Richelle Nessralla, a lawyer in Cambridge, is planning two retirements: one for herself and her husband, and another for her son with Down syndrome.
Within weeks of giving birth to her twins, Sofiya and Zayn, seven years ago, Nessralla said she did something most new parents donâ€™t do: she shopped around for life insurance. She wondered about how much they would need and worried if it would be enough to support Zayn. â€śOur financial plan needed to look differently than it did before my kids were born,â€ť she said.
The plan went from having enough to fund the coupleâ€™s retirement, with maybe a little extra money to leave for the children, to having the need to fund their retirement and pay for their sonâ€™s living expenses the rest of his life. â€śSubstantively, it was/is hard because we feel we need to leave a lot more funds after our death than we might otherwise have felt,â€ť she said. â€śSo everything we spend or buy takes away from that. We think of it constantly with all financial decisions we make.â€ť
Parents of children with special needs are paying for medical costs now, but also usually worry about caring for their childrenâ€™s needs throughout their lives, including housing, transportation and food and medical costs.
Every year, about 6,000 babies in the U.S. are born with Down syndrome, the most common chromosomal disorder diagnosed, according to the Centers for Disease Control and Prevention. Medical costs for children with Down syndrome up to 4 years old with private insurance are 12 times higher than a child without Down syndrome. Nearly 60% of families provided health care at home, and 40% said the childâ€™s condition caused financial problems.
People with Down syndrome have a life expectancy of 60, up from 25 in 1983, according to the National Down Syndrome Society.
â€śParents really need to think about the future, and when we think about special needs planning, we think about planning for two generations,â€ť said Cynthia Haddad, a wealth adviser and partner of special needs financial planning at Shepherd Financial Partners.
Haddad, who works with Nessralla and has a brother with special needs, says there are five factors involved in this type of planning: family and support (who is and will be in the childâ€™s life, as well as professionals providing care to the child), emotions (addressing fears parents and family members may have, and creating letters of intent for what they want after they die), finances (including various investment accounts, such as ABLE accounts and 529 plans), legal (understanding your rights at school, or under the American with Disabilities Act) and lastly, government benefits (what public assistance programs are out there and what benefits children with special needs may be entitled to). â€śWe need to balance the needs of the families and their resources and the needs of the child and resources available to the child,â€ť she said.
Parents can also use a special needs trust, which restricts the beneficiaries from accessing the trustâ€™s assets. Doing so ensures they arenâ€™t disqualified from receiving government benefits, and the trust will outline when and how the assets can be used, said Colleen Carcone, a wealth planning specialist at TIAA.
ABLE accounts are also available to individuals with disabilities and their families, used for medical treatment, education and job training, assistive technology, housing and legal administrative fees, according to Intuitâ€™s INTU, +2.19% Â TurboTax. An individual can contribute up to $15,000 a year to an ABLE account (a disabled individual can be named the beneficiary of only one account) and the first $100,000 in an account is not treated as personal assets (thereby not affecting government benefits).
Although Nessralla was concerned in the beginning â€” sheâ€™s a worrier, she said â€” she feels comfortable with her financial plans now. â€śWhile weâ€™re alive, he can live with us and we can look after him to an extent, but once weâ€™re gone, that will all need to be paid for,â€ť she said. â€śItâ€™s a significant emotional stress on everyone â€” on me and family, and other families Iâ€™ve spoken to â€” to try to plan for the future and do what you can to ensure their financial security.â€ť