Retirement Planning for a Family with Special Needs Children Ronald S. Pearson, CFP®, AEP Financial Planning Association

The Challenges Normal Personal Issues of Retirement Normal Personal Issues of Retirement The Financial Issues of Retirement The Financial Issues of Retirement Saving While Caring For a Special Needs Child Saving While Caring For a Special Needs Child

This is NOT Your Parent’s Retirement! More dependence on personal savings More dependence on personal savings Fewer Pensions Fewer Pensions Uncertain Social Security Uncertain Social Security

This is NOT Your Parent’s Retirement! Longer Life Expectancy/Higher Probability of Caring for Children and Parents Longer Life Expectancy/Higher Probability of Caring for Children and Parents More Options for Your Time More Options for Your Time Children with Special Needs have Higher Medical/Child Raising Costs over the Long Term Children with Special Needs have Higher Medical/Child Raising Costs over the Long Term

Special Needs Planning Issues SSI/Medicaid SSI/Medicaid Letter of Intent Letter of Intent Special Needs Trust (SNT) Special Needs Trust (SNT) Funding of SNT Funding of SNT Life Insurance on One or Both ParentsLife Insurance on One or Both Parents From Investment Assets (Not Needed for Retirement)From Investment Assets (Not Needed for Retirement) Must Not Interfere with Parent’s Ability to Save for RetirementMust Not Interfere with Parent’s Ability to Save for Retirement

Special Needs Planning Issues Sufficient Life Insurance/Disability Insurance on Breadwinner Sufficient Life Insurance/Disability Insurance on Breadwinner Sufficient Life Insurance on Caregiver Sufficient Life Insurance on Caregiver Critical Need to Make Sure Will/RLT and all Beneficiary Designations Avoid Jeopardizing SNT Critical Need to Make Sure Will/RLT and all Beneficiary Designations Avoid Jeopardizing SNT Planned Living Arrangement for Child (Family or Group?) Planned Living Arrangement for Child (Family or Group?) Guardianship Guardianship

Things Parents of Children with Special Needs Have Difficulty Doing Volunteering (except with advocacy groups) Volunteering (except with advocacy groups) Starting to Paint or Write Starting to Paint or Write Getting a Part-Time Job in a New Field Getting a Part-Time Job in a New Field Traveling/Scouting Out New Place to Live Traveling/Scouting Out New Place to Live

Working On It 30s and 40s 30s and 40s Be AggressiveBe Aggressive At Least 10% of IncomeAt Least 10% of Income Must Balance Costs of Child with Special Needs with Need to Save for RetirementMust Balance Costs of Child with Special Needs with Need to Save for Retirement

Working On It 50s and 60s 50s 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 Options Employer-sponsored 401(k) plans Employer-sponsored 401(k) plans Individual Retirement Accounts Individual Retirement Accounts Simplified Employee Pension (SEPs) Simplified Employee Pension (SEPs) Mutual Funds, Stocks, Other Investments Mutual Funds, Stocks, Other Investments

7 Most Common 401(k) Mistakes Failure to Participate Failure to Participate Failure to Maximize Contribution Failure to Maximize Contribution Poor Diversification within Plan Poor Diversification within Plan Not Enough Assets Invested Outside of the Plan Not Enough Assets Invested Outside of the Plan Constant Changes within the Plan Constant Changes within the Plan Borrowing from the Plan Borrowing from the Plan Cashing Out Early Cashing Out Early

Annual IRA Review Review Your Investments Review Your Investments Consider Converting to Roth IRA Consider Converting to Roth IRA Review Your Beneficiaries Review Your Beneficiaries Consider All Options Before Rolling Over to IRA Consider All Options Before Rolling Over to IRA Don’t Forget to Begin Withdrawals by 70 ½ Don’t Forget to Begin Withdrawals by 70 ½ Withdraw Enough to Avoid Penalties Withdraw Enough to Avoid Penalties

Other Issues Long Term Health Care Long Term Health Care Part-time Work Part-time Work Wills/Revocable Living Trusts/Living Wills Wills/Revocable Living Trusts/Living Wills Estate Planning Estate Planning Inheritance Taxes Inheritance Taxes

Summary Government Benefits Critical Government Benefits Critical Parents Must Focus on Their Own Retirement Parents Must Focus on Their Own Retirement Legal Issues (guardianship/trusts) Legal Issues (guardianship/trusts) Financial Issues (funding, beneficiary designations, insurance) Financial Issues (funding, beneficiary designations, insurance)