom is sometimes flipped on its head. For instance, if you purchase a life insurance policy and name your son as beneficiary, you think you’re ensuring his long-term financial security. If a grandparent purchases savings bonds for your daughter, they think they’re putting her in a better financial position down the road. But if your child has autism, good intentions could potentially undercut your son or daughter’s eligibility to receive government benefits at age 18, absent proper planning. This is because disabled adults are only eligible for Supplemental Security Income or Medicaid if their total assets do not exceed $2,000.
By age 18, money set aside in bonds or checking accounts should be transferred into either a tax-advantaged 529 ABLE (Achieving a Better Life Experience Act) account or a special needs trust. ABLE accounts are set up in a child’s name and allow contributions of up to $14,000 per year to cover certain expenses like education, housing, health care, prevention and wellness.
There are similarities and differences between ABLE accounts and special needs trusts – nuances that a financial advisor familiar with special needs planning is well positioned to help explain to clients. For instance, ABLE account funding limits – the amount your clients can save without it impacting their child’s Supplemental Security Income (SSI) or Medicaid eligibility – is determined by the state they live in. While ABLE accounts are often easier to set up, a special needs trust designates the trustee as a fiduciary for a child, and there is no annual contribution limit.
Expect the best, but plan for other scenarios
Ensuring quality of life for a child with special needs – even after the parents are gone – requires a level of financial planning that is overwhelming for most parents. Rather than taking a “wait-and-see” approach, my wife and I have found that it is best to plan for a few scenarios – striving toward the most optimal. Many children with autism will have the education, life skills and maturity to live independently or in a group setting one day. Others will not. As early as possible, parents of children with autism should begin to construct a financial plan that assumes some level of independence on the part of their son or daughter – but can also accommodate a scenario where he or she requires permanent in-home care.
Because experiences differ so greatly from family to family, I would also encourage you to work with parents to take pause and evaluate their long-term financial plan before one spouse drops out of the workforce. The need for mom or dad to become full-time caregiver will vary greatly depending on a child’s needs. These decisions should be weighed carefully, during in-depth conversations with a long view into the future. In some situations, it could be more financially advantageous for both parents to stay in the workforce and to hire someone to provide additional support services before the child is engaged in school and other activities.
I am consistently amazed at how advancements in early detection and intervention have improved outcomes for children with autism, and dramatically changed the way parents envision their future. Having a back-up plan is important, but parents have every reason to be optimistic about the probability that their child will live independently in the future. A financial advisor can play a key role in helping clients create an integrated plan incorporating financial, legal and quality of life considerations.
Plan earlier and plan smarter
Any article we read about planning for retirement will say the same thing. Start early. The planning may be different for parents of children with special needs, but the message is the same.
Procrastination is understandable. Before clients start saving for private school, they’ll want to see if their son or daughter hits his or her developmental milestones as a toddler. Before having conversations with family about guardianship and powers of attorney, parents want to determine how to ensure quality of life for their child, which may include independent living as an adult, engaging in the workforce, etc.
While not required, there are certain steps parents can take early on in a child’s life to set them up for financial security in the future. Most important is establishing the appropriate legal framework for the family. You can help coordinate for your clients to work with a special needs attorney to help them establish a will, medical directives and powers of attorney, and to set up a special needs trust in the child’s name at the same time. In some cases, it might also make sense to establish guardianship of a child with a disability before age 18. Sometimes an aunt, uncle or other close relative is named guardian, power of attorney and special needs trustee, and is empowered to make all decisions in the best interest of a child should anything happen to your clients.
Parents of children with a disability face similar challenges as the rest of the population in regard to financial planning. These challenges are exacerbated given the added cost, stressors and emotional exhaustion associated with caregiving. Leveraging professional resources and revisiting the plan periodically can help keep your clients on track as client needs, and the needs of the child, evolve throughout their lifetime.
Serving the special needs community is a natural extension of Voya’s vision to become America’s Retirement Company®. Voya CaresTM provides personalized financial and retirement planning solutions to help clients plan for the retirement future they envision and create a lifetime of continuous care for their loved one with special needs. For advisors, Voya Cares presents a unique opportunity to grow and differentiate your business through special needs financial planning. Through Voya Financial Advisors, a group of advisors who are a part of Voya Cares provide financial wellness solutions focused on the unique challenges faced by people within the community. Voya Cares helps advisors gain proficiency in special needs planning through training, educational resources and support.
Current video link for quick reference
Baking up a strategy for special needs families
Additional Content:
- Special needs planning checklist
- Roadmap to government benefits for special needs financial planning
- Case study: Special considerations for beneficiary designations
About the Author
Jon Kurtz is a Certified Financial Planner and is part of select group of financial advisors participating in Voya Financial’s Voya Cares program, which helps people with special needs and their caregivers plan for the future they envision.
i http://www.huffingtonpost.com/2014/06/09/autism-costs_n_5474061.html
ii Harvard School of Public Health study states it can cost about $3.2 million to take care of a person with autism over his or her lifetime.
http://archive.sph.harvard.edu/press-releases/2006-releases/press04252006.html
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