Financial planning can be complex for everyone, especially for families with special needs. The costs associated with a disability vary upon their type and severity, but many incur high costs that families cannot afford.
Today we’ll be giving insight into some of the unique challenges families with children that have special needs face and how financial planning can help them along their journey.
Understanding the Financial Needs of Families with Special Needs
A variety of conditions and impairments can be classified as special needs. It can include chronic illness, physical impairments, cognitive or psychiatric issues, or terminal illnesses.
The World Health Organization states that disabilities have three dimensions:
- Impairment in a person’s body structure or function or mental functioning.
- Examples include loss of a limb, loss of vision, or memory loss.
- Activity limitations that include difficulty seeing, hearing, walking, or problem-solving.
- Participation restrictions in daily activities like working, social and recreational activities, and obtaining healthcare and preventative services.
Additionally, they describe that a disability can be related to conditions present from birth, become apparent during childhood (for example, autism spectrum disorder or attention-deficit/hyperactivity disorder), related to an injury (for example, brain or spinal cord injury), associated with a longstanding condition (example, diabetes), or a progressive condition (example, muscular dystrophy or multiple sclerosis).
With all of this being said, it’s understandable that families with special needs have a unique set of challenges specifically related to their financial life. Let’s dive into what those unique financial needs can look like.
Financial Considerations for Families with Special Needs
One of the most significant concerns for families is paying for treatments and ongoing care services. Which, as a parent, should be the last thing you should spend your energy on.
It’s reported that it costs approximately $240,000 to raise a child from birth to 18. For children with special needs, that number can quadruple.
The tricky thing about financial planning for special needs is that no one’s needs are the same. Disabilities can impact people differently, so there’s no rulebook to follow.
Here are just a few statistics regarding out-of-pocket costs for families with special needs:
- The cost of caring for a person with autism can be $1.4 million over their lifetime and $60,000 per year for the average family.
- The cost of caring for someone with intellectual disabilities can be $2.3 million over their lifetime.
Additional costs for families with special needs that may not be front of mind are legal fees (for estate planning, trusts and wills, and guardianship documentation).
There are federal government programs that can assist, but not all families qualify.
How do families with special needs do it?
Effective Financial Planning for Families with Special Needs
You likely know the recipe behind a solid financial plan, but what ingredients are unique to families with special needs?
- Special Needs Trust
- 529A plan (ABLE Accounts)
- Choosing a legal guardian
- Writing a letter of intent explaining your child’s specific care needs
- Determining eligibility for federal benefits and assistance
- Preparation for dealing with the unexpected (emergency fund)
For more details on these topics, visit our Inclusive Financial Planning blog.
Traditional financial planning typically includes planning for retirement, educational costs, estate planning, etc. What do all of these things have in common? They’re all occurring (hopefully) later in life.
Families with special needs have a lot of work that needs to be done early on.
Another tricky aspect of financial planning for families with special needs is navigating the different types of support programs that are available. In TFS’s experience, we’ve heard of families that have accidentally disqualified their child from eligibility for certain benefits due to a lack of planning. Don’t let this happen to you!
Seeking Professional Guidance
TFS Advisors are experts in financial planning for families with special needs. Our very own Aaron Terwedo has children with special needs, so he is familiar with the unique challenges that families have to face.
In addition, Aaron is an excellent personal resource in addition to financial. He’s passionate about working with families with special needs because they’re a community of vibrant and diverse people.
Families that have children with special needs can sometimes feel as if they’re alone. But it isn’t true! Connecting with other families that have children with special needs is essential.
No family should have to choose between their financial stability and the needs of their family. A solid financial plan can relieve stress, so you can spend more time focusing on your child’s well-being.