Prioritizing Goals for Your Child with Disabilities - Part II

Posted by Patricia Manko on Tue, Jul 24, 2012 @ 04:21 PM

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Defining Planning Timeframes


Having a child with special needs re-defines the classical financial planning terms of short, intermediate and long-term planning goals. 

In planning for a child with disabilities, we often look at things differently.  

    Goal Planning Timeframe


Special Needs


<5 years



5-10 years

goal with quantifiable timeframe


>10 years

two generations


Defining Traditional Planning Goals:

The relevance in defining a goal as either a short, intermediate or long-term goal is that it helps you to

  1.  Prioritize the order of each goal 
  2.  Determine a plan of action
  3.  Establish benchmarks to measure if you are achieving your goals.
  4.  Determine the most appropriate financial and legal tools to be used  to achieve each goal

Determining the appropriate Investment Objective

Each goal whether short term, intermediate, or long term requires a careful analysis of the needs and the savings available to achieve this goal based upon the time remaining until the invested funds are needed.

For short term needs, planning is focused on having adequate liquid savings for emergencies and unexpected expenses.  A simple rule of thumb is to have 3 to 6 months of living expenses available in the bank and/or equivalent.  Although liquid savings tend to have lower rates of return, they provide safety of principal.  The key is to receive a return OF the money, not necessarily to have a return ON the money. 

For intermediate term needs, planning is focused on accumulating savings in non-retirement accounts that can be accessed without having to pay a penalty.  The investment objective is primarily focused towards growth, with a secondary objective of safety of principal.

For long-term needs that are earmarked to be available during your retirement years, planning is generally focused on accumulating savings in retirement plan accounts.  The investment objective is primarily focused toward growth of principal. 

Defining Special Needs Planning Goals:

 For a typical family, an intermediate term savings goal is generally paying for college tuitions,  which are often a 4 year commitment. For special needs planning, an additional intermediate term savings goal might be purchasing a home for your child with disabilities. Defining the specific dollar amount required to purchase a home can vary dramatically from state to state, from family to family and from child to child. However, it is important to at least establish a base line for which to plan. To define the amount of savings needed to achieve this goal, many financial planners would use the model of purchasing a condominium unit. The purchase of the physical structure is basically the same with some variatons in structure or layout based on the child’s abilities. The primary distinction would be to anticipate any requirements for any significant modifications to the home to meet the needs of the individual. Nonetheless, these are definable intermediate goals.

 Continuing to provide for the lifetime supports required to enable your child with disabilities to live away from you in a separate residence are considered long term savings goals. Regardless of the number of years until the child moves into the residence, the support needs are for his or her lifetime. In developing the long-term planning strategy, the long-term support needs of your child should be integrated within your personal long-term cash flow needs. In planning ahead, this involves increasing your cash flow needs during your retirement years by the estimated amount of money required to support your child in his or her residence.

 For example, in traditional retirement planning it is frequently recommended to establish your retirement income goal to be 75% of your preretirement expenses. In supporting the lifetime needs of your child, his or her additional estimated expenses should be added to your own  retirement income goal.





Tags: Housing, Special Needs Financial Planning, Retirement Planning

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