How to Plan for Retirement When Your Child Has Special Needs

A dad high-fives his special needs son in their backyard.

If you’re a parent or guardian of a child with special needs, you’ll know that caretaking can be all-consuming. But when your child turns 17, your attention needs to turn to the future and what that future will look like — for your child and for you.

The year before your child becomes a legal adult is an opportune moment to begin considering special needs planning, estate planning, retirement planning, Social Security applications and the host of other issues confronting parents and their special needs children.

In the absence of such planning, you could come up against these issues again and again, fragmenting your time, money and energy. Failure to plan may also mean missing out on opportunities to take advantage of programs that are designed to help you and your child.

No matter how good your intentions and caretaking of your child are today, a time will come when you won’t be able to manage that care yourself. Don’t put off preparing for that transition. This article helps provide insight into how you can strategize for today and tomorrow in a way that supports your goals for yourself and your child through five simple steps.

Step No. 1: Apply for Supplemental Security Income

Supplemental Security Income (SSI) unlocks the door to many other benefits, not just a monthly benefit and Medicaid. Many parents believe they don’t need money or health insurance and don’t want their children to be stigmatized as being disabled. Those feelings are completely understandable.

But SSI isn’t a judgment — it’s a benefit your child is entitled to, owing to their health situation. Because obtaining disability isn’t easy, you should apply as soon as you can and be ready to reapply if necessary.

Obtaining medical records, doctors' reports, test results and more that attest to the specific disability are part of the application process; getting function reports and a mental and physical assessment can help you be ready in case you need to appeal any denials.

Step No. 2: Maximize government assistance

Depending on the state where you live, special benefits may be available to your child. In Pennsylvania, for instance, children with Individualized Education Plans may qualify for Medicaid outside of traditional income limits.

Your child may be eligible for other benefits, such as home health aide assistance, the Supplemental Nutrition Assistance Program (SNAP) and more.

Step No. 3: Create a special needs trust

To help ensure that your assets go to support your child when you are no longer around to provide for them without interfering with their government benefits, you should set up a special needs trust. Determining the most appropriate trust, and funding it, helps ensure the most appropriate wealth transfer scenario for you, your child and any other children you may have.

Step No. 4: Plan for retirement

Having a special needs child need not deprive you of the retirement you’ve worked so hard to achieve. To ensure that you can continue to save for retirement, accessing the government benefits noted above will provide you with more financial flexibility.

If your child gets SSI, for example, you can use at least part of the monthly benefit to buy life insurance that will fund a special needs trust once you and your spouse have passed away.

Take advantage of any company-sponsored retirement plans you or your spouse are eligible for, and rely on compounding over time to grow your savings so you’re ready for retirement.

Step No. 5: Foster independence

There will come a point at which you and your spouse will no longer be able to provide the care your child needs. That’s why fostering independence while you are still healthy is important. You can use any SNAP benefits your child is entitled to teach them about budgeting, shopping and meal preparation.

At the same time, you can also find a group home or other housing situation where they will have their needs met without you. Most parents don’t want to burden other siblings with the care of a special needs child, so finding a suitable living situation before you need care yourself should be a priority.

Create a supportive environment

One of your most important jobs as a special needs parent is to anticipate and prepare for the time when you are no longer around to support your child. Starting now, you can help create a supportive environment for them that supports their disability and makes the most of their capacity.

Amy Buttell contributed to this article.

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