Retiring is a significant milestone, but for parents or caregivers of a child with disabilities, it comes with unique challenges and considerations. Beyond your own financial independence, you must plan for your child’s long-term care and security. To create a smooth transition into retirement while planning for your child’s future, here are key steps to consider:

1. Clearly Define Your Retirement Goals
Retirement planning starts with understanding your goals. Ask yourself:

  • What does a successful retirement look like for you?
    Consider your lifestyle, travel, or hobbies. Being out of the workplace, you’ll need to consider how you’ll spend your time as this can significantly impact your retirement expenses.
  • What are your long-term goals for your child?
    Envision their living arrangements, level of independence, and financial needs. Do you have a path in mind, or do you still need to do some research into your options? 

Having a clear vision helps you structure your retirement and align it with your caregiving responsibilities.

2. Define Long-Term Goals for Your Child
For a child with special needs, their financial future must consider both care and quality of life. Key aspects to address include:

  • Living Arrangements: Will they live independently, in a group home, or with family?
  • Care Requirements: Outline the type and level of care they will need throughout their lifetime.
  • Financial Independence: Evaluate their eligibility for government benefits like Social Security Disability Insurance (SSDI) or Medicaid.

Documenting these goals can guide your financial and legal planning efforts, and give you peace of mind that your child will be cared for in the best way possible for them.

3. Align Investment Assets with Purpose
Effective retirement planning involves categorizing your assets into three key buckets:

a) Savings for Immediate Needs
This includes cash or short-term investments for emergencies and day-to-day living expenses. How much to keep on hand will vary from person to person, so we recommend consulting with your advisor to determine the right amount for you.

b) Income-Producing Assets
Investments like bonds, annuities, or dividend-paying stocks can provide a stable income stream to cover living expenses.

c) Long-Term Growth for the Next Generation
Consider assets designed for long-term appreciation, such as equities or real estate. These could be critical for funding your child’s future needs after your passing.

4. Identify the Most Efficient Assets for Each Bucket
Tax efficiency is key to maximizing the resources available for your retirement and your child’s future. That’s why it’s often best to break up your future income sources between different types of accounts:

  • Taxable Accounts for immediate access and flexibility.
  • Tax-Deferred Accounts like IRAs or 401(k)s for income during retirement.
  • Tax-Free Accounts such as Roth IRAs for long-term growth and funding Supplemental Needs Trust (also known as a 3rd Party Special Needs Trust) down the road.

For your child, funding their SNT with life insurance proceeds, real estate, or other inheritance-friendly assets can ensure their care without jeopardizing benefits or creating large tax bills. The estate planning piece of your plan will really affect how much of your wealth is preserved for your child and how much of it is paid to the IRS upon its bequeathment. 

5. Plan for a Long-Term Care Transition
Your retirement will eventually require transitioning your child’s care to another person or agency. This transition should be carefully planned to provide comfort and certainty:

  • Identify Future Caregivers: This could be family, friends, or professional organizations.
  • Create a Transition Plan: Include details about your child’s routines, preferences, and medical needs.
  • Involve Everyone Early: Discuss the plan with family members, potential caregivers, and professionals to ensure clarity and alignment.

It’s also wise to create or update legal documents such as a Will, Power of Attorney, Trust and supporting documents such as a Letter of Intent, detailing your child’s care needs and preferences.

6. Build a Collaborative Team
You don’t have to do this alone. Assemble a team of professionals to help you navigate these complexities:

  • Financial Advisor: To review your plan for efficiencies, address potential risks, and align your assets with your retirement, family and caregiving goals.
  • Estate Planning Attorney: To draft or update your Special Needs Trust and other essential documents.
  • Support Coordinator/Advocate: To understand the benefit landscape and what your child may qualify for now and in the future.
  • Key Family/Community Members: To create cohesion in your intentions and the long-term plan for your child.

7. Regularly Review and Adjust Your Plan
Life is dynamic, and so are financial needs. Schedule regular reviews of your retirement and caregiving plan to adjust for changes in your financial situation, government policies, or your child’s needs.

Final Thoughts
Retirement as a caregiver requires balancing your goals with those of your child’s future. By clearly defining objectives, aligning assets strategically, and preparing for long-term transitions, you can retire with confidence, knowing you’ve safeguarded your child’s well-being.
With thoughtful planning and support, retirement can become a rewarding phase that encourages both independence and stability. 
Need help crafting a tailored plan? Take the first step by scheduling an introductory call. Together, we can build a roadmap to work towards achieving a secure future for both you and your child.