Helping a family with a child or adult child with a disability build its retirement and life-care plan is analogous to tackling one of those puzzles called "most difficult."

For families with special needs, putting the puzzle together requires significantly more attention to many more small details and the ability to construct a plan with more dimensions.

This being the age of internet micro-specialization, there is a website for everything. Some members of my family are very much into jigsaw puzzles so, surfing for reserve future gift ideas, I checked out what is available online. Yes, there are several websites devoted only to puzzles.

Within our preferred category of jigsaw puzzles, there are the standard rectangular or square ones stepping up from simple (fewer, larger pieces) to more complex (more of smaller and smaller pieces). Then there are shaped jigsaws that, when completed, depict a larger image, such as the puzzle that depicts thousands of Hershey kisses in the overall shape of—you guessed it—a large Kiss™. There are "large print" jigsaws for people with visual limitations and 3D interlocking puzzles (are they still jigsaws?) for more tactile people who want to finish with a sculpture. Several sites claim to have the most difficult puzzles, listing 1000-piece monochromatic flat jigsaws or 950-piece 3D puzzles that result in a scale model of the Taj Mahal.

Helping a typical family build its retirement plan is analogous to completing a moderately complex jigsaw. We put together the parameters in a way that creates definitive borders. They want to work into their later sixties, could live to be 100, want to pay off the mortgage before retiring, want $60,000 after-tax income per year to live on, want to downsize to a townhome and want to cover up to three years per spouse at an acceptable long-term care facility. Then, we fill in the picture with their various income stream (Social Security, pension, dividend, rental) and assets (401(k), IRA, taxable accounts). Helping a family with a child or adult child with a disability build its retirement and life-care plan is analogous to tackling one of those puzzles called "most difficult." For families with special needs, putting the puzzle together requires significantly more attention to many more small details and the ability to construct a plan with more dimensions.

Take the very basic question of when to retire. In a typical family, there may be a great deal of flexibility once the adult children are "launched." If the couple is willing to accept a lower annual budget, they can retire earlier. If they enjoy their work and are aiming for a higher retirement allowance, they can wait a few more years. In a situation where one child has a disability, though, the family may have additional considerations. One or both parents may need to retire later than the norm in order to continue employer-sponsored health insurance as long as possible, as well as to pay for the exceptional expenses related to the disability, on top of the family's gen eral expenses. These days, more and more young people are considering post-secondary education, but they may start and finish later than their typical peers and have less opportunity to earn and pay their own way. Some of the programs are quite expensive, meaning parents have to continue working to pay the tuition.

On the other hand, in states where the funding for adult services is sparse, and the waiting list for such services is long, one parent may need to retire early in order to help support the adult child with a disability to pursue employment or access recreational activities once s/he has aged out of school. The best time to begin working out how having a child with a disability may impact the parents' retirement horizon is when the child is young, and the parents are far from retirement. Saving a little more over a long time, knowing how your child can get the maximum possible Social Security benefits, understanding how Medicaid Waiver works to pay for services in your home state, knowing how your state's Vocational Rehabilitation office can help pay for tuition, stressing work-readiness goals in your child's IEP, and getting on waiting lists early, can help parents retire at a reasonable age and improve their post-retirement life, as well as the life of the adult child.

Another question that becomes more complicated when the family has an adult child with a disability is when the parents should begin drawing Social Security. An insured worker can take her/his retirement benefit and receive the full benefit at "Full Retirement Age," (FRA), which ranges from 65 to 67, depending on one's year of birth. A worker can take a reduced monthly benefit, as early as age 62, but that reduced benefit amount locks in for life. In addition, Social Security payments before FRA may be further reduced if the recipient is still actively employed. Conversely, if a worker can wait until age 70, her/his monthly benefit will be 8% larger for each additional year and that enhanced benefit will continue for life and transfer to her/his spouse at death. If both spouses are fully insured, each spouse is eligible for a benefit on her/his own work record and, if the spouse has filed, may be eligible for an additional amount if the own-record benefit is less than 50% of the spouse's benefit. For a typical couple where both are covered, both spouses may benefit from waiting until at least FRA or, if they have other assets and income to draw upon, waiting until age 70, thus allowing both benefits to grow as large as possible. This is particularly true if one or both parents plan to work until at least their full retirement age.

For parents who have an adult child with a disability, the variables increase. This is because the adult child is also eligible for a so-called "Childhood Disability Benefit" (sometimes called "Disabled Adult Child" benefit) when her/his parent starts drawing Social Security. In addition, a person becomes eligible to receive Medicare 24 months after s/he begins to receive a disability benefit based on a parent's work record, just as s/he would 24 months after starting disability benefits on his/her own work record. Medicare provides a substantial and cost-effective health insurance benefit. If the adult child with a disability has worked long enough to have disability benefits on her/his own work record, the parents' filing date remains flexible. But if not, once one takes into account the adult child's earlier access to cash benefits and Medicare, it may be more valuable for one parent to claim Social Security as early as 62, even though the benefit will be permanently reduced. If there is a noticeable age gap between the parents, the younger parent should be aware that s/he can file for "mother/father of a 'child in care'" benefits once the older spouse has filed for retirement. This basically allows a spouse to draw a spousal benefit before the minimum age of 62, as long as s/he is providing physical or managerial support to the couple's adult child with disabilities. 


PIECE BY PIECE: It's clear that we all have our strengths as puzzlers, and that we complete the puzzle fastest when we all work together.

Whether to sell the family home and downsize is likewise more complicated when the retirement scenario includes an adult child with a disability, particularly if the adult child wants to or must continue to live in the home with her/his parents. In some cases, the family may have spent time and money to adapt the property for an accessibility that would be difficult or expensive to replicate in another home. It may be impossible to downsize and still keep sufficient living and "personal" space for a household that includes three adults in two generations and, perhaps, the presence of paid support staff. Conversely, if the adult child has moved out to a supported living arrangement separate from the family home, the parents may want to use the proceeds from downsizing to contribute to a special needs trust. Or in states where the funding for supported living allows for sufficient flexibility, and where the adult child is comfortable in the family home, the parents might opt to downsize to a townhome to use as their own living quarters, while maintaining the family home and arranging for the adult child and several friends to live in the home supported by paid staff.

Whether or not to purchase long-term care insurance also takes on an additional dimension when the family has a next-generation member with a disability. First of all, daily living in retirement may consume additional assets if the parents are paying not only for themselves, but also for their adult child with a disability. Even if the adult child has moved into a supported living situation in which basic living expenses are funded by a combination of Social Security and Medicaid Wavier, parents will still need to provide the supplemental funds to pay for clothes, electronics, gifts, eating out, recreation, sports and exercise, vacation and other non-essentials that make life worth living. The additional expenditure will leave them less of a cushion to cover long-term care for themselves. Second, if adult children are self-sufficient, or at least have the capacity to be, the parents are free to spend down all their assets if one or both of them requires extended long-term care and the only risk is disappointed heirs.

But, in situations where parents have been providing supplemental support to their adult child with a disability, they will want that assistance to continue after they die, via a Special Needs Trust. If all assets are consumed to cover one or both parents' long-term care, what will be left to fund the trust? For families with a disability situation, it is imperative not only to consider seriously whether to purchase long-term care insurance, but also to investigate closely the different kinds of insurance available. For example, parents could purchase a second-to-die (survivorship) life insurance policy that would ensure a certain level of trust funding even if all other assets had been exhausted. Also, there are a number of hybrid policies currently available that combine life insurance and long-term care insurance. If parents require long-term care, the policy will pay for that, limiting the drain on other assets. But if the parents do not need long-term care, or need less than expected, all or a portion of the policy will pay out as a death benefit to augment assets going to the adult child with a disability or other heirs.

As our family has worked its way up from simple to larger and more complicated puzzles, it's become clear that we all have our strengths as puzzlers, and that we complete the puzzle fastest when we all work together. My husband, a mechanical engineer, can assess rapidly where a piece fits based on minute details of its shape. I'm very methodical, sorting out the corners and edges first and then sorting by colors. My son has no patience or strategy but has flashes of intuition where he just knows a piece will fit. He's usually right.

When you set out to build a plan that supports a secure retirement for you as parents and the most person-centered and community-integrated life for your son or daughter with a disability, you will be most successful when you work with a team of advisers with different strengths. Find a reputable attorney and an experienced benefits planner who know the boundaries imposed by Social Security, Medicaid and other sources of public funds. Find a case manager and a financial planner who can methodically walk your family through each stage of finding and paying for the supports the person with a disability needs to live her or his best life. Above all, harness the creativity and intuition of the person with a disability and those of you who know and love that person best. •

ABOUT THE AUTHOR: Alexandra Baig has an MBA from the University of Michigan and her CERTIFIED FINANCIAL PLANNER™ designation, and is a member of the Academy of Special Needs Planners. Alexandra's first career was as a stock market analyst in Hong Kong and China. A search for a more meaningful life's work took her to L'Arche, an international, interfaith network of communities where people with and without intellectual and developmental disabilities share life. Her work at L'Arche introduced Alexandra to the financial planning challenges of people with physical, intellectual, developmental and behavioral disabilities and their families. In particular, she is well-versed in the government benefits available to people with special needs and the rules governing them. Her goal is to help people with disabilities and their families make the most of public and private money to live the life they chose.