Retirement Planning With a Special Needs Child in Mind

The days of fully vested lifetime pensions are long gone, Social Security is under threat from budger cutters and the stock market is a volatile place that has recently offered more downs than ups. Add to this unstable mix a variety of confusing retirement planning options with opaque names like 401(k)s, 403(b)s and SEPIRAs and its no wonder that most people are worried about how they will finance their retirements. But let's throw one more factor into the mix: Instead of just worrying about yourself, let's say that you have a child with special needs who relies on you for support. What happens to her when you retire?

First, the good news. Under our current Social Security system, when a parent of an adult child retires and begins collecting Social Security retirement benefits, her child may be eligible for Social Security Disability Insurance (SSDI). The criteria for collecting benefits is complicated, but if your child suffers from a permanent disability that manifested itself prior to her turning 22, then there is a chance that she could receive SSDI upon your retirement.

SSDI is a great benefit, but it may not be nearly enough to provide for your child when you retire. The obvious reason is that retirees often end up living on reduced incomes that come nowhere near their previous salaries. In other words, while you work there may be plenty of money to assist your child, but once the money gets tight in retirement it may be impossible to provide the benefits that she needs.

In an age dominated by private retirement plans and benefits, it should come as no surprise that the best strategy for helping a child with special needs when you retire is essentially the same strategy that you should follow for yourself, namely saving additional funds in your retirement account now for use when the time comes. This involves a detailed calculation of your needs and your loved one's needs, both now and into the future. (Merrill Lynch offers a Special Needs Calculator, a simplified version of this calculation, as a marketing tool on its Web site).

Knowing how much money you'll need for retirement is one thing, but selecting the appropriate financial vehicle to hold that money for you and your loved one with special needs is an equally pressing concern. Many financial professionals are great at making money, but they may not have any idea how that money affects the benefits of a person with special needs. Retirement options that work for one family may not be suitable for another. This is where your special needs planner comes into the picture to assist your financial adviser with making suggestions that will generate enough income for retirement and protect that income for the benefit of your child.

Retirement should be a time to relax and enjoy your well-earned time off. It shouldn't be one long period of stress, especially when it comes to your child's special needs. Consult early and often with your retirement planner and your special needs planner and you should be able to rest assured that you will still be able to provide for your child with special needs throughout your retirement.