Three Financial "Do's" After An Autism Diagnosis: Part Two
Our son was diagnosed with autism two weeks before his third birthday in August, 2014. I feel fortunate that we were able to get the official diagnosis early, because it set off a chain of events which allowed for him to be enrolled in the disabled preschool program in our suburban New Jersey district.
We are both teachers, and have had many students with disabilities in our classes over the years. I am a special education teacher, and so I've had years of experience working with children on the spectrum.
Statistically it would seem improbable that we would have a child on the spectrum, but the rates of autism diagnosis in New Jersey are growing.
We started seeing signs - the loss of the few words he did have. Lack of eye contact. Decreasing interest in others. Independent and isolated play.
We walked out of the child development clinic at the hospital, and while I cannot say that I was not slightly upset and disheartened, I remember the strongest feeling and thought that I had was one of preparation: We can do this. It will be different, but we're good.
What was important to me as a father two and a half years ago has becoming increasingly more important as time has gone on: Divide and conquer the tremendous amount of work at home. Be involved with and supportive of our family to the greatest extent possible. Create opportunities for career and salary advancement. Put money away for the future.
The creation of this small blog is an extension of those thoughts. There is a clear need for a community of people who are caring for a child or other family member living with a disability who want to share ideas the day to day finances and long term investing strategies that can help to alleviate many of the substantial medical, therapeutical, and educational costs that come with that care.
Many people do not know or understand the costs associated with raising a child with autism. According to the Centers for Disease Control, one out of every 68 children is diagnosed with a form of autism. And according to the Autism Spectrum Disorder Foundation, "the severe financial strain associated with the diagnosis does not help the fact that the families with autistic children generally earn 28 percent less than families with non-autistic children."
Sometimes it can be hard to know where to begin. That is why I would suggest a few simple things from Part One of this series to begin to save money and otherwise provide for a family member with a disability.
I am not a financial professional, but I knew that even with a clear savings strategy in place, I would need much more to secure my family's future.
In a case of excellent timing, the special services department of my school district hosted an insurance and investments professional, and I went to the presentation. He laid out, step by step, a plan for financial security that made sense to me. I eagerly made an appointment to visit his office.
I cannot understate the importance of meeting with a licensed insurance and investment professional whose primary business is special needs planning. There are many large and well known companies who provide these valuable services.
My wife and I gathered all of our financial documents, including bank statements, our newly established brokerage account for our son, our 403(b) retirement savings, and our small life insurance policies through our employer.
What we quickly discovered was that, as well-meaning as we were to build savings and keep focused on those goals, we were woefully behind the curve - if not completely unprepared for meeting our financial needs.
We have the usual bills - medium-plus sized house in New Jersey, and the ensuing mortgage that eats up a huge percentage of our take-home pay. Two older kids and our youngest on the spectrum. Lots of the same household expenses that everyone has, plus therapy bills out the wazoo.
At this rate, we would realistically never be able to save the amount of money that we would need to retire, never mind funding the care for our little one across his lifetime.
We knew that we needed to meet our financial goals and protect our family's future.
But how should we do that?
Step Two: Buy Term Life Insurance
A part of the answer, it seems obvious now, was to buy life insurance.
When you want to provide financial security to those who matter most to you, life insurance is a good place to start. It can protect your loved ones by providing a death benefit, so they have one less thing to worry about during difficult times.
Nothing matters more than the safety and well-being of your loved ones. You want to make sure they live comfortable, happy lives, no matter what may happen along the way. With the proper planning, you can put your family on the path to a secure financial future, even if you’re not able to provide for them. By protecting your loved ones, they’ll be able to count on you — now and for years to come.
We recognized this and worked to create a plan that met our needs.
My wife wants to retire as early as possible from teaching, and she has about 8 years in the classroom longer than I do. We decided to buy a 20 year term policy for her to provide income replacement should anything unforeseen happen.
For me, we bought the same dollar amount, but a 30 year term as I will likely work far longer than she will and the need for my income replacement is therefore slightly more critical.
I am also about to complete my graduate program in Educational Leadership, so theoretically, should I pursue a course of action that sees me leave the classroom for administration, my potential career earnings will be higher, and that greater income will need to be replaced through insurance.
It goes without saying that we do not ever want to have to use these term policies. But you cannot plan for accident or tragedy, and I would argue that a greater tragedy would be my wife and family left in dire financial straits when we would have paid a small premium every year to prevent that from happening.
Consider these two scenarios:
In the first, I am out on my bike for a long weekend ride. A distracted driver crosses into the shoulder and I am struck by the car and pass away. Our savings are very small and cover funeral expenses and perhaps two or three months of bills. A small life insurance policy through our union provides a few months of relief, but very quickly my wife, alone, will have to run a household of three children while at the same time preparing to sell our family home and drastically downsize. Instead of retiring early, she must work beyond the age of retirement to fund higher education costs for the elder children while hoping to have enough time, and energy to provide for therapy and care for our youngest child. There simply will not be enough income, and their lives will be very hard. It is already shaping up to be a bleak outlook, but it would probably be much worse in reality.
In the second scenario, I am clipped by the car (again!). After things settle down, my wife is able to pay off the house with the tax-free life insurance payout. Of that payout, 60% remains. If she opens a brokerage account and invests the majority of the funds that remain into high quality dividend aristocrats, she will be able to generate somewhere in the area of $15,000 per year in dividends alone.
While she may still have to work for a few more years to build up enough of a buffer in her bank account, the income generated by dividends will provide a very large cushion that will cover a lot of the daily living expenses of the family without having to dip into most of what the term policy paid out.
That also leaves her with the smaller policy from our union that can be put straight into a savings account or used to keep up with home ownership expenses or buy a new SUV to drive for the next 10 years.
Between the insurance and a few more years of earning her salary, she will still beyond to retire at or around her target date without the drastic changes in lifestyle and circumstances outlined in the first scenario.
Of course, we hope that neither of the scenarios comes to pass.
But what happens 30 years from now, where the big pile of money that would be provided by term life insurance disappears? What do older adults at the age of retirement do to provide funds to cover the costs of their disabled child's care?
We'll cover those questions, and more, in Part Three.
Comments? Questions? Leave them in the field below!
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