According to the National Organization on Disability, more than 57 million people across the U.S. are living with a physical or cognitive disability. With limited assistance from government programs, this group — along with their caregivers — will need to consider additional planning decisions, especially when it comes to creating a financial strategy for retirement.
As with any challenge, knowing where to begin can be the hardest part. To help you get started, here are some considerations to keep in mind — no matter what your situation.
Planning for a child with disabilities. Advances in education, early intervention and support services have made it feasible for many adult children with disabilities to achieve some level of independence, depending on their specific needs.
[See: 8 Things Not to Hide From Your Investment Professional.]
Whether your loved one will remain in the comfort of their childhood home or live independently in the future, it’s likely you’ll need to maintain some level of support whether in the form of caregiver services, housing or transportation. You will also need to make sure he or she has the means to continue this type and level of care after you have passed. This is where working with an advisor with experience serving the special needs community can be especially helpful. They can help you avoid missteps when it comes to beneficiary choices, educate you on navigating government benefits and should be able to help connect you with the network of professionals to help fully build out your strategy.
Planning often includes the setup of a special needs trust to help ensure your loved one will not be financially dependent on a future caregiver or guardian. Assets held by a trust are not taken into account when determining one’s eligibility for current and future government benefits and won’t jeopardize his or her ability to receive supporting funds from public-assistance programs.
One standard type of means-tested government benefits includes Supplemental Security Income, a federal program designed to help those who have qualifying disabilities or special needs with less than $2,000 in qualified assets. Additionally, Medicaid is offered to those whose income falls below a certain level.
While an advisor can help explain finer points of the various government programs and benefits, as a primer, visit the Social Security website to learn what might be available to your family.
Planning while living in the sandwich generation. According to Pew Research, about one in seven middle-aged adults provides financial support to both an aging parent and a child. If you’re part of this group — commonly referred to as the sandwich generation — odds are you’re struggling to care for an elderly parent over the age of 65, while simultaneously providing for children under the age of 18. Providing care for a parent with disability, such as Parkinson’s or Alzheimer’s, often entails a significant amount of emotional and financial stress.
It might seem selfish to pay yourself first for retirement in this situation. But in reality, the opposite is true. Your parent might qualify for government benefits to cover living expenses and medical costs, and your child(ren) could be eligible for a student loan to help with the cost of college tuition. But, you won’t be able to take out a loan for retirement, so it’s important to identify all of the alternative funding sources and consider all expenses in order to make retirement planning a priority.
After committing to pay yourself first, the next step is to gain a better understanding of your parent’s financial situation and long-term care needs, but having the discussion can often be difficult.
[See: 11 Tips for the Sandwich Generation: Paying for College and Retirement.]
One way to broach the topic is to discuss your own retirement plans and ask for their advice. Once the discussion begins, you can create a profile of their finances. Find out if they are eligible or receiving benefits from a former employer or the government. Ask them for insurance records, medical and financial documentation, and make sure you have contact information for their advisor, attorney or accountant if they have one. This can help to mitigate stress and ease the transition if you need to eventually assume responsibility for their finances.
Focusing on protection. We understandably spend a great deal of time working to succeed in our jobs and careers. But it’s also important to make sure we have a safety net to fall back on should an unexpected event cause a prolonged absence from work — or force you to stop working entirely.
If you’re the primary earner, you might also consider disability insurance or long-term care insurance, which might be available to you through an employer or purchased outside the workplace.
Outside of workplace benefits, and not based on income level, entitlements are also available to anyone who meets the eligibility requirement. Social Security Disability Insurance, for example, is a program designed for people with disabilities or special needs that have a work history and have contributed to Social Security, but have been unable to work for at least a year.
After receiving SSDI for two years, some people may also be eligible for medical support through Medicare, a federal program that provides medical care to certain persons, including individuals with a disability.
While navigating government benefits for special-needs financial planning may seem overwhelming, these benefits can provide valuable resources and can serve as a good foundation for your broader special-needs financial plan.
Whether you’ve already started the process or are unsure where to begin, working with an advisor that has experience with special-needs planning can help guide you through the journey. Remember to also revisit your plan annually as your needs, and the needs of your loved ones, will continue to evolve.
[See: 7 Things That Can Derail Your Retirement Investing.]
Investment adviser representative and registered representative of, and securities and investment advisory services offered through, Voya Financial Advisors, Inc. (member SIPC). Neither Voya nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax adviser or attorney before making a tax-related investment/insurance decision.
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3 Unique Financial Issues for Special Needs originally appeared on usnews.com
