I wish to retire in two years, my spouse and I’ve $three million saved however we’re nervous about our son with particular wants — what can we do?


I’m almost 60, my wife 57, and I want to retire at 62. I currently make about $ 125,000 to $ 150,000 a year, which my family supports. My wife stopped working at the age of 43 to raise our child who is now nearly 18 years old and has moderate autism. I have no debt and I own three houses. I live in one, one is empty (inheritance) and one is rented. I’ll take out a mortgage on the house I live in ($ 1,350 a month, with just 20 payments left) and the other two will be paid off. Together they have an estimated value of 2.6 million US dollars in the market. I plan to rent the vacant house but I’m not sure when as it’s a little sentimental to me as my parents lived there until they died not long ago. Once rented, both rentals bring in $ 6,000 per month. Aside from the houses, I have $ 2.2 million in my 401 (k), my wife has $ 600,000, we have $ 150,000 in savings and $ 100,000 in my brokerage account. I don’t plan to apply for social security before I reach full retirement age at 66. I’ll apply for Medicare at 65, as will my wife, and we’re both in good health, on average.

My main concern is my son, he needs full time care and will never be able to feed or live on his own. He has resources at his disposal such as a regional center, Medi-Cal, home support services, and government funding, all of which add to his life away from mom and dad when we retire. I don’t want to worry about my son’s happiness and well-being in a government system, so I wanted to add to his other resources so that he can live in the best possible care and to make sure that he will be cared for and happy to the best of his ability when we’re not there. I plan to contribute around $ 100,000 per year on top of the other resources mentioned earlier, which is nearly another $ 100,000 per year. Is that enough?

I also want to maintain or improve my lifestyle when we retire. Do you think this is doable for our retirement and my son’s future?

Thanks very much,


See: Here’s how to plan your retirement after you have special needs children

Dear R,

It is so wonderful to see how much you have saved for yourself and your wife’s future and how you are planning for your son’s too – kudos to you.

They ask really important questions, and many other families are deliberating too. Retirement provision and special needs planning go hand in hand, especially for parents who are concerned about the well-being of their children both before and after their lives. You have to strike a delicate balance between taking care of your children, but also not exposing yourself to the risk of being neglected in retirement.

You and your wife have amassed a really wonderful nest egg – over $ 3 million in non-real estate assets, and then the estimated $ 2.6 million under the three houses as you said. To many people, it may sound like you are ready to live your life and care for your son too. Although you have the financial resources to help, carefully consider how to do this.

Based on the wealth you contributed, and assuming that you and your spouse will live to be 92, the $ 3 million you invested would be sufficient, said Eric Bond, a financial advisor at Bond Wealth Management. But where should the $ 100,000 a year come from? Most likely, it will come from your retirement accounts as your savings and brokerage accounts don’t have enough to cover this payout rate. “Make sure you don’t run up your savings and sacrifice your own financial security,” said Bond. You’ll also need to set up an emergency account for any unforeseen circumstances, especially if you have two rental apartments.

I’ll provide some resources for planning special needs in a moment, but I want to get very quickly into your retirement plans first. You mention that in retirement you want to live an “upscale” lifestyle. I’m not exactly sure what this means, but make sure you do it before you leave work. Try to estimate what your monthly spending will be on this new lifestyle, then determine where to get the money from, Bond said. “This is where longevity and then the length of your retirement also play a role – if your retirement is 20, 30, or even 40 years, do you risk using up your savings in the early years of retirement with an upscale lifestyle?”

This is absolutely not to say that you shouldn’t splurge a little. After both working so long, in and out of the home, you should both be enjoying your retirement years – just figure out how you’re going to pay for that in addition to your goals of helping your son with that $ 100,000 a year.

Want more actionable tips for your retirement planning journey? Read MarketWatch’s “Retirement Hacks” pillar

Be as comprehensive as possible in your budget estimates. For example: healthcare. Your son can be taken care of by any of the various means you mentioned, but will you pay for the private insurance until you are eligible for Medicare? This can get pretty expensive, so plan your health expenses before you retire.

When it comes to your social security benefits, think carefully about when you will receive them. You mentioned that you’ll be starting from your full retirement age, which is definitely better than applying early if you can afford it, but you may want to delay even longer. The longer you wait to claim your FRA and up to 70 benefits, the more you will get in those paychecks in due course. Perform scenarios that use both your age and that of your wife, who will get her performance based on your age if you die before her.

One strategy is to get your wife to get her benefits from her FRA so that your son can collect half of her amount. Then by the time you turn 70, he starts getting your benefit, said Alexandria Dunn, a certified financial planner and investment advisor with Affinia Financial Group. (Children are entitled to up to half of the full retirement pension of one parent after the age of 18 if they have a disability that was reported before the age of 22 Social Security Administration).

I often suggest that people turn to a financial planner who can look at the minute details and financial reports and create an actionable plan based on their needs and goals. I will suggest that to you too! A professional can pay off, because they can best determine how you can withdraw your retirement savings in a sensible, yet efficient and tax-efficient manner.

If you go down this route, look for a consultant who specializes in special needs planning as they know many of the rules and options available. Here are two additional resources to check out: the Academy of Special Needs Planners and the Special Needs Alliance, said Cynthia Haddad, certified financial planner, partner, and investment advisor at Affinia Financial Group. These organizations can help you find advisors and lawyers. Haddad and her colleague John Nadworny recently wrote the second edition of their book The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child’s Life, which is published by Brookes Publishing and is due out next month.

Bond also recommends working with a family attorney who can assist you in creating a special needs trust if this is right for you. “Many people have made the mistake of naming disabled family members as beneficiaries of their wills and leaving assets to them directly, the disabled person may lose their right to government assistance,” said Bond. “It is possible that a special needs foundation is a good option as it allows you to make expenses that can improve your son’s quality of life without jeopardizing monthly government income or other services that are their primary ongoing concern Can be a source of support. ”

This concept is crucial. You probably want to protect your son’s performance while also contributing in his or her favor.

See also: The pandemic made everything difficult: financial strategies for people with disabilities and special needs

There are two main types of special needs trusts: one is a first-party trust that runs in your son’s name, and the second – and more common option – is a third-party trust where everyone has money for the beneficiary can donate and after that person’s death, other beneficiaries named by the donors will receive the rest. Regardless of whether your son is a beneficiary of one of your accounts, it is his trust that is truly referred to as the beneficiary so that he continues to be entitled to various benefits said Dunn.

Also, think about what you want from his caretaker now and in the future. States have different rules about this, but some allow one parent to be a guardian and the other to act as a carer and receive a Medicaid grant. Check with your state to see if this is an option. As morbid as it may feel, think carefully about who wants to be there for your son when you and your wife are not. Who are the key people in your life? And what roles and responsibilities can or would they take on? Talk to them about it before you make it official.

Guardianship can be very restrictive and has had a bad rap, especially recently, for Britney Spear’s 14-year mentorship. But in situations where the person is unable to make their own decisions, this may be the only way to go, Dunn said. There are only limited guardianship, e.g. B. For health or financial matters only, but a lawyer can help you figure out what is the best path for you, your son, and your family to go through.

Better to make these decisions now than to let someone else make them after you both pass. You may even want to appoint a co-guardian who could fill in if the current guardian dies.

“Guardians are appointed by the court,” said Dunn. “When the guardian dies, a new person has to go through the whole process that the parents went through.”

As the saying goes and the flight attendants remind us every time we are on a plane, you must put on your own air mask before helping anyone else. This is true even in your situation. Find out how much money you will need in retirement, estimate your expenses in this next chapter, and get an overview of your expenses. Then you will know where you are and how you can help your son.

“We always start with: Take care of mom and dad first,” said Haddad.

Reader: Do you have any suggestions for D? Add them in the comments below.

Do you have a question about your own retirement provision? Email us at HelpMeRetire@marketwatch.com

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