Many families will face an unanticipated event or circumstance at some point that might require a financial change of plans. For those who have a child with special needs, this change is long-term and can greatly impact a family’s financial and lifestyle goals.
Having a child or children with special needs can be rewarding in many ways, but careful planning for the future is critical. Ameriprise financial advisors Michael Scott and Brendan Sheehan focus on working with clients who have a family member or members with special needs, and have witnessed the challenges that come along with it. “These families need to plan for uncertainty – and that can be a very difficult thing to do financially and emotionally,” says Michael, who is a board member for the National Alliance on Mental Illness (NAMI).
One in four families have a loved one with mental illness,1 but unfortunately it can be difficult to find professionals that are familiar with the hurdles these families face. Michael recommends that families ensure the professionals they work with are aligned. “Your psychologist or psychiatrist, attorney, financial advisor and any other professionals you work with make up a team,” he says. “I often act as a ‘coach’ to bring everyone together to discuss and coordinate plans for a family’s overall situation. No aspect of planning for the future - whether it’s financial, legal, or related to healthcare – can be completely considered without the other parts.”
Many parents find it difficult to balance their own financial needs with those of their child, so taking an objective perspective is key to effective planning. “Naturally, a parent tends to put the needs of their child before anything else, but this can become problematic if they neglect to plan for their own long-term situation,” says Brendan. “The basic question to ask yourself about ongoing care or financial obligations for your child is, ‘Can we really afford this and for how long?’”
To help answer these questions and establish a balance, he suggests visualizing each need as a “bucket” and then dividing one’s assets to fund each one. Some of the categories the family can begin with are their own retirement, their child’s education and future care, healthcare expenses, an emergency fund and other discretionary costs.
A person with special needs may never be financially independent, which can be emotionally difficult for a parent of a special needs child to consider. "One of the hardest things that parents must do is to plan for how their child will be cared for after their family members are no longer able help physically or financially. I find with new clients that many families are unaware of all the options available to them as they plan for this,” says Michael. “Doing the research, creating a written financial plan and ensuring that all the proper documents are in place is absolutely crucial to the financial security of you and your child. It may take some time and resources, but you likely won’t regret it.”