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: 99
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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Joined: Sat Jan 04, 2014 4:07 pm

Re: Planning for special needs investments?

Post by CFOKevin » Tue Mar 06, 2018 4:30 pm

Sorry that I didn't see this earlier.

We're 20-25 years ahead of you on your path with four kids, one a 25 year-old with a CP diagnosis. The impact to our lives financially has been that we've worked 5+ years longer than expected (retirement isn't too far down the road) and we've funded a special needs trust to throw off approx. $10K per year to meet our daughter's supplemental needs.

Our daughter's challenges are cognitive and she now lives with a family-member room mate in a 2 BR apartment, has two jobs she works for a total of 24 hours per week and generates enough income through working and SSDI combined with other govt funding to have a nice life.

Our recommendation is to appreciate your providers, raise a happy kid, learn the system to get the most out of it and network with parents in your area who are 5-10 years further down the road than you. That's where you get your best information.

Good Luck,


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Joined: Wed Jul 26, 2017 12:46 pm

Re: Planning for special needs investments?

Post by JBTX » Tue Mar 06, 2018 7:03 pm

Have young teenage son ASD. Probably will require support once into adult hood. As he approaches 18 will research his potential to receive government benefits, and may set up a special needs trust and/ or 529
ABLE account (a 529 for special needs)

We don’t invest differently than otherwise but will probably work longer than we would have. Only advice I have is save save save. Our goal is to have low 7 figures for him down the road, in a special needs trust or elsewhere.

In some inherited trust situations down the road when you both pass on, funding a trust with a Roth IRA can have favorable tax treatment. The specifics get pretty technical and I’m still figuring it out myself. Bottom line having a least some of your retirement accounts in Roth could be beneficial way down the road.

We have gone the public school route. Our older daughter has some of her own issues and attended a private school catering to special needs early on one year and we deemed it a waste of $18k. So we have stayed with public for both since then. Our public school district has been far from perfect but they have been very good about working with us to provide an appropriate experience. The feedback we have gotten from most of the medical professionals is that the private schools in our area (major metro area) that cater to ASD aren’t that terribly good and we are better off in public schools. We’ve chosen to use the saved money for therapies and to otherwise save for his future.

I’d look into if there are government benefits for special needs kids or certain waiting/interest lists for Medicaid disability eligibility. Obviously varies by state.

It kind of stinks because you have to figure this stuff out by yourself and sometimes you stumble on resources later than you would have liked. We haven’t really belonged to any organizations with parents in similar situations. It probably would have behooved us to do so, but we were hesitant to deal with other parents who spend much time engaging in conspiracy theories and pursuing strategies with no scientific support. We have stumbled on a local charity that provides activities and coaching to kid/teens with social deficits and it has been great.

One resource I have found useful is the school district puts on presentations and get togethers on special needs issues. Some gatherings are useful, others less so, but it has helped us find some resources we weren’t previously aware of. It may be worth seeing if such a thing exists for you - even if you don’t go to the public school such resources may be helpful.

Btw you are off to a good start and having it all in vanguard target date fund is totally appropriate. You may decide many years down the road to invest any saved trust assets for your son differently but you have a long time to figure that out.

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