Caregivers of disabled Americans unprepared for retirement

A large majority (82 percent) of caregivers are concerned that they do not have enough financial resources to last their disabled relative’s entire lifetime. And because of the time and cost required for caring for those with special needs, 30 percent of caregivers are not saving for their own retirement.

The American College of Financial Services discloses this finding in a new report, “Special Needs Caregiver Survey.” The research seeks to understand the challenges that caregivers of special needs children and young adults face managing day-to-day and long-term finances. The research also explores solutions that may help caregiving households prepare for their dependent relative’s financial futures.

Related: Rosie the caregiver: 10 ways to help her rivet our LTC ship together

“Caring for a child with special needs is a full-time job that requires all of your emotional and physical energy, which is why it makes sense that planning beyond the present is often delayed or ignored,” says Professor Adam Beck, director of The American College MassMutual Center for Special Needs Planning. “Leaving a special needs child financially insecure is a serious problem and this study confirms that a majority of special needs families lack the most basic preparations for their own financial security and that of their child.”

Disabled Americans’ financial crisis

Caregivers are concerned about what the future holds for their special needs relative, and for good reason. Alarmingly, two-thirds (67 percent) of Americans with special needs have no Special Needs Trust established for them, which puts them at imminent risk of losing Medicaid coverage and Social Security benefits. The survey also finds that:

• 87 percent of caregivers are concerned about what will happen to their special needs relative when they are no longer living.

• 59 percent of caregivers have not even taken the basic step of preparing a will.

• 60 percent of caregivers with life insurance have less than $300,000 of coverage and fewer than half have the protection of whole life coverage. However, the lifetime cost of caring for a dependent with autism is between $1.4 and $2.4 million.

• 23 percent of caregivers have a formal financial plan for their dependent and only 37% work with a financial advisor.

Related: 7 ideas for improving long-term care insurance

Retirement gap

Caregivers are also concerned about their own financial future and how their caregiving responsibilities may adversely impact their retirement. Most special needs caregivers will be caregivers for the duration of their lives – encompassing their entire retirement period. Yet almost one-third of this group (30 percent) is not saving at all for retirement.

Related: AirLTC: Can you play that game?

• Only 16 percent of caregivers strongly believe they are financial secure.

• 70 percent believe they will have to compromise their own retirement plans in order to provide for their special needs dependent.

• 77 percent are concerned they won’t be able to retire when they want to.

• 80 percent of caregivers are concerned they won’t be able to maintain a comfortable lifestyle throughout retirement.

“The number of children born with special needs continues to grow, and the cost of care is escalating as well,” says Beck. “Unfortunately, the financial services profession has not made special needs planning a priority, so too many families are unprepared for their financial future.

“However, there are well-established resources for special needs planning and advisors who specialize in serving these families,” Beck adds. “Together, these solutions can help provide financial security for both caregivers and those in need.”