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Raising a child with special needs presents unique and long-term financial planning considerations.
Parents need to focus on ensuring their child has the care, resources and support they require — today, and, quite often, well into adulthood and their own retirement.
This level of planning often involves complex financial decisions and, in some cases, trade-offs that may impact other priorities. And parents in this cohort are hungry for more guidance.
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According to Ameriprise Financial’s recent study, 68% of parents of children with special needs expressed concern that the decisions they’re making now will impact their own financial future.
Fortunately, there are steps parents can take to help ensure their child has the support they need in the years ahead, while still planning for their own financial futures.
Here are five important areas to consider for parents with children with special needs who may be in various stages of the planning process.
1. Plan for two lifetimes
Depending on your child’s needs and their ability to earn a future income, your financial plan may need to consider your full lifespan and your child’s.
Clearly, this puts pressure on one’s resources.
One important area to consider are public programs that can help supplement what you may need to provide, such as Supplemental Security Income (SSI), Medicaid, and other federal and state benefits and community-based waivered services.
These resources often have eligibility requirements based on income and assets that can vary state by state, so working with an attorney who specializes in this area is important to determine which options will best preserve your child’s access to these benefits.
As you consider the long term and the potential need for a child’s lifelong care, life insurance can play a critical role. Knowing that your child will be cared for financially provides peace of mind and emotional relief for parents and guardians.
2. Give special consideration to your estate plan
Before naming your child as a beneficiary in your will or life insurance policy, it’s important to pause and consider the potential impact. Doing so could unintentionally affect their eligibility for government benefits like SSI and Medicaid.
Instead, you may want to explore a special needs trust (SNT), which allows your child to continue receiving public support while also benefiting from your estate or policy proceeds.
There are several types of SNTs, each with specific rules and eligibility requirements, so it’s a good idea to work with an attorney to determine the best fit for your situation.
Keep in mind that beneficiaries don’t have direct control over funds in an SNT, so this option may not be ideal if your adult child is capable of managing their own finances.
3. Consider ABLE accounts to supplement support
Under the Achieving a Better Life Experience (ABLE) Act of 2014, you can set up a tax-advantaged savings account to help support your child with a qualifying disability as they grow into adulthood.
ABLE accounts are designed to supplement benefits such as SSI, Medicaid and private insurance, helping your child maintain their health, independence and quality of life as an adult.
Anyone, including friends and extended family, can contribute, keeping in mind that annual contributions are limited to the gift tax exclusion amount of $19,000 for 2025.
The funds can then be used tax-free for qualified expenses, such as groceries, housing, transportation, education, employment support and medical care.
Some states also offer tax credits for contributions to ABLE accounts. Since rules, investment options, enrollment requirements and limits vary by state, it’s a good idea to consult with an attorney or financial adviser before getting started.
Here are a few additional considerations to keep in mind:
- Up to $100,000 in an ABLE account is not counted as a resource for SSI eligibility.
- Each state has its own limits on what will not affect current or future eligibility for programs such as the Free Application for Federal Student Aid (FAFSA), Housing and Urban Development (HUD) assistance, the Supplemental Nutrition Assistance Program, Medicaid, Medicare, SSDI or vocational rehabilitation services.
- Individuals who are disabled and who work may be able to make additional contributions (limits vary by state) if their employer hasn’t contributed to a retirement plan for them.
4. Designate guardianship and future support
As part of your estate planning, include clear instructions in the event you’re unable to manage your child’s care owing to illness, injury or death. Your child may need support with financial, legal or medical decisions, and appointing a guardian or conservator can help ensure those needs are met.
Once your child turns 18, you no longer have automatic legal authority over their decisions, so you may need to be appointed as a legal guardian through the court to continue acting on their behalf.
For planned absences, such as travel, many states allow you to set up a short-term guardianship without a court hearing, often valid for up to 365 days.
5. Have open family conversations
You know your child best. As you make decisions about the future, try to involve them in the process whenever it’s appropriate. They may have thoughts about their ability to live independently or concerns about what lies ahead.
Having open, honest conversations can ease anxiety on both sides and help ensure everyone feels informed and comfortable with the plans being made.
Planning for a child with special needs involves unique considerations, but it also reflects the deep care and commitment parents have for their child’s future.
By working with a financial adviser and attorney, you can create a thoughtful, personalized strategy that provides lasting support and peace of mind.
With the right guidance, you can feel confident that your child will be well cared for, both today and in the years to come.
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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.
