How Parents Can Save for Retirement While Caring for Adult Disabled Children

As the life expectancy of disabled adult children continues to climb, it becomes increasingly problematic for their aging parents to save for retirement. In the United States alone come 2030, there will be a population of 1.2 million adults age 60 and older with developmental disabilities, which is nearly double the amount in 2000.

One important thing for parents with disabled children to ensure is that any means of savings they undertake do not affect their child’s eligibility for government benefits. A special needs trust will help with this concern by putting assets into trust that do no affect government benefit eligibility. Therefore, it is important not to name a special needs child as the direct beneficiary of a retirement account or other asset; instead, name the special needs trust. Another tool that will not affect the government benefits is an ABLE account, which has tax-free distributions for qualified expenses.

Another essential issue for aging parents to consider is health-care costs, which can coincide with increased health expenses for the parents as well. Long-term care insurance can help combat some of these substantial expenses while policyholders reap tax advantages.  

See Elizabeth O’Brien, Parents of Special Needs Children Plan for Two Futures, Market Watch, July 7, 2016.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) for bringing this article to my attention.