Retirement Planning for a Retirement Planning for a Family with Special Needs Family with Special Needs

ChildrenChildren

Ronald S. Pearson, CFP®, AEP

Financial Planning Association

757-428-6634

Ron@beachfas.com

The ChallengesThe Challenges

Normal Personal Issues of RetirementNormal Personal Issues of Retirement

The Financial Issues of RetirementThe Financial Issues of Retirement

Saving While Caring For a Special Saving While Caring For a Special Needs Child Needs Child

This is This is NOTNOT Your Parent’s Your Parent’s Retirement!Retirement!

More dependence on personal More dependence on personal savingssavings

Fewer PensionsFewer Pensions

Uncertain Social SecurityUncertain Social Security

This is This is NOTNOT Your Parent’s Your Parent’s Retirement!Retirement!

Longer Life Expectancy/Higher Longer Life Expectancy/Higher Probability of Caring for Children and Probability of Caring for Children and ParentsParents

More Options for Your TimeMore Options for Your Time

Children with Special Needs have Children with Special Needs have Higher Medical/Child Raising Costs Higher Medical/Child Raising Costs over the Long Termover the Long Term

Special Needs Planning IssuesSpecial Needs Planning Issues

SSI/MedicaidSSI/Medicaid Letter of IntentLetter of Intent Special Needs Trust (SNT)Special Needs Trust (SNT) Funding of SNTFunding of SNT

• Life Insurance on One or Both ParentsLife Insurance on One or Both Parents• From Investment Assets (Not Needed for From Investment Assets (Not Needed for

Retirement)Retirement)• Must Not Interfere with Parent’s Ability Must Not Interfere with Parent’s Ability

to Save for Retirementto Save for Retirement

Special Needs Planning IssuesSpecial Needs Planning Issues

Sufficient Life Insurance/Disability Sufficient Life Insurance/Disability Insurance on BreadwinnerInsurance on Breadwinner

Sufficient Life Insurance on CaregiverSufficient Life Insurance on Caregiver Critical Need to Make Sure Will/RLT and all Critical Need to Make Sure Will/RLT and all

Beneficiary Designations Avoid Beneficiary Designations Avoid Jeopardizing SNTJeopardizing SNT

Planned Living Arrangement for Child Planned Living Arrangement for Child (Family or Group?)(Family or Group?)

GuardianshipGuardianship

Things Parents of Children with Things Parents of Children with Special Needs Have Difficulty Special Needs Have Difficulty

DoingDoing

Volunteering (except with advocacy Volunteering (except with advocacy groups)groups)

Starting to Paint or WriteStarting to Paint or Write Getting a Part-Time Job in a New Getting a Part-Time Job in a New

FieldField Traveling/Scouting Out New Place to Traveling/Scouting Out New Place to

LiveLive

Working On ItWorking On It

30s and 40s30s and 40s• Be AggressiveBe Aggressive

• At Least 10% of IncomeAt Least 10% of Income

• Must Balance Costs of Child with Special Must Balance Costs of Child with Special Needs with Need to Save for RetirementNeeds with Need to Save for Retirement

Working On ItWorking On It

50s and 60s50s and 60s

• Be a Little More CautiousBe a Little More Cautious

• 20% of Income20% of Income

• Invest any InheritanceInvest any Inheritance

• Keep some Stocks for the Long HaulKeep some Stocks for the Long Haul

Savings OptionsSavings Options

Employer-sponsored 401(k) plansEmployer-sponsored 401(k) plans

Individual Retirement AccountsIndividual Retirement Accounts

Simplified Employee Pension (SEPs)Simplified Employee Pension (SEPs)

Mutual Funds, Stocks, Other Mutual Funds, Stocks, Other InvestmentsInvestments

7 Most Common 401(k) Mistakes7 Most Common 401(k) Mistakes

Failure to Participate Failure to Participate Failure to Maximize ContributionFailure to Maximize Contribution Poor Diversification within PlanPoor Diversification within Plan Not Enough Assets Invested Outside Not Enough Assets Invested Outside

of the Planof the Plan Constant Changes within the PlanConstant Changes within the Plan Borrowing from the PlanBorrowing from the Plan Cashing Out EarlyCashing Out Early

Annual IRA ReviewAnnual IRA Review

Review Your InvestmentsReview Your Investments Consider Converting to Roth IRAConsider Converting to Roth IRA Review Your BeneficiariesReview Your Beneficiaries Consider All Options Before Rolling Consider All Options Before Rolling

Over to IRAOver to IRA Don’t Forget to Begin Withdrawals by Don’t Forget to Begin Withdrawals by

70 ½70 ½ Withdraw Enough to Avoid PenaltiesWithdraw Enough to Avoid Penalties

Other IssuesOther Issues

Long Term Health CareLong Term Health Care Part-time WorkPart-time Work Wills/Revocable Living Trusts/Living Wills/Revocable Living Trusts/Living

WillsWills Estate PlanningEstate Planning Inheritance TaxesInheritance Taxes

SummarySummary

Government Benefits CriticalGovernment Benefits Critical

Parents Must Focus on Their Own Parents Must Focus on Their Own RetirementRetirement

Legal Issues (guardianship/trusts)Legal Issues (guardianship/trusts)

Financial Issues (funding, beneficiary Financial Issues (funding, beneficiary designations, insurance)designations, insurance)