Tips for Planning Ahead for Your Family’s Financial Future
Raising a child is expensive. But raising a child with special needs is anywhere from 4 to 10 times more costly than raising a neurotypical child.
If that sounds shocking to you, you are not alone. It’s common for many parents in the special needs community to feel overwhelmed by these numbers. At Aviance Capital Partners, our goal is to help our clients feel a little less stressed and a little more prepared when it comes to managing the costs of caring for a child with special needs.
In this article, we’ll break down the true cost of supporting your child and what you can do to plan for the future.
The Basic Cost
The cost of raising a neurotypical child born in 2022 from birth to age 18 is roughly $272,000 when adjusted for inflation,[1] whereas the cost of raising a child with autism or some form of intellectual disability can range from $1.4 – $2.5 million.[2],[3]
Each family’s cost of care will be unique since every child’s diagnosis and daily needs are unique. On average, though, the huge discrepancy in costs can be attributed to everyday costs that the average neurotypical family does not need to consider. These include:
- Frequent doctors’ visits
- Therapy, sometimes daily
- Medical equipment
- Surgeries
- Medications
- Supervised care
- Specialized education
- Group homes in some cases
The True Cost
What the statistics above don’t include is the financial impact that occurs when a parent leaves the workforce in order to care for a child with special needs. Not only are the costs of taking care of that child higher, but now the family has one less income source to help manage the expenses.
Roughly 40% of parents of children with special needs will leave the workforce to care for their child full time.[4] Even those who don’t leave the workforce completely will need more days off and other workplace accommodations that could greatly impact their earning potential. It is a catch-22 that exacerbates the financial side of supporting a child with special needs.
Here’s an example.
Imagine a parent of a 5-year-old child with special needs was making $60,000 annually when they left the workforce to manage their child’s care full time. Over the course of 13 years (from age 5 to 18), that parent would lose approximately $891,000 in income, assuming their wages kept pace with the 30-year inflation rate of 2.2%.[5] That loss of income can have a devastating impact on an already difficult set of financial circumstances!
Government benefits are available to help make up the difference; however, they usually only cover bare minimum expenses. Many expenses that would help a child with special needs thrive are not covered and parents are often left to choose between paying out of pocket or providing a lower quality of life for their loved one.
What Can You Do?
The good news is that there are steps you can take to improve your family’s financial future as a parent with special needs. Working with a qualified financial professional who has experience helping families with special needs is a great place to start.
There are also ways to make the most of the government benefits available to your child, and special needs trusts can be an effective way to plan for your child’s financial future long-term.
We’re Here to Help
Regardless of where you are in the process, we’re here to help. At Aviance Capital Partners, we have experience helping families with special needs navigate the true costs of caring for their loved one. To learn more about how we can help, check out our educational blog or schedule a complimentary call today.
Disclosures: Aviance Capital Partners, LLC (“ACP”) is an SEC registered investment adviser located in Naples, Florida. Registration as an investment adviser is not an endorsement by securities regulators and does not imply that ACP has attained a certain level of skill, training, or ability. While information presented is believed to be factual and up-to-date, ACP does not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of ACP as of the date of publication and are subject to change. Not all services will be appropriate or necessary for all clients, and the potential value and benefit of the ACP’s services will vary based upon the client’s individual investment, financial, and tax circumstances. The effectiveness and potential success of a tax strategy, investment strategy, and financial plan depends on a variety of factors, including but not limited to the manner and timing of implementation, coordination with the client and the client’s other engaged professionals, and market conditions. This should not be construed as specific investment, financial planning or tax advice tailored to an individual reader. ACP suggests that readers consult a financial professional, attorney or tax advisory professional about their specific financial, legal or tax situation. Past performance does not guarantee future results. All investment strategies have the potential for profit or loss, and different investments and types of investments involve varying degrees of risk. There can be no assurance that the future performance of any specific investment or investment strategy, including those undertaken or recommended by ACP, will be profitable or equal any historical performance level. Additional information about ACP, including its Form ADV Part 2A describing its services, fees, and applicable conflicts of interest and its Form CRS is available upon request and at https://adviserinfo.sec.gov/firm/summary/146597. For current ACP clients, please advise us promptly in writing, if there are ever any changes in your financial situation or investment objectives, if you wish to impose any reasonable restrictions to our management of your account, or if you have not been receiving at least quarterly account statements from your account custodian.
[1] The Cost of Raising a Child in the United States (investopedia.com)
[2] The Cost of Raising a Special Needs Child – MintLife Blog (intuit.com)
[3] The Surprising Costs of Raising a Special Needs Child – Digital Storytelling (uga.edu)
[4] Parents of special-needs kids assume they’re less desirable employees. They’re wrong. – The Washington Post
[5] United States – 30-year Breakeven Inflation Rate – 2022 Data 2023 Forecast 2010 Historical (tradingeconomics.com)
