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I want to retire in two years, my wife and I have $3 million in savings but we are worried about our son with special needs – what can we do?

I’m almost 60, my wife is 57 and I want to retire at 62. Currently, I make about $125,000 to $150,000 a year, enough to support my family. My wife has quit her job the age 43 to raise our child, who is now almost 18 years old and has moderate-severe Autism. I have are not debt and own three homes. I live in one unit, one vacant (inheritance) and one rented. I pay a mortgage on the house I live in ($1,350 One month, only 20 payments left), and the remaining two have been paid in full. In total, they have an estimated market value of $2.6 million. I was going to rent the empty house but I don’t know because it has some feelings for me because my parents lived there until they passed away not long ago. Once leased, both rentals will 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 until I reach Full Retirement Age at 66. I will be applying for Medicare at 65 as will my wife and we are both in average to good health.

My main concern is my son, who needs full-time care and will never be able to support himself or live. There are resources available to him, such as regional centers, Medi-Cal, home support services, and government funds, all of which contribute to helping him live away from his parents as they grow older. we retire. I don’t want to worry about my son’s well-being and happiness in a state system, so I have planned to contribute to his other resources so that he can live in the best possible care. I can and guarantee to the best of my ability that she will be cared for and happy when we are not around. I plan to contribute about $100,000 a year to the other resources mentioned previously, another close to another $100,000 a year. Is this enough?

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

Thank you,

NS

See: How to plan for retirement when you have children with special needs

Dear R,

It’s amazing to see how much you’ve saved for your future as a couple and you’re planning for your son – great things for you.

You are asking really important questions and questions that many other families are pondering as well. Retirement planning and special needs planning go hand in hand, especially for parents concerned about their children’s well-being during and after their lives. You must strike a delicate balance between caring for your children, but also not putting yourself at risk of shortfall in retirement.

You and your wife have amassed a really great nest egg – over $3 million in non-real estate assets, and then an estimated $2.6 million out of three homes, like you said. To many, it seems like you’re ready to live your life to the fullest and take care of your son. Even though you have the financial means to help, consider carefully how you will do so.

For example, based on the assets you provide and assuming you and your spouse live to age 92, the $3 million you’ve invested would be a lot, said Eric Bond, a financial advisor at Bond Wealth Management said. But where will that $100,000 a year come from? Chances are, it will be taken from your retirement account because your savings and brokerage accounts don’t have enough housing to support that withdrawal rate. “Make sure you don’t run out of savings and sacrifice your financial security,” says Bond. You also need to have a dedicated emergency account for any contingencies, especially while maintaining two rentals.

I’ll provide some special needs planning resources in a moment, but first I want to tackle your retirement plans really quickly. You mention that you want an “enhanced” lifestyle in retirement. I’m not entirely sure what that means, but make sure you do before leaving the workforce. Try to estimate what your monthly expenses will be for this new lifestyle and then determine where you plan to get the money, says Bond. “Your longevity and retirement will also be a factor here – if your retirement spans 20, 30 or even 40 years, you run the risk of running out of savings by living a high lifestyle in the early years of retirement?”

This doesn’t mean at all that you shouldn’t splurge a bit. Once you’ve both worked long, inside and outside of your family, you should both enjoy your retirement years – just map out how you plan to pay for it alongside your goal of supporting your son. you in the amount of $100,000 per year.

Want more helpful tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacking” column

Be as expansive as possible in your budget. Example: Healthcare. Your son can get care using the different sources you mentioned, but will you pay for private insurance until eligible for Medicare? That can get pretty expensive, so budget your healthcare expenses before you retire.

As for your Social Security benefits, think carefully about when you claim them. You mentioned starting at Full Retirement Age, which is certainly better than declaring it early when you can afford to do so, but you might even want to delay it longer. The longer you wait to claim your benefits after the FRA and get up to 70, the more money you will get when the time comes. Run scenarios using your age as well as that of your wife, who will get her benefits based on yours if you refer her first.

One strategy is to have your wife start collecting her benefits at her FRA, that way your son can collect half of her money. Then, when you turn 70, he starts collecting your money, says Alexandria Dunn, a certified financial planner and financial advisor at Affinia Financial Group. (Children are eligible to claim half of their parents’ full retirement benefits after age 18 if they have a disability that started before age 22 and for survivor benefits they can get up to 75 % of deceased parent’s basic Social Security benefit, according to Social Security Administration).

I often recommend that people contact a financial planner who can scrutinize the little details and financial statements and create a workable plan based on their needs and goals. I would suggest that to you too! Having a professional can really be beneficial, as they will be able to best determine how you can cash out your retirement savings in a meaningful yet efficient and tax-friendly way.

If you go this route, find a special needs planning consultant, as they will know the many rules and options available. Cynthia Haddad, a financial planner, partner and financial advisor at Affinia Financial Group, says here are two additional resources for you to consider: The Special Needs Planners Academy and the Needs Coalition. special demand. Those organizations can help you find counselors and attorneys. Haddad and her colleague John Nadworny recently wrote Second version for their book “A Guide to Special Needs Planning: How to Prepare for Every Stage in Your Child’s Life,” published by Brookes Press and due out next month.

Bond also recommends working with a family attorney who can assist you in creating a special needs trust, if that’s right for you. “Many people make the mistake of naming disabled family members as beneficiaries in their wills and leaving assets to them, people with disabilities can lose their eligibility to participate in schemes,” says Bond. government assistance. “Perhaps a special needs trust is a good choice as it will allow you to provide expenses that can improve your son’s quality of life without affecting his own monthly income. government or other services may be their primary source of ongoing support.”

This concept is very important. You may want to protect your son’s ability to receive benefits, while also contributing to his benefit.

Also see: Pandemic makes things harder: Financial strategies for people with disabilities and special needs

There are two main types of special needs trusts: one is a first-party trust, which will be in your son’s name, and the second – and the more common option – is a third-party trust, where any Anyone can contribute money to a beneficiary, and when that person dies, other beneficiaries designated by the sponsors receive the rest. Make sure, though, that if your son is the beneficiary of any of your accounts, it’s your child’s trust that is actually named the beneficiary, so your child is still eligible for benefits. different interests, Dunn said.

Also, keep in mind what you want from your caregiver, now and in the future. States have different rules about this, but some allow one parent to act as guardian and the other to act as caregiver and receive Medicaid benefits. Check your status if this is an option. No matter how sick you feel, think hard about who you want to be with your son when you’re not. Who are the important people in your life? And what roles and responsibilities can they take on? Of course, talk to them about it before you announce it officially.

Custody can be quite limited and has gained a bad reputation especially since later this year because of Britney Spears’ 14-year guardianship. But in situations where the person is incapable of making their own decisions, that may be the only path, Dunn says. There are limited guardianships, such as for health care or financial matters only, but an attorney can help you determine what is the best path for you, your son, and your family. your family.

You’re better off making these decisions now than having someone else make them after you’ve both gotten over it. You may even want to name a co-custodian who can step in if the current guardian dies.

“The guardianship is appointed by the court,” says Dunn. “If the guardian dies, a new one has to go through the same full process as the parents did.”

As our saying goes, and as the flight attendants remind us every time you get on a plane, you must put on an anti-aircraft mask before helping others. This is true even in your situation. Figure out how much money you’ll need in retirement, estimate your expenses in this next chapter, and work through your expenses. Then you’ll know where you stand and how you can help your son.

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

Reader: Do you have a suggestion for D? Add them in the comments below.

Have questions about your retirement savings? Email us at HelpMeRetire@marketwatch.com

https://www.marketwatch.com/story/i-want-to-retire-in-two-years-my-wife-and-i-have-3-million-saved-but-were-worried-about-our-son-with-special-needs-what-can-we-do-11637080922?rss=1&siteid=rss | I want to retire in two years, my wife and I have $3 million in savings but we are worried about our son with special needs – what can we do?

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