As a parent of a severely disabled child, you understand that childcare is a permanent necessity. It cannot stop when your child is an adult, when you retire, or when you are gone. Severe disabilities often require a lifetime of support. While unavoidable, the realization is often hard for parents to accept. Planning for your child ahead of time greatly reduces stress and fear associated with a disabled child’s future.
Social Security Benefits for Disabled Children
Many disabled children qualify for Social Security benefits when a parent retires. Social Security disability benefits apply automatically for children under 18 as well as for children who are disabled before the age of 22. An adult child may start collecting benefits if a parent is currently receiving retirement or disability benefits or if the parent is deceased and qualified for Social Security during his or her life. In addition to securing benefits through a parent, a disabled child/adult may also collect benefits through an eligible spouse, grandparent, or stepparent.
Benefits may include automatic Medicaid coverage and monetary compensation to cover living costs. The amount awarded varies individually based on the child’s ability to work in the future, the child’s needs, and the nature of the disability. The Social Security Administration determines eligibility on a case by case basis, but some of the more common disabilities that qualify include total blindness or deafness, cerebral palsy, Down syndrome, muscular dystrophy, and severe mental disabilities. You can use the Social Security Administration’s website to calculate your potential benefits before you start the application process.
If you have trouble getting your application approved, don’t lose hope. Many applicants must reapply before they receive approval. Talk to an attorney if you feel that the administration did not fairly evaluate your application.
Budgeting for Retirement With a Special Needs Child
Before retirement, workers often use online calculators or a financial planner to help them create a manageable budget for retirement. If you have a disabled child, consider how their needs will affect your overall costs. In addition to personal planning, you may want to consider speaking with a special needs planner. A special needs planner can help you understand both the resources you have access to in retirement as well as the budgetary concerns you need to take into account as you plan for retirement.
Special needs planners often has a legal background and can help you navigate the complex documentation required for retirement planning with a disabled child. If you choose to work with a special needs planning attorney, look for someone who also has experience with estates and trusts work. In addition to attorneys, you may also find professionals who focus on special needs planning in the financial and insurance sectors. Finding the right outside help can significantly reduce the amount of stress associated with long term planning.
Social security benefits and retirement budgeting address the near future challenges for your family, but many parents also use retirement as a time to create, review, and update estate planning strategies. Trusts, life insurance, and your will all provide ongoing support for your child regardless of what happens in the future.
Creating a Trust
If you leave your child your bank accounts or other financial assets in your will, those assets could jeopardize your child’s ability to collect Social Security and Medicaid benefits. A special needs trust, on the other hand, will not disqualify your child from benefits. In a trust, the trustee and not your child will have guided control over the trust. A trustee may be a close friend, a family member, or a group of people (e.g. a family member or friend and a professional). Trusts can serve any need child regarding your child’s future including money for education, uncovered costs of healthcare, vacations, caretakers, furnishings, clothing, and more.
If you don’t have someone you trust to administer your trust in good faith, you can set up a pooled trust. In this type of trust, a 3rd party organization serves as the administrator for many families. Each beneficiary has an account and a designated trustee will oversee the money spent on your child’s behalf.
Many parents take out life insurance policies before or soon after the birth of a child. Retirement represents a good opportunity to create or update a policy to ensure your child receives the benefits. You may want to change your life insurance policy to cover the needs of all of your children and to ensure your beneficiaries receive the full cash value of a policy. When you budget for retirement, consider the premiums you must pay on life insurance. Any hiccup with payments could stall or prevent your child from collecting benefits in the future. Think about directing benefits into your child’s trust rather than into a bank account.
Preparing Your Family for Retirement
Taking the appropriate steps will ensure your child is treated with the care and dignity he or she deserves while still benefiting from your retirement years. Squaring away financial matters and benefits for your child also provides peace of mind so you can focus on enjoying your retirement. Use your retirement to spend quality time with your family and build a support network of people you trust to look after your child’s best interests well into the future.
Preparing your child as much as possible during this time can also ease future transitions. If you experience a wide range of emotions during the planning stages and into your retirement, that’s okay. Find others who are going through the same experiences and care for your emotional health. Retirement with a special needs child can and should be a time for celebrating the joy in life.