Did you know that only 30% of Americans have a long-term financial plan with savings and investment goals on the side? This means that the vast majority (70%) don’t make financial plans at all.
Here’s the truth: Financial planning isn’t exciting for most adults. But for people with disabilities (PWDs), it’s the first step they should take to achieve financial independence and long-term security. As managing healthcare costs and daily expenses is quite complex, a solid financial plan makes these challenges easier to handle.
Fret not; This practical guide offers proper financial planning for PWDs and their immediate families. Read on to learn what it takes to protect yourself and secure your future…financially and holistically!
Comprehensive Financial Planning for People with Disabilities (PWDs)
Americans with disabilities comprise nearly 15% of the U.S. population. But here’s the catch: Half of them are aged 65 years old and above. Likewise, their unemployment rate stands at 7.5%, about twice that of those without a disability. What do the numbers imply?
Many adults with disabilities in the U.S. face ongoing financial strain from medical expenses, housing challenges, and long-term care. On top of that, they often encounter barriers when trying to access the financial services they need…and rightfully deserve. That’s why, as a PWD, you should undergo proper planning as well as access financial resources during uncertain times.
That said, here’s how to protect your finances and secure your future:
1. Government benefits: Build a solid foundation
In general, PWDs should have comprehensive disability and special needs planning, which includes a detailed financial blueprint. Why? Knowing your financial options and understanding available benefits is the first step to establishing a solid financial plan.
Jarrod Epps, CEO of CPR Certification Labs, suggests taking advantage of government benefits specifically designed for PWD. He recommends some of the notable ones, such as SSI, SSDI, Medicaid, and Medicare.
Epps says, “Several government programs provide financial access and support to disabled people. However, each program has its own policies based on the individual’s income, assets, and even work history.”
As a PWD, here are government benefits readily available to you:
- Supplemental Security Income (SSI) offers monthly payments to people with limited means, particularly those who are blind, living with a disability, or age 65 and older.
- Social Security Disability Insurance (SSDI) provides benefits to individuals and their immediate families for the most part. However, they consider your employment history and a qualifying medical condition.
- Medicaid pays for healthcare costs exclusively for people with limited income and assets. They usually cover services not covered by private insurance.
Medicare is a federal health insurance program for individuals aged 65 years and above. But this plan also applies to younger individuals with disabilities.
2. SNTs and ABLE accounts: Safeguard your future
Establishing your financial foundation is one thing; Protecting your future is another. That’s where Special Needs Trusts (SNTs) and ABLE accounts come in!
For those unfamiliar, Special Needs Trusts (SNTs) and ABLE accounts let you manage your finances without jeopardizing benefit eligibility. Each serves a distinct role and offers its own set of advantages. Therefore, see what best suits your needs as a PWD.
SNTs:
- Managed by a trustee on behalf of the person with a disability
- No contribution cap, which can be funded by family, friends, or through an inheritance
- Can hold various assets like property, investments, and savings
- Must be created by an attorney experienced in special needs planning
- Covers extra costs that government benefits don’t pay for
ABLE Accounts:
- Owned and managed by the individual with a disability
- Annual contribution limit is $17,000 (as of 2023), with state-based total limits
- Simple to open through your state’s ABLE program
- Only available if the disability began before age 26
- Can be used for major life costs like housing, education, and transportation
3. Savings, investments, and insurance: Go beyond the basics
The road to financial freedom often starts with establishing these three key factors: savings, insurance, and investments. However, this doesn’t just apply to regular people as PWDs can also go beyond the essentials in financial planning.
Grant Aldrich, founder of Preppy, highlights the value of savings, investments, and insurance, particularly for disabled people.
Aldrich advises getting certified for certain financial programs meant for PWDs. “While keeping government benefits, growing your savings, making investments, and protecting yourself with insurance requires careful planning. Even modest, regular contributions can add up over time when invested wisely.”
Below are your financial options:
- Wise investments can go a long way. Retirement plans, such as IRAs and 401(k)s, are beneficial for people with disabilities, as they often don’t count toward asset limits for programs like SSI or Medicaid. And guess what? They come with valuable tax perks!
- Insurance is a crucial piece of the financial puzzle. Life insurance can provide for loved ones, while supplemental health and long-term care policies help fill coverage gaps and shield against future high costs.
- Savings still really matter. When speaking with a financial advisor, ask how your savings or investments might impact your benefits. Likewise, see what the tax implications are and how your plan can evolve as your needs change. In Canada, for instance, the Registered Disability Savings Plan (RDSP) is a valuable tool for long-term financial growth.
4. Estate planning and transition strategies: Plan for the unexpected
To begin, what is estate planning? It’s the process of planning how you want your assets managed and distributed after you pass away. In short, it’s making a plan in advance!
Estate planning helps ensure that care and financial support continue during significant life changes. This is especially important for families supporting someone with a disability. Below are key documents to include:
- Will specifies who inherits your assets and can name a guardian for minor children.
- A living will or advance directive states your medical preferences if you are unable to communicate.
- Durable power of attorney gives someone the authority to handle your finances if you’re unable to do so.
- Healthcare power of attorney authorizes someone to manage your finances if you’re unable to do so.
- Letter of intent shares details about care needs, routines, and preferences to guide future caregivers.
Emily Ruby, owner of Abogada De Lesiones, recommends consulting legal professionals for estate planning. “These experts can help you stay on top of your legal directives should you pass away to ensure the financial protection of your loved ones.”
Ruby also suggests, “Make sure to review your plans regularly, especially after major life events or policy changes. As a PWD, the ultimate goal is to keep everything current and effective.”
5. Financial, legal, and social work professionals: Bring in the experts
For PWDs, financial planning can be a bit complicated. Even if you can count on your family members, it’s still best to consult the experts for proper guidance. Having the right professionals on your side can make financial planning much easier, faster, and better.
That said, look for the following:
- Financial planners with credentials like Chartered Special Needs Consultant (ChSNC)
- Legal professionals who focus on disability law, special needs trusts, and Medicaid planning
- Social workers who understand benefit programs and community resources
These professionals can help you tap into options like government aid, nonprofit resources, personal loans, and debt relief programs meant for people with disabilities. Their guidance can lighten financial stress and lay the groundwork for long-term security.
But when speaking with an advisor, ask about their experience in disability planning, any specialized training they have, and updates on recent policy shifts. It’s also helpful to know if they work with other experts and can potentially refer to their clients for testimonials.
Fret not! To find qualified support, check the Academy of Special Needs Planners, the Special Needs Alliance, or seek referrals from disability advocacy groups.
6. PWD tools and community resources: Empower your journey
Getting started with financial planning can feel overwhelming. However, small steps can make a huge impact. Fret not, as available tools and community resources are all at your disposal. As these tools and resources are accessible, begin by:
- Listing your current assets, benefits, expenses, and future needs
- Identifying your top concerns and setting priorities
- Using free consultations to explore your options
- Joining support groups to connect with others and share advice
- Taking action, even opening an ABLE account, is a strong first move
There’s more—Helpful resources include:
- ABLE National Resource Center
- The Arc’s Center for Future Planning
- National Disability Institute
- Special Needs Alliance
- Benefits.gov
Final Thoughts: Safeguarding Your Wealth and Securing Your Tomorrow
One thing’s clear: Smart planning is essential for financial stability, especially for people with disabilities. Taking charge of your finances can help you move past everyday challenges and build confidence in your future. The solution? A comprehensive financial planning for PWD is key!
That said, consider our practical advice above, from accessing government benefits and ABLE accounts to having savings, investments, and insurance, to making estate planning. Plus, don’t forget to consult expert professionals and access tools and resources. Ultimately, start early and stay informed, as your future is all worth it!
Need access to financial services as a PWD? Partner with Abilities Expo for their live events and online resources designed to empower disabled individuals. Sign up now for free to join their next event!
Author’s Bio: Jesse Galanis is a professional writer who decomposes complex concepts of business information and working online. He provides quality content that assists people in everyday life.
