|
CRESCENDO NOTES
Special Needs Financial Planning
|
|
|
My first job in the Financial Services Industry was as a Communication Specialist with Principal Financial Group. My role was to provide group and one on one education to our retirement plan participants which included 401(k), 403(b), Defined Benefit(pension), Employee Stock Ownership Plans, and Deferred Compensation Plans. I would educate employees on the importance of setting aside money today to "pay" for their retirement. I would discuss the “Three-Legged Stool” which represented the SOURCES of Retirement Income individuals use to replace their paycheck.
|
|
 |
|
The 3 Legs of the Stool Include:
1. Social Security
A program in the U.S. that requires workers to make regular payments to a government fund which is used to provide payments to people who are unable to work because they are old, disabled, or retired. This money is paid out through a social security program.
|
|
|
|
|
|
|
|
|
2. Private Pensions
A regular payment made during a person's retirement from an investment fund to which that person or their employer has contributed during their working life.
|
|
|
|
|
3. Personal Savings
Any funds that an individual may set aside to use to provide income when no longer employed. Examples include Individual Retirement Accounts (IRA).
|
|
|
|
|
According to the U.S. Bureau of Labor Statistics, a 2016 study showed only 20% of US workers have access to a pension. Of this percentage who does have access to a pension – 80% of those are union workers. This leaves a considerable number of workers whose retirement savings/income is solely dependent on their discipline to save.
The future of the Social Security system is one that seems to be debated during most Presidential election cycles. I found in my years of educating employees that there were strong opinions as to whether Social Security would be there for them upon retirement. The younger the workforce the less likely they were to rely on Social Security income being there at retirement.
Of the three sources of income above, the only one within our control is personal savings. We can’t control the changes employers make to benefit programs, and government policy can be impacted when we vote, but ultimately the future of Social Security is out of our control. The best we can do is make sure that we are disciplined to save for our own futures and not rely on the public or private sector to control our futures.
|
|
|
|
|
Special Needs and Government Benefits - BCRA?
|
|
The Senate’s Better Care Reconciliation Act of 2017 (BCRA)has received tremendous news coverage over the last month. There have been three revisions to this ACT (most recent July 20th) which proposes large cuts to Medicaid. Medicaid is a health care program that assists low-income families or individuals in paying for long-term medical and custodial care costs. Medicaid is a joint program, funded primarily by the federal government and run at the state level, which provides guaranteed funding with no caps to all those who qualify. Click
here
to view the most recent proposal. The majority of my client’s children with a disability receive Medicaid. Medicaid not only provides funding for Health Insurance, but federal funding helps support the State Waiver Programs that they participate in too. These include long term support for housing, transportation, supportive employment, etc. It is difficult for families to imagine losing these vital benefits, let alone prepare to take steps to plan for the potential loss of any of them.
|
|
|
Expect the Best, Plan for the Worst
|
|
I use this phrase often in my practice when communicating to families how we plan for the future of their loved one with special needs. We don’t know what the future will hold in terms of the consistency of public benefits. The cuts being proposed are equal to $880 Billion in benefits over a 10 year period, and this can be overwhelming to attempt to plan for. However, it is my job to help parents, and families understand that we MUST consider what the future holds if there was a reduction, or complete elimination of benefits. Not only do we need to understand this potential impact, but we need to PLAN for it. Yes, this is much more difficult for adult children because parents don’t have the time to set aside money to Plan for this. However, it’s never too late to start, and I recommend you start now.
|
|
|
Fail to Plan or Plan to Fail
|
The 529 ABLE (Achieving a Better Life Experience Act) Savings Accounts were created for this purpose. To allow parents a tax advantaged means to set aside funds to save and plan for future supplemental income needs of their loved one, or for the disabled individual themselves. Click
here
to learn more about the 529 ABLE Accounts. Opponents of these accounts focus on the contribution limitations which only allows for $14,000 per year. However, it’s a start and a $14,000 account balance can provide an additional $1000 a month on an annual basis to provide for living expenses of a disabled individual.
|
|
|
Managing Risk
The earlier you begin to plan the better, this was true when educating employees about the importance of setting aside earnings to save for retirement, and it remains the same as I educate parents on the need to begin saving for current and future needs of their loved one with Special Needs. We cannot control government funding, but we can control our own income, and how we manage that income. It’s difficult when I am having conversations with parents who have adult children who currently rely on benefits such as Supplemental Security Income(SSI) and/or Social Security Disability Income(SSDI) knowing they don’t have as much time on their side. The fact is, there is a political debate going on today on the future of Medicaid, and families must take this seriously.
Parents need to ask themselves the following questions:
- How much are you going to rely on Government Benefits for your child’s Fixed and Discretionary Needs? Food, Shelter, Medical Expenses, Housing, Transportation, etc.?
- Have you taken the time to understand what those needs will be?
- Are you relying on your own income to provide the additional means for them?
- What if something were to happen to you and your income?
- Will your child be financially dependent on you for the rest of your lifetime and the child’s?
I know as both a parent and a professional that these questions are hard to ask, and the answers can be even more difficult to process. However, it's my job, as a Financial Advisor to make sure I am helping my clients work through the risks that are within, and outside of our control, even when it can be overwhelming. I help parents DEVELOP and IMPLEMENT a Special Needs Financial Plan so the fear of potential future cuts may be a bit easier to digest!
|
|
When: Thursday, October 12, 2017 @ 8 pm
What:
Special Needs Planning through the Life stages
Who: Down Syndrome Association Of Wisconsin (DSAW) - Webinar
|
|
|
Securities and Advisory Services offered through JW Cole Financial , a registered investment advisor. Member FINRA/SIPC. The information contained in this email message is being transmitted to and is intended for the use of only the individual(s) to whom it is addressed. If the reader of this message is not the intended recipient, you are hereby advised that any dissemination, distribution or copying this message is strictly prohibited. If you have received this message in error, please immediately delete.
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual, nor intended to be a substitute for individualized legal advice. Please consult your legal advisor regarding your specific situation.
|
|
|
|
|
|
|
