Families living with a disability is more common than one expects. Nearly 54 million Americans cope with special needs and the rising cost of associated expenses, according to the National Organization on Disability.
Physical or Mental Disabilities
Whether the disability is physical or mental, ongoing medical appointments, extra caregiving expenditures, or a family member unable to work full time directly impact the family’s financial wellness. Many families are concerned about how to provide care for their children in the future:
- 10% of children under the age of 18 have a severe disability
- 40% of families with special needs children struggle to save for the long-term
- 70% of families are worried they will need to compromise retirement to care for a loved one
A Unique Financial Plan
While health is primarily the focus for these families now, financial planning for a child whose life may extend beyond their parents’ lives requires a unique financial plan. Planning for a child with disabilities takes research, legal and financial professionals, and should focus on what the child can do versus not do as they age. Everyday things to consider in financial planning for a child with a disability include:
- Will the child live independently or need around-the-clock care in a facility?
- Will the child be able to work at least part-time as an adult?
- Is Medical Assistance or Medicaid likely to cover the child as an adult, or will the parent’s private insurance cover the child?
- Should a guardian be named now and after the child reaches age 24?
- Is an estate plan covering care for the child the best option for care directives?
Children living with a disability can receive Supplemental Security Insurance(SSI) benefits when they turn 18 years of age that assists with housing, utilities, and food as long as the child’s assets are under $2000, even if they’re living with their parents. Often, parents use this benefit as part of their monthly budget for caring for the child. However, this benefit goes away if the child has a job earning over $2000 a month. Or is the beneficiary of a fund set up for their care with a value exceeding that limit.
Consult a Professional
Legal and financial professionals should be consulted when developing a financial plan for a child with a disability. Since state and local laws can impact investments, titling, or trusts set up for the child’s care. Life insurance policies that pay upon the parents’ death to care for the child with disabilities. These also, need to be included in the specialized financial plan. While financial planning that covers the cost of care throughout the child’s life is essential. So is relaying information about the child’s likes and dislikes, habits, and other factors that impact their happiness and overall well-being is equally important.
Life Insurance is Essential
Life insurance is essential for all families, but perhaps more so for those living with a disability. The type of insurance needed may differ depending on the family’s unique situation. Term insurance or whole life insurance may be appropriate, but maybe a second-to-die policy that pays out upon the second parent’s death into a trust set up to provide care for the disabled child. Since living with a disability is a unique situation, work with your financial and legal professionals to help to ensure that your financial plan is well thought out and meets your family’s needs.
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