Disclaimer: The following article is part of a series about important financial planning concepts for families of loved ones with special needs. It was written after an interview with members of the Canale Financial Group. Tom Canale and his team serve hundreds of families throughout the United States, and he is considered an expert in the special needs family planning space. The Ruben Digital team has a unique connection with this subject matter and it’s our passion to provide helpful resources to our community. Content in this article is for general information only and not intended to provide specific advice or recommendations for any individual. We hope you or someone you know finds this article useful!
Do you have a child or loved one with special needs? Have you considered what their future may look like? Enjoy having peace of mind while protecting your loved one with special needs financial planning. Let’s take a look at some important statistics that shouldn’t be ignored:
- Over 75% of special needs adults are without employment (Grassi, S.G. Special Planning is Needed for Families with a Special-Needs Child. Journal of Practical Estate Planning, 39-51)
- Households containing at least one family member with a mental disability are also marked by the highest poverty rate, 32%, within the U.S. (Erickson, W., & Lee, C. Disability Status Report: United States.)
- 69% of families say they are very concerned about being able to provide lifetime care for their dependents with special needs (MetLife’s survey “2005 The Torn Security Blanket: Children with Special Needs and the Planning Gap)
“Raising a child with a disability costs more on average, and depending on their diagnosis may need care for the rest of their lives. It costs an estimated $233,610 to raise a child to age 17, according to the U.S. Department of Agriculture. Autism Speaks, an autism advocacy organization, estimates the cost to raise a child with autism or an intellectual disability is $1.4 to $2.4 million. The more severe the disability, the more expensive the lifetime cost. But, you can financially prepare.” Policygenius
Time is Your Friend, Not Your Foe
It’s never too early for families to begin financial planning for their child with special needs. Parents of children with special needs often have so many unknowns about what the future looks like for their child. You’re not sure what kind of assistance or level of care they may need in the future…and that’s ok. While no one can predict the future, you can do everything in your power as parents to prepare for it. Experts recommend getting started saving for the future as soon as possible.
If a parent suddenly dies, who is responsible for caring for your child? Will their sibling, an aunt, or grandparent become their caretaker and advocate? This will likely become a lifelong responsibility for that person. Planning for possibilities such as a divorce, death, or loss of a job can be unpleasant, but your child’s quality of life depends on these tough conversations. Putting this off will hurt the individual with special needs as well as everyone else involved in their care. It’s important to get everyone on the same page about a plan of action and financial goals as soon as possible.
“I like to think smaller sooner versus larger later. Make smaller decisions sooner, invest small amounts, and take smaller action steps now as opposed to having to make much larger decisions and investments later on.” – Tom Canale
Protecting Your Loved One and Yourself
Financial planning protects both the futures of you and your children. Many family members aren’t educated on how their actions may accidentally disinherit the family member with special needs. It’s important to know about the government benefits available to your child and plan in a way that will protect their benefits long-term.
For example, consider allocating some funds to a discretionary special needs trust in order to benefit them without interfering with public benefits. You’ll want to make sure grandpa understands why he can’t leave anything to your child in his will or name your child beneficiary on his life insurance policy. Government benefits your loved one may need could include Medicaid, Supplemental Security Income (SSI), Social Security Disability Insurance (SSDI), SNAP/Food Stamps, and much more. The goal of financial planning is to do everything you can to ensure your loved one lives a fulfilling life with the support they need to thrive.
Certainty is Not Required to Begin Investing
Certainty of your child’s future needs is not required to begin financial planning. There is baseline planning that will be useful regardless of your family’s specific situation. For example, certain things must be in place early on if care needs continue to progress as time goes on. You may be overwhelmed with so many questions of where to start or what to consider. Fortunately, you’re not alone!
Professional financial planners like the Canale Financial Group specialize in this area of family planning and can guide you through this process. Financial planners help families manage and integrate government benefits and family financial resources. Start thinking of what kind of qualified disability expenses you want to save for and how you’d like the funds to be used over time. Events to save for may include the purchase of a wheelchair, therapies not covered by insurance, paying for college, vocational training, transportation, health care, or long-term housing in adulthood.
Getting Started with Special Needs Financial Planning
As we’ve discussed, the sooner you begin planning, the more your child will benefit. This task may feel challenging, but try to see it as a positive opportunity to protect your child and set them up for success. You may be wondering, when should I begin funding my child’s account? The best time to begin is soon as you know your child will require certain care needs in life. The sooner parents are educated, the sooner you have the opportunity to take action, the more choices you’ll have, and the more in control you’ll be. For example, experts recommend parents buy life insurance for infants right after they’re born.
“There’s an advantage to helping your child secure life insurance nearest their birth as the least amount of information has been shared about their life. Take advantage of the opportunity to purchase insurance while their health is perfect, before anything may develop that could make it more difficult to buy life insurance.” – Tom Canale
This will also create the opportunity for friends and family members to help contribute funds as soon as possible. Plus let’s not forget about the benefits of compound interest when you start early! When funds are invested early, the impact will be much greater at a quicker rate than if you got started later on.
“Parents who do not have enough money for a special needs trust can research other options. Sometimes parents of children with disabilities can enter into an arrangement called a ‘pooled trust’ or ‘master cooperative trust,’ where multiple families pool together assets that are paid out to those families’ children, and the assets are managed by a non-profit organization. How much each child receives can be determined on a percentage basis, depending on how much the initial investment in the trust was.” HIE Help Center
Your Roadmap to Success
As a parent of a child with special needs, the best thing you can do to secure their future and yours is to partner with a financial planner. Canale Financial Group has over 25 years of experience guiding families that are in the same situation as you. For a family with an individual with special needs, they will help you maximize your financial resources to provide a lifetime of financial security for yourself, your loved one with special needs, and any other beneficiaries you have.
“90% of special needs and disability family members and caregivers admit that caring for their loved one is more important to them than planning for their own retirement. But it could be even more difficult to help your loved ones if your financial future is in jeopardy.” Thrivent
You probably have questions regarding IL ABLE accounts, SNT (Special Needs Trusts), 529 College Savings, levels of risk, and so much more. Tom’s team is happy to answer any questions you have and clearly explain all of your options, including short-term, medium-term and long-term. They will also discuss your goals in terms of growth and how aggressively you’d like to invest in each account. Different investments will serve different purposes based on matching your child’s potential needs with timing and risk.
Canale Financial Group has worked with hundreds of families that have been in situations just like yours. When you partner with them, enjoy the benefits of planning for the entire family to enjoy an excellent quality of life for many years to come!