Planning for Your Retirement, and for a Child’s Special Needs, All at Once

Rachel Nagler, 39, has worked part-time since she was 22, but she will never be financially independent, according to her father. She is legally blind with a seizure disorder and mild cognitive impairment as a result of congenital trauma.

For her parents, Sam and Debra Nagler of Concord, Mass., Retirement planning forced them to focus on Rachel’s future as well as their own.

Mr Nagler, 70, said: “She has very limited earning capacity. “The question is, will this be enough for her for the rest of her life?”

His wife, 68, has been their daughter’s primary caregiver since she was born.

“No one knows Rachel, cares for Rachel, knows all of Rachel’s needs, and more than my wife,” Mr. Nagler said. “It’s a worry because she won’t live forever.”

For parents of children with severe disabilities or special needs, the challenges of growing and preserving their property are growing exponentially, and the down payment is also higher. much. While they’re trying to plan their retirement, these parents need to simultaneously ensure ‌the stability of their son or daughter, who will depend on them‌ until – and even even after they die.

“We want to be 100% sure that after we leave, there will be no problems,” Mr. Nagler said.

In the best cases, caring for an adult child with special needs is physically and emotionally taxing. As these parents age, the question of who will build, raise and drive their son or daughter after they are gone can become a pressing question.

But not all parents in this situation are aware of the multitude of challenges they face. “Making them understand that they need to think differently about their retirement in this plan is an important step. And it’s not that simple,” said Mary Anne Ehlert, a certified financial planner and founder of Protected Tomorrows, a financial planning firm that specializes in families with special needs, said.

For example, Ms. Ehlert said, she must consider the multigenerational timeline for these clients’ portfolios. “We can be a little more cautious, but we still need growth. We need to grow longer,” she said. But a conservative asset mix also has its limitations. “Conservatives don’t always give us the growth we need,” she said. Additionally, many families choose part of their portfolio as cash or liquid investments like cash in case their child suddenly needs a new expensive device, such as a voice assistant. speak.

Often, one spouse will put their careers on hold or leave the workforce altogether to take care of them, reducing their own ability to save for retirement. These families find their budgets strained by a range of ancillary costs: paying for gas to get their child to therapy appointments and day programs; buy items like adult diapers and waterproof bedding, compression stockings to promote circulation, a specialized diet – the list goes on.

Even when people with disabilities are eligible for public health assistance, finding suitable, affordable housing is especially difficult. Some people require supervised care in a group home, while others need home care in a home modified to accommodate physical limitations. In both cases, time on the waiting list is measured in years.

As a result, many parents feel they have no choice but to keep their son or daughter at home, said Harry Margolis, an estate planning attorney near Boston who works with families. families with special needs, said. “Usually, they still live with their parents even as people get older,” he said.

This can be costly in terms of lost opportunity costs. To save their kids the upheaval, parents can forgo the opportunity to downsize into a less expensive or more accessible home while they’re still healthy enough to do so.

Since most public benefits for people with special needs and disabilities are administered at the state level through Medicaid, a parent of a child with special needs may not be able to move to another state. states with a lower cost of living. Doing so could mean the adult child will lose access to their benefits and be placed at the bottom of a waiting list for services in a new state.

However, some families move to states that offer more generous benefits, even if it means a higher cost of living. “It’s been a real struggle for these families, especially when mom and dad are older,” said Debra Taylor, founder of Taylor Financial Group in Franklin Lakes, NJ.

Douglas and Susan Rohrman moved out of the Chicago area five years ago, concerned about their daughter Liz’s declining health, who suffered a traumatic brain injury shortly before age 2. Now 38, the younger Rohrman has one a series of physical challenges, including partial paralysis impairing her mobility and swallowing and cognitive impairment.

Ms Rohrman, 74, said: “Liz was not well looked after in Illinois, so it was time to sell the house and move everything. “I researched this on wazoo.”

The Rohrmans moved to the San Diego area because resources such as housing and day programs were more readily available. But when Covid struck, the couple felt that the only way they could keep their daughter safe – who was hospitalized with pneumonia three times in 2019 – was to get her out of the care home. squirrel they had moved her to just a few years earlier, to whom they had uprooted their lives.

It’s a huge adjustment in terms of responsibility, but also financially.

“When we pay taxes, I often sit back and watch where my money is going. And Liz is a big part of that,” Ms. Rohrman said, Accumulate amounts she has to pay out of pocket while her daughter is living at home.

For example, difficulty swallowing meant that the younger Miss Rohrman was, the more thickener she had to add to the water. That alone costs several thousand dollars a year, her mother says, and there are a host of other unique expenses, such as to stabilize shoes that help her daughter walk. “I made about $9,000, not counting everything I bought at the grocery store and Walmart,” she said.

Mr. Rohrman, 80, postponed his retirement from a law firm for several years to continue earning an income, but he stopped working when his family moved. The combination of much higher expenses, falling earnings and a thriving stock market requires them to reassess their finances.

These financial struggles are all the more important for single parents. “Care is definitely more expensive when you have a single parent, as they have to be more dependent on paid carers,” Ms Taylor said.

Laura Weinberg, 59, became the sole caregiver for her son Will, autistic and speechless, when her husband, an attorney for the Port Authority of New York and New Jersey, was killed in the attack. 9/11.

She said: ‘I was in the strange situation of being a widower when I was 38, dealing with a 4-year-old that was a danger to myself. She also cared for her ailing mother and maintained a family home in northern New Jersey. “I was overwhelmed,” she said.

“Property planning was confusing and extremely expensive when I started getting my hands on the water,” she says. “I get all kinds of false information.”

Ms. Weinberg said she wanted a voice-enabled device for her son so he could communicate, but the cost was very high. Instead, she combined a solution with the iPad and specialized apps. “It’s more modest than it can be, but some of them cost thousands of dollars,” she said.

For parents of children with special needs, retirement planning and estate planning must go hand in hand. Special needs trusts and life insurance policies in the name of one or both parents are two of the most commonly used tools. Both must be structured to comply with complex eligibility regulations for public health benefits, as many facilities have been vetted for vehicles.

Mr. Margolis said that even wealthy families have to navigate the landscape of government benefits, because many of the services available, including housing, are managed entirely through these programs. “To qualify for SSI and Medicaid, in most cases you are limited to $2,000 in countable assets,” he said.

“For someone with a disability, a lot of the time, maintaining eligibility is very important,” said Joellen Meckley, executive director of the American College of Financial Services’ special needs center. importance. “I cannot tell you how many times family members, with the best of intentions, will name an adult child with a disability as a beneficiary, without understanding that receiving the money immediately that could jeopardize their access to public interests,” she said. parental will, retirement plan or life insurance policy.

This makes money for an individual with a disability required to be held in a specialized financial instrument, such as a special needs trust.

Trust funds can be used to improve the quality of life for individuals with special needs such as cable TV, cell phones or computers, better food, care providers, and money. rental housing or utilities, Mr. Margolis said.

There are two main types of special needs trusts. First-party trusts are established with assets belonging to individuals. The drawback is that these trusts have a payback clause: After the individual dies, any money left in the trust will be reimbursed by the state for the costs of their care over the years.

Third-party special needs trusts established and funded by others for the benefit of individuals with disabilities. “Third parties will take other people’s assets, like gifts, inheritance or life insurance money,” said Brian Walsh, senior manager of financial planning at SoFi.

These trusts are often funded or supplemented with proceeds from the parents’ life insurance. “A lot of times, life insurance can be used to create funding when one or both people die,” says Mr. Walsh.

The “second death” life insurance policy is a frequently used instrument. Both members of a couple are covered and the policy pays out after the death of the second spouse, providing a more affordable option than individual coverage for each parent.

“The purpose of this policy is to pay a death benefit to fund the remaining needs of the child regardless of when the parents die,” Mr. Walsh said.

Since the funds in these trusts are often prudently invested, experts say the ultimate challenge is to ensure that the funds in the trust will provide a commensurate source of income.

Getting that balance is something the Rohrmans, of California, struggle with.

When Mr Rohrman quits, it means not only cutting household spending, but also rethinking their investment strategy.

“We are very cautious financially. We know we can’t be like us in our 30s and 40s in terms of a mix of investments, spending, etc,” said Mr. Rohrman. “We think about it a lot. We don’t let it rule us.”

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