Staying Financially Prepared for a Child with Special Needs

Regular MoneyChat readers will know that we’ve featured some great advice from financial planner Chitra Iyer, who also happens to be on our expert panel.

Today, we bring you a pertinent story with advice on preparing financially for a disabled child. Chitra is not only an experienced planner but also the mother of Shravan, a special-needs child with Autism. While trying to deal with the challenges of being a care-giver, she reached out for support and joined the Forum for Autism, where she’s the trustee today.

Autism includes a spectrum of developmental disorders that affect individuals to varying degrees. ”At any point of time, we have between 300 to 400 registered members. But over the last 10 years, we have touched over 5000 families,” says Iyer. Forum for Autism conducts informative workshops for parents around the year. “Our annual meet typically attracts some 300-odd attendants from various parts of Maharashtra, Goa, M.P and other states,” she adds.

Perhaps, the finesse with which Chitra balances her work life, responsibilities as a mother and duties as the trustee of Forum for Autism is the kind of stuff we should devote more space to in our inspiration section. For now, Iyer tells us how parents with special-needs children should prepare themselves financially.

You need to be prepared for at least 50 years

Most people are at risk of death between the ages of 60 and 80, at which point the child could be middle-aged. Essentially, if your child is in his 50s when you pass away, you have to provide for 30 to 40 years of his life. This will have to be accounted for. Also keep in mind that you’ll probably retire around the age of 60. That is the time-frame you have to save up.

Account for inflation and growing needs

“Any kind of disability treatment, be it physiotherapy, behavior modification or music therapy, apart from basic schooling, is ridiculously expensive,” says Chitra.

These costs will go up with inflation. As your child grows older, age-related ailments will also add to the expenditure. However, you will be fine as long as you account for it and save accordingly. If you have a second child with no special needs, you will probably have to account for his or her expenses like education too.

It comes down to basic financial planning

Cover your risks, be disciplined about saving and invest wisely.

It may be hard, but additional money needs to be set aside for financial and medical emergencies. Basic health insurance for all family members should be prioritised and life insurance with adequate cover, with the special child in mind, will have to obtained for the earning member.

“You must save in a disciplined manner. You cannot have the ‘I will save when I have the money’ mentality,” says Chitra. Take your income and expenses into account, and decide realistically how much you can save. Whether it is 1% of your income or 10%, and stick to it no matter what. Of course, the savings amount itself cannot be too low. Look at the first two points if you need help accounting for how much you will have to save.

Important point: Do refer to the links below for our extensive in-depth series on financial planning, which begins with ‘self-diagnosis’. While these articles haven’t been written with special-needs dependants in mind, they offer some excellent advice. But first, our most crucial, closing point.

Remember the two Ts (and a W! And a G!)

Trust. Tax. Will. Guardianship.

Trust: The The National Trust for the Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 offers special privileges for Persons with Disabilities. Do ensure that you know all that your child and family is entitled to by law.

Will and another Trust: Trust also stands for the special Trust that you may have to create to ensure your child is taken care of. This ensures that the wealth is protected. A Will, of course, is a must.

Guardianship: You will also have to remember to become the legal guardian of your child after he or she turns 18. Only then can you sign legal and other documents on the behalf of our child.

Tax: Section 80U of The Income Tax Act (1961) enables tax deduction for families with disabled dependants.