Planning for special needs investments?

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Joined: Fri Mar 07, 2014 1:19 pm

Planning for special needs investments?

Post by z91 » Fri Jan 12, 2018 8:06 pm

Hi all. I have two young children, one of which has special needs. Unclear if he will be able to self-sustain, but it's likely he'll be living with us for a while.. My wife and I have been frugal and trying to save for the inevitable, but would love some advice. Here's where we are:

Early 30s, myself, DW, 2x DS (both in some form of private care)
200k gross

Savings (mostly under my name, my wife has ~10k in a Roth)
100k cash (no-penalty CDs, savings accounts etc..)
350k 401k+Roth
5k Traditional

All are invested in a form of Vanguard Index 2050 (public and workplace).

Biggest expenses:
Townhouse - PITI $3000/mo (HCOL area) - 400k mortgage, worth ~1.2M
Preschool for the little one - $1200/mo (this will go away next year)
Private school for special needs son - $1500/mo (my wife and I agreed there is no way our son will do well in public school, even with supports). This will continue for another 10+ years.. We love the private school and have no plans to switch.
Medical - $3000/yr (maximum OOP..)

Cars both owned outright, and if something goes wrong I can work on it myself.

I max out my 401k (50% maximum match), and will look into backdoor Roth this year. Take home pay is around $8k/mo after all deductions. I currently receive stock options which is why my gross is high. Even with all the expenses I still am able to somehow save $1500-2000/mo (though this likely goes to my property taxes and insurance, since I pay those annually..).

Any thoughts on what we should do? I know folks will tell me the cash position is high, but I unexpectedly lost my job a few years ago, and my first few years of full-time work were through the recession.. I am thinking about moving 20-30k into a mixed portfolio though, and keeping the rest in savings (70k). I am also considering working with a fee-only advisor just for another perspective.

Posts: 74
Joined: Tue Mar 27, 2012 11:52 am

Re: Planning for special needs investments?

Post by robebibb » Mon Jan 15, 2018 12:00 pm

We are in a similar scenario as yourself, young 30s with an almost 3 y/o with significant delays which will likely have a lifelong impact. We do not separately invest for his future, rather we plan to work longer to build a sufficient inheritance for him to maintain an acceptable lifestyle. Presumably since the investment timeline is longer it would make sense to have a more aggressive AA than one would have if you are just saving for your individual lifetime (since we are so young I wouldn't say it's affected our AA yet). It would be interesting to hear from a more seasoned individual with adult dependents on their planned AA and how it differs from what it would be if no one was depending on an inheritance.

We did buy longer term and higher face amount term life insurance than we otherwise would have given the likelihood of his dependence on us into adulthood.

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