Advances in medicine and technology are allowing Americans — including those with special needs and disabilities — to enjoy longer, fuller lives. Still, as a caregiver, the emotional, physical and financial toll can be draining and could potentially prevent you from being able to plan for your own future. Research shows 30 percent of caregivers are not saving and investing for their own retirement because of the time and cost required for caring for those with special needs.
In most instances, a primary caregiver will be responsible for the majority of medical and related costs for their family member with special needs. While these lifetime costs can certainly range depending on one’s condition, they can be substantial. As an example, the lifetime cost of care for a child with autism is estimated to be as much as $2.4 million.
When it comes to retirement planning, caring for a loved one with special needs can add an extra dimension. To get started, here are a few important considerations to keep in mind as you prepare for your financial future — and that of your loved ones.
Know what’s available to you. Before dipping into your hard-earned retirement bucket to pay for care, you should know there are certain government benefits that might be available to you or your family member. While the process and requirements to receive government support can be long and difficult to navigate, if they are executed properly, they can serve as a key funding piece of a broader special needs financial plan. To fully understand how these elements will fit within your plan, consider talking with a specially trained financial advisor. You can also visit the Social Security Administration website to learn more.
It’s also important to remember to keep saving and investing as you apply for and wait to receive government benefits. If you are working, take advantage of your employer’s retirement plan and any 401(k) match to make sure your retirement is funded. If your contribution to your 401(k) is less than your employer’s match rate, you’re leaving money on the table that could be used to help create the future you envision for your loved one.
And don’t forget to maximize other employer benefits such as life insurance, disability insurance and health savings accounts. Keep in mind that beneficiary arrangements on your accounts are very important to ensure that your loved one with a disability or special needs does not inadvertently become ineligible for government benefits.
What you can (and can’t) leave behind. Government programs are designed to provide financial support to people who are disabled, but the rules are not always intuitive. As a caregiver, your income and assets may rule out or reduce the amount of Supplemental Security Income available for a loved one with special needs under the age of 18.
After turning 18, an individual’s assets cannot exceed $2,000, but be aware that there also are income limits.
It’s also important to remember this for any well-meaning family members who might wish to leave a sizeable inheritance to your loved one with a disability or special needs. Given the legal limitations, leaving money directly to an individual with a disability or special needs could jeopardize eligibility for government benefits if the proper planning is not put into place.
A special needs trust allow your beneficiary to hold assets for his or her benefit without interfering with government benefits. There are many types of trusts that are available to choose from, so you’ll want to select the one that’s most appropriate for your situation. It’s also a good idea to seek legal guidance for support as state laws governing the naming of trustees can also vary.
Working with the right team of professionals and legal experts can help you strategically communicate your wishes by creating a will or letter of intent. While not legally binding, a letter of intent can serve as a written, personal road map of your wishes and expectations for whoever will assume responsibility for your loved one after you’re gone.
Housing options and costs. Housing options for your loved one with special needs can vary widely, depending on the level of care needed and resources you have available. The costs can also be significant; however, with proper planning, it can be funded in a variety of ways, including government assistance that can make them more affordable.
Programs such as Medicaid may cover long-term care needs, including senior housing or skilled nursing facilities for qualified individuals. In addition, Section 8 vouchers could allow your loved one to live independently in a community by subsidizing one’s rent on a sliding scale based on family size and income.
However, often times the primary — and most cost-effective — housing option may involve living with family members. And for those who prefer to live at home, Medicaid also offers waiver programs that can help with long-term personal care costs. But it’s important to be aware of the potential strain this living scenario can have on family relationships. You might also consider creating a separate space or arrangement within your home to help provide a more independent experience for your loved one.
For those who might need a higher level of care, or where a family home is not an option, there are also a variety of potential community-based group homes and assisted-living facilities. Some may even offer counselors who can help residents become more independent.
The key takeaway is that planning for your financial future, while at the same time ensuring continuity of care for a loved one, can be extremely complex, but you don’t have to do this alone. Leveraging professional resources and revisiting your plan periodically can help keep you on track as your needs, and the needs of your family, continue to evolve.
Disclosures: Investment adviser representative and registered representative of, and securities and investment advisory services offered through, Voya Financial Advisors, Inc. (member SIPC). These materials are not intended to be used to avoid tax penalties, and are provided by Voya for your education only. The taxpayer should seek advice from an independent tax advisor. Neither Voya nor its affiliated companies or representatives provide tax or legal advice. Please consult a tax advisor or attorney before making a tax-related investment/insurance decision.
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