MONEY Financial Planning

The One Time Raiding Your Kid’s College Savings Makes Sense

Broken money jar
Normally, breaking into your college savings accounts is a no-no. Jeffrey Coolidge—Getty Images

It's never a great idea, but in an emergency tapping funds earmarked for education beats sabotaging your retirement plans.

Lauren Greutman felt sick.

She and her husband Mark were about $40,000 in debt, and were having trouble paying their monthly bills. As recent homebuyers, the Syracuse, N.Y. couple were already underwater on their mortgage and getting by on one income as Lauren focused on being a stay-at-home mom.

“We were in a really bad financial position, and just didn’t have the money to make ends meet,” remembers Greutman, now 33 and a mom of four.

There was one pot of money just sitting there: their son’s college savings, about $6,500 at the time. That is when they had to make a tough decision.

“We had to pull money out of the account,” she says. “We thought long and hard about it and felt almost dishonest. But it was either leave it in there, or pay the mortgage and be able to eat.”

It is a quandary faced by parents in dire financial straits: Should you treat your kids’ college savings—often housed in so-called 529 plans—as a sacred lockbox, or as a ready source of funds that may be tapped when necessary.

Precise figures are not available, since those making 529-plan withdrawals do not have to tell administrators whether or not the funds are being used for qualified higher education expenses, according to the College Savings Plans Network. That is a matter between the account owner and the Internal Revenue Service.

TIAA-CREF, which administrates many 529 plans for states, estimates that between 10% to 20% of plan withdrawals are non-qualified and not being used for their intended purpose of covering educational expenses.

It is never a first option to draw college money down early, of course. Private four-year colleges cost an average of $30,094 in tuition and fees for 2013/14, according to the College Board. Since that number will presumably rise much more by the time your toddler graduates from high school, parents need to be stocking those financial cupboards rather than emptying them out.

Joe Hurley, founder of Savingforcollege.com, has a message for stressed-out parents: Don’t beat yourselves up about it.

“The plans were designed to give account owners flexible access to their funds,” Hurley says. “I imagine parents would feel some guilt. But I don’t think they should. After all, it is their money.”

Why the Alternative Might Be Worse

Keep in mind that there are often significant financial penalties involved. With non-qualified distributions from a 529 plan, in most cases you are looking at a 10% penalty on the earnings. Withdrawn earnings will also be treated as income on your tax return, and if you took a state tax deduction on the original investment, withdrawn contributions often count as income as well.

Not ideal, of course. But if your other option for emergency funds is to raid your own retirement accounts, tapping college savings is a last-ditch avenue to consider. That’s not only because you do not want to blow up your own nest egg, but because it could make relative sense tax-wise. And as the saying goes, you can borrow money for college, but not for retirement.

“If you think about it, a parent who has a choice between tapping the 529 and tapping a retirement account might be better off tapping the 529,” says James Kinney, a planner with Financial Pathway Advisors in Bridgewater, N.J.

If the account is comprised of 30% earnings, then only 30% would be subject to tax and penalty, Kinney explains. And that compares favorably to a premature distribution from a 401(k) or IRA, where 100% of the distribution will be subject to taxes plus a penalty.

Lauren Greutman’s story has a happy ending. She and her husband made a pledge to restock their son’s college savings as soon as they were financially able. It is a pledge they kept: Now eight-years-old, their son has a healthy $12,000 growing in his account.

She even runs a site about budgeting and frugal living at iamthatlady.com. Still, the wrenching decision to tap college savings certainly was not easy—especially since other family members had contributed to that account.

“We tried to take emotion out of it, even though we felt so bad,” Greutman says. “Since we didn’t have money for groceries at that point, we knew our family would understand.”

Related: 4 Reasons You Shouldn’t Be Saving for College Just Yet

MONEY Estate Planning

Want Less Stress? Get Your Estate Plan In Order

Preparing the right paperwork will help ensure that your wishes are followed and may save your heirs a bundle of money.

After helping a girlfriend through the messy, tangled finances left in the wake of a parent’s death, John Kerecz had a message for his own mom and dad: Get your paperwork in order.

A few years later, Kerecz’s father passed away unexpectedly. The 52-year-old environmental engineer from Harrisburg, Pennsylvania went to the house and looked where his father and mother used to keep their important documents, but nothing was there. It was pure luck that he went to the computer to look up a phone number and saw a folder on the desktop labeled “DEATH.”

“Sure enough, everything was there in that folder,” Kerecz says.

Armed with a copy of the will, lists of the financial accounts and insurance policies and other paperwork, Kerecz was quickly able to settle his father’s estate and use the funds to take care of his ailing mother, making him extremely grateful.

The difference between having your files organized or not is about more than just stress; leave behind a mess and it can delay inheritors’ access to funds and cost a bundle in legal fees.

“It could be six months or longer if you don’t have the paperwork in order, and … your family is in the dark, not knowing things, jumping through hoops. It’s not a fun existence,” says Howard Krooks, president of the National Academy of Elder Law Attorneys.

Taking care of the necessary documents is a hallmark of good parenting, he adds, rather bluntly: “More than any kind of monetary legacy, if you really love them, you’d do this.”

HOW TO GET IT DONE

Compile a list of the financial information your heirs will need upon your death: wills, trust information, investment accounts, legal contacts, etc. You can keep this information in an electronic file – in one master document or several attachments – to serve as a road map to find all the physical paperwork.

Or, you can do what some of elder law attorney David Cutner’s clients do, and just pull out a cardboard box and start piling up the papers.

You have to do more than just gather the information, though, cautions Cutner, co-founder of the Lamson & Cutner Elder Law firm in New York. You have to tell your loved ones you have done it and tell them where to find it. You can either hand over the file immediately or keep it in a safe place (away from the prying eyes of caregivers and potential scammers).

A safe deposit box, by the way, is not a good place to keep these papers, says Cutner, because it’s too hard to access when needed.

THE WILL

Top of the list is a copy of your will, hopefully the most recent version, plus contact details for the attorney who drew it up and any executor named. Also important are trust documents, if they exist, estate experts say.

While power of attorney and living will documents are crucial should you become incapacitated, they will not be useful after your death, says Krooks—your heirs will then be using a death certificate to obtain access to accounts.

The real power in assembling all these items is that it forces you to go through the process of specifying your wishes. Without them, your family would have to put your estate into probate, which is when the state determines the distribution of your assets. This can take up to a year and eat up about 5% of the estate, says John Sweeney, an executive vice president responsible for Fidelity’s planning and advisory services business.

FINANCIAL ACCOUNTS

Your heirs will need to know all of your account information, down to your utility bills and your tax returns. You can either create a list or include copies of statements in the file, or just directions to where to find them. Also useful is a list of relatives to contact.

Knowing passwords for online accounts is not as important as naming another person on key accounts ahead of time, says Sweeney. This way, if the family needs to make mortgage payments or pay any medical bills, they do not have to wait until the estate is settled.

“Children are often dipping into their own assets to pay for taxes and mortgages when the last surviving parent has passed away,” says Sweeney.

In that same vein, make sure to sign another person up for a key to any safe deposit boxes or home safes, says Krooks. Include clear directions on how to access any other valuables that may be stashed elsewhere, so that it’s not mistakenly thrown out.

SURVIVOR BENEFITS

Pensions and insurance plans have many different payout rules, so you need to leave behind detailed information about policies. Insurance information should extend beyond life insurance to car, home and boat insurance, says Sweeney. It is also critical to include your Social Security benefit information, he adds.

The job of assembling all of this information can be massive, but most people appreciate it in the end.

“At first they curse us out because it’s so much to gather and put in one place. But by the time they come into the office, they’re really glad they did this exercise,” Krooks says.

MONEY Financial Planning

People Ignore 80% of What Their Adviser Tells Them. Here’s Why.

man putting fingers in his ears
moodboard—Getty Images

A financial planner explains why so many clients ignore good advice. Hint: It's not the clients' fault.

I’ve heard it estimated that out of all the financial and estate planning recommendations that advisers make, their clients ignore more than 80% of them. If there’s even a shred of truth in this stat, it represents a monumental failure of the financial advice industry.

Unfortunately, I think there’s a lot of truth to this number.

To explain why, let me tell you a story about a financial planning client I worked with a few years back. In one of our first meetings, she and I were reviewing her three most recent tax returns. As I discussed them with her, it became clear that the accountant who had prepared those returns — an accountant who had been recommended to her by her father — had filled them out fraudulently. A bag of old clothes that she had donated to charity became, on her Schedule A, a $10,500 cash gift. She also deducted work expenses for which she had already been reimbursed.

The client, a young single woman, wasn’t aware of these problems, as far as I could tell. So I gave her my best advice: Turn yourself in — and turn in the accountant, too. Tell the IRS about this before they come after you. “You’ve got to do this,” I said.

That was the last I ever saw of that client. I tried getting in touch with her, but she never communicated with me or my firm again.

Upon reflection, have a pretty good idea why.

Her accountant had been doing her father’s returns for even longer than he’d been doing hers. By telling her to turn in her accountant, I was also telling her to turn in her dad — the person who recommended the accountant and who, perhaps, had fraudulent statements on his own returns. I had crossed a line. And she, I assume, had decided to pretend that we had never had that conversation.

So why did she ignore my advice — or any of the advice I never got to give her? For the same reason that so many clients ignore so much of their advisers’ advice.

To say that clients are just not good at follow-through is a cop-out. I think the real problem is that advisers fail to apply the key discipline I learned early in my training as a financial planner: Know Your Client.

For Certified Financial Planner professionals, of which I am one, a key part of the Standards of Professional Conduct is to “Gather client data and establish goals.” It’s primarily in that step, when we gather client data, that we have the opportunity to get to know our clients. The standard-setting CFP Board offers some further guidance in that area:

The financial planning practitioner and the client shall mutually define the client’s personal and financial goals, needs and priorities that are relevant….”

Please note that the CFP Board specifically mentions both a client’s personal and financial goals. While I’m confident that planners are well-equipped for the collection of tangible, financial information, I’m less sure that advisers are effectively gathering intangible personal information about our clients.

So how do you gather and apply data about your client’s personal life, goals and values? The CFP Board offers further guidance:

…the practitioner will need to explore the client’s values, attitudes, expectations, and time horizons…”

OK now, this has gone a little too far, right? I mean, how exactly am I supposed to explore a client’s values, attitudes and expectations?

Most advisers relegate this warm and fuzzy talk of exploration, values and attitudes to a niche within financial planning called “life planning.” These advisers picture an entirely different breed of Zen planners meditating on a yoga mat with clients, and discount the practice entirely. According to the CFP Board, however, knowing our clients on a deeper level is just plain good, by-the-book financial planning.

So back to my client: Maybe if I’d gotten to know her on a deeper level, I could have helped her with her tax returns — and the rest of her finances. But I’ll never know. I may have been pleased with myself for uncovering her problem, but my recommendation didn’t bring her relief. It went the other way.

Since then, I’ve learned that planners, myself included, can have a more meaningful impact on the lives of our clients by recognizing that personal finance is more personal than it is finance.

And I believe that better understanding our clients’ intangible hopes, dreams, values and goals is also the key to higher implementation rates. So how do we do that?

That’s another story.

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Financial planner, speaker, and author Tim Maurer, is a wealth adviser at Buckingham Asset Management and the director of personal finance for the BAM Alliance. A certified financial planner practitioner working with individuals, families and organizations, he also educates at private events and via TV, radio, print, and online media. “Personal finance is more personal than it is finance” is the central theme that drives his writing and speaking.

MONEY Estate Planning

When Children Should Butt Out of Their Parents’ Finances

sliced dollar bill on cutting board
ersinkisacik—Getty Images

A financial planner explains how some adult children take too much of an interest in mom and dad's estate planning.

How many of us financial planners have had the privilege — or aggravation — of having a client’s adult children participate in a discussion of the parent’s finances?

There are good reasons for an adult child to be involved. A client may be aging or be recently widowed, and well-intentioned children may feel a responsibility to help mom or dad with money matters. And many of us financial planners encourage clients to include family members in important financial discussions, such as long-term care and estate planning.

But bringing the kids into a discussion isn’t always a good idea.

For example, let me tell you about a conversation I had with a client and his daughter. During an initially pleasant dinner meeting, it was revealed that dad had given money to the daughter and her husband to help buy some real estate.

The client then demonstrated a concern for fairness that I have seen with most parents: He turned the conversation to possibly reapportioning his estate among his children, taking this gift into account.

It’s in situations like this when family conflicts and tensions — the “mom always liked you best” grievances — usually become apparent. And this dinner was no exception. My client’s daughter didn’t have children. Like many adult children who are childless, whether or not by choice, they often see gifts go to grandchildren or to other siblings who are struggling to raise their families. Such was the case here. The daughter made it clear that she saw no need to equalize the estate because of the real estate purchase.

Meanwhile, I sensed my client’s uneasiness over the conversation.

Each family has its own own financial history — its own “financial DNA.” Every planner knows that very few things affect relationships in the way that money does. Some families don’t discuss money, but should. Some families fight over money and have severed relationships because of it. And some family members use their money to manipulate and control others. All of this history comes to the table when children and parents sit down together.

How many times have we planners heard something like “It’s dad’s money, and we don’t care if we ever get a dime”? Of course adult children are going to say these things — and most truly are sincere.

But sometimes what the child really means is “I don’t want mom’s money — unless, of course, it’s going to someone else.” That includes, in the child’s mind, Brother Tom (he’s such a loser) and Sister Sue (she just spends every dime she gets her hands on).

In reality, however, Brother Tom could be a hard-working guy who sells tires and who stops by to mow mom’s lawn each week during the summer. Sister Sue could be a single mother with two kids struggling to make ends meet after a bad divorce. That may be mom or dad’s point of view as they see their children through different eyes.

I think we should encourage our clients to make financial decisions through those eyes for as long as they are capable — with no “at-the-table” emotional influence.

Most children truly care about the happiness and well-being of their parents over any inheritance they may — or may not — receive. But, even in the loveliest of family relationships, I have sometimes gotten uncomfortable questions about future inheritances or “suggested” gifting strategies that mom or dad might want to “take advantage” of.

My gentle but straightforward response to the next generation is, “It’s not your money yet.” We can never know enough of a family’s personal history — their financial DNA — but knowing that we don’t know should cause us to question when to include the adult children of our clients in financial and estate planning discussions.

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Sandy is the founder and CEO of Confiance, based in Cleveland, Ohio. She is a certified financial planner and an accredited domestic partnership advisor specializing in planning for traditional as well as non-traditional relationships. Pamela also currently serves on the national board of the Financial Planning Association.

MONEY Financial Planning

What Would You Do With $100,000?

Stack of Money
iStock

Deciding how to spend a large inheritance isn't as easy as you might think. Heirs who have received big bequests, along with financial planners, share lessons learned.

What would you do if you suddenly got $100,000, no strings attached?

It’s a hypothetical question for most of us. But for Peter Brooks, it was reality a few years ago.

After the untimely death of an old friend from pancreatic cancer, a lawyer called Brooks and told him there was a check waiting for $107,000, taxes paid.

With $30 trillion set to change hands from one generation to the next over the next 30 years, many others will find themselves in a similar position, according to Accenture .

While some may receive a few trinkets and others millions of dollars, the median inheritance will be between $50,000 and $100,000, according to a survey by Interest.com.

Handling new and unexpected wealth may sound wonderful, but can be a financial challenge. We asked financial experts to assess the decisions of three different beneficiaries:

WELCOME BOOST

For Brooks, a 55-year-old marketing consultant from the San Francisco area, the money significantly improved his quality of life.

At first, he deposited the check into a managed portfolio that his bank recommended. This was just before the market crash in 2008. Frustrated when the portfolio didn’t budge, Brooks rolled the money into a certificate of deposit, which turned out to be fortuitous.

“When the market crashed, I thought, wow, I must have a guardian angel,” he says.

Brooks decided that real estate was the biggest risk he could stomach, and he found an old Victorian house to buy for himself in nearby Vallejo for $97,000.

Indeed, buying a house is one of the most common financial moves people make with new money, according to Susan Bradley, a financial planner and founder of the Sudden Money Institute, based in Palm Beach Gardens, Fla., who specializes in helping people manage newfound wealth.

“If your inheritance increases your sense of home and safety, that’s a really lovely thing to do with it,” Bradley says.

Her caveat is that this works only if you’re able to handle the upkeep on the house, which Brooks has been able to do just fine.

A SPLURGE (OR TWO)

By contrast, John Kerecz, a 52-year-old environmental engineer in Harrisburg, Pa., went on a spending spree after he inherited about $160,000, plus a broken-down house, when his father died two years ago.

Because his father had his paperwork in order, Kerecz was able to quickly access the cash. He hired a lawyer based on the recommendation of a family friend, got the death certificate, and had a payout from the insurance company within a couple of weeks.

Then he embarked on a series of trips to Europe, Nashville, and New Orleans with his mother, who was in declining health, and eventually spent about $100,000.

What remained went toward a new home for Kerecz and his mother, who now suffers from dementia. He is trying to sell his parents’ original home and intends to invest the proceeds from that sale.

“I feel bad that I kind of blew it, but I wanted my mother to enjoy life while she could,” he says.

It may seem irresponsible, but using an inheritance to make memories has intrinsic value, says Bradley.

“Sometimes you can meet that purpose without spending $100,000,” notes Bradley, who says she would have coached him to take a little more time to figure out how to build those memories with just $60,000.

IN OVER YOUR HEAD

Many inheritors get in even further over their heads, especially if the money comes when they are young.

Richard Rogers, a financial consultant with Stephens Private Client group in Little Rock, Ark., had a client who inherited a significant sum at 25 and insisted on buying an $80,000 car.

“I tried to tell him that if you compound this money for a few years, you can buy a lot nicer car. But you can’t tell somebody what to do,” Rogers says.

CarmenBelcher could have used that advice, too, when, at 22, she inherited $300,000 out of the blue from her estranged father.

The money came quickly because her name was on his bank accounts and she was listed as the beneficiary of his veteran’s benefits.

Belcher responsibly paid off her college loans, then moved from Missouri to New York for a graduate program in journalism. She used what was left to support herself.

Now, eight years later, the money is gone.

She blames that partly on not being savvy about spending in New York, and partly on the money not being invested optimally by a bank adviser in Missouri who first helped her.

“It’s unfortunate, when people haven’t thought through it and, before you know it, [the money is] gone,” says Bill Benjamin, chief executive officer of U.S. Bancorp Investment.

The ideal thing to do is to draw up a financial plan before you start dipping into an inheritance, he says.

While Belcher thinks she is better off than before — she is building a career as a fashion editor in New York — overall, the experience was negative.

“I couldn’t appreciate the amount of money,” she says. “If this would have happened at an older age, I would have had more knowledge.”

MONEY Kids & Money

8 Ways to Teach Your Kids to Be Financially Independent

Kid learning to use abacus
When it comes to money management, your child can't do this alone. Laurence Dutton—Getty Images

Want your children to develop good money habits for life? Then teach them well from the start. Use these tips from parents and top personal finance experts as your lesson plan.

To help your kids master essential money skills—and some day break free from you—devote time to financial home schooling. Parents are the biggest influence on their children’s financial habits, more so than work experience or financial literacy courses, according to the National Endowment for Financial Education. For ideas on how to do this, see how personal finance and parenting bloggers and authors teach their kids.

1. Tie a “No” Today to a “Yes” Tomorrow

“My wife and I have three children, ages 6, 4, and 2. While they are still a little young for in-depth money lessons, we make a point to involve them in family finances and try to make talking about financial responsibility and independence a part of our daily life. This usually happens in a thousand little, ordinary ways. An instance that comes to mind is when my four-year-old son asked if we could go to a local pizza and games restaurant that he loves. I said no, but went on to explain to him that it costs a lot of money for our family to enjoy an evening there. I reminded him of our vacation in a few months and said we were saving up so that we can have a lot of fun on our trip. It was a good way to teach him about the important principle of delayed gratification and the lesson that sometimes you have to say ‘no’ to things you want now, to enjoy better things in the future.” —John Schmoll, Jr., Frugal Rules

2. Let Them Make Spending Mistakes

“From the time our children were three or four years old, we’ve given them opportunities to earn money by doing chores and projects. When we’re out shopping, they can bring their own money and spend it however they’d like (within reason!). Not only do they learn money management skills, but this helps prevent the ‘gimme’ attitude. If a child sees something they want and asks if we can buy it, I always respond, ‘Do you have enough money for it?’ It also gives them the chance to make money mistakes. They’ve learned valuable lessons when they’ve purchased cheap items that broke almost immediately, and we’ve had great discussions on how to make wise purchases. We’d much rather they made $3 mistakes when they are little to hopefully prevent some $3,000 and $30,000 mistakes down the road.” — Crystal Paine, MoneySavingMom, author of Say Goodbye to Survival Mode?

3. Show Them That Work is Rewarding

“’I get an M&M mama?’ my talkative toddler asks. I reply, ‘Yes, if you complete the job.’ Even at 2 1/2 years old, I’m attempting to lay financial foundations in my son’s life. At this age, he doesn’t care a thing in the world about real money, but when I break out the M&Ms he knows I mean business. That’s because chocolate is a special treat reserved for a reward. At this stage, candy talks, and I can teach my son about finances with food. He is learning that when he uses the potty, picks up after himself, or helps me with a chore, he is paid for his work in delicious, color-coated chocolate candies. He’s beginning to understand that hard work is rewarded. That’s a trait my parents instilled in me, and I desire to pass along. Cash and chore charts will eventually replace sweets, but until then, candy paychecks are perfectly fine by him. Coins just don’t taste as good.” — Kim Anderson, Thrifty Little Mom

4. Break Out the 24-Hour Rule

“I’m blown away that my teenage daughter still remembers going to the flea market together years ago and learning a cool buying lesson from her mom. (As all us moms know, this is a rare and exotic occurrence!) Though I liked a pair of earrings, I waited a day to think it over, knowing that they would likely still be there if I changed my mind. Sure enough, after a day of thinking about it, I realized they weren’t all that special and that I’d rather wait to get something that I loved. To this day, whenever my daughter and I are out shopping and can’t make a decision, we invoke the ’24 Hour Rule.’” —Beth Kobliner, author of the forthcoming book Make Your Kid a Money Genius (Even If You’re Not) and a member of the President’s Advisory Council on Financial Capability for Young Americans.

5. Connect Saving, Spending, and Giving From the Outset

“My wife and I have a four-year-old son, and we’re just now beginning to teach him the true value of money and how it is a tool to be used for different purposes. We’re doing that through the use of three money jars. When he earns money through little jobs we have given him, depending on the day he will put the money in one of three jars. One day for giving, one for saving, and one for spending. On the last day of the week he can choose which jar to put his money in. He can never buy anything unless he has the money available in the spending jar. He also sees importance of saving for the future, and the joy of giving to others. It’s truly a joy to see when the ideas of giving and saving start to register, and it’s so fun to see the smile on his little face when he’s giving to our church, or to a friend through his giving jar. — Peter Anderson, Bible Money Matters

“Our kids are still very young, but at ages 3, 5, and 6 we’re doing our best to teach them the importance of spending, saving, and giving. Last summer, we made piggy banks as a family, and each child has three in their bedroom. One for saving, one for spending, and one for donating. Anytime they make money at a lemonade stand or receive birthday money, they split it up equally among their three jars. It’s not a huge act, but it does start the process at a young age that it’s okay to spend some of your money, as long as you’re giving back to others and saving as well.” — Anna Luther, My Life and Kids

6. Show Them the Price—and the Path

“We have young kids, but we’ve started occasionally working with our five-year-old daughter, Kate. One day while shopping with us she discovered My Little Ponies and asked if she could have one. We explained that we were planning on using our money for other things right now (a phrase we prefer to ‘we can’t afford it’). We shared with her that we would love to help her earn the money to buy it herself. We told her to write down the price and start saving money for it. Over the next couple of weeks we gave her little odd jobs to do around the house to earn the money, quarters and dimes at a time. She worked hard until she’d saved enough. Then we went to the store, and she got to buy her pony. She was so proud. It was a great lesson in money math, delayed gratification, and the power of saving.” — Philip Taylor, PT Money

7. Talk About Debt, Too

“My two boys aren’t quite old enough for serious money lessons yet, but one thing I’m excited to teach them early on is the importance of smartly managing debt. If they want to buy something on their own, like a toy, they’ll have three choices: 1) Buy it now, 2) Save to buy it later, or 3) Borrow money from us. If they choose to borrow, they’ll have payment terms and interest just like a regular loan. My hope is that they can learn the consequences of debt, both good and bad, before it has any real-world implications for them and without the lectures and scare tactics. Then they’ll have the skills and experience to make smarter choices once they’re out on their own.” — Matt Becker, Mom and Dad Money

8. Make Them Work for Wants

“A key factor in reaching financial independence is what you spend. Some spending is needed and necessary. But it’s the ‘wants’ that can get people in trouble. Therefore, when our kids ask for a non-essential item, we reply with a two-step plan: 1. First, wait a week. If you still want it, we’ll get it then (most times the ‘want’ goes away by the end of the first day); 2. If you still want it after the week passes, you have to work around the house to earn half of the purchase price—even if you have enough in savings to pay for it. The second step forces them to think if the amount of work required to purchase the item is worth it to them. If they follow through with the required work, then we know that they’re serious about the purchase, rather than just expressing a fleeting, short-term desire.Several times the “acquiring of money to pay for the thing” becomes almost exciting as the actual purchase.” — Kevin McKinley, On Your Money

More on helping your kids become financially independent:

 

 

MONEY Financial Planning

The Tough Talk Worth Having With Your Parents This Weekend

Conversation with grandparent
Silvia Jansen—Getty Images

Midyear is a great time for adult children to have a discussion with their parents about finances.

Do you find yourself in the Sandwich Generation, squeezed by dependent children on one side and caring for your parents, financially and otherwise, on the other? Now, at the middle of the calendar year, is a good time to have some difficult conversations with your parents.

One reason why a midyear conversation is ideal comes from author Stephen Covey. In his book The 7 Habits of Highly Effective People, Covey likens people’s banking activity to their personal relationships. Making deposits of goodwill will offset withdrawals — tough conversations, for example — and keep the relationship net positive. Many families have yet to recover from overdrawn relationships!

As a midyear mark, the beginning of July falls on the heels of Mother’s Day and Father’s Day — occasions for significant (and often expected) deposits into parents’ lives. The beginning of summer keeps the positive momentum by ushering in a mindset of fun and relaxation.

Among financial planners, the middle of the year is also a traditional time to review clients’ finances. Planners discuss with clients their net worth, asset allocation, and estimated taxes, among other financial areas, to ensure progress toward the client’s goals.

These factors make July an ideal time for people in the Sandwich Generation to talk about finances with their parents. This sensitive conversation requires effort and sound strategies. You can make the conversation relevant, for example, by linking it to a triggering event experienced by the parent, such as a pronounced illness or unexpected job loss close to retirement.

In a midyear review, financial planners can give their clients some guidance with how to conduct this conversation. Some of the questions that financial planners ask of clients in the financial planning process are relevant for clients to ask of their parents: How do you envision your life ten years from now? What fears do you have in reaching the quality of life you envision?

Working with a financial planner also exposes people to tools and techniques for understanding their parents’ financial situation. To build the foundation for gauging your parents’ financial needs, you can request from them, or create with them, the same materials that planners assemble with their clients: A net worth statement, for example, a spending plan, long-term care insurance coverage, and estate planning documents.

The client’s family values and the financial impact of any parental financial dependency are key areas of focus for planners and Sandwich Generation clients. For example, the aging parent of a client may envision being cared for at home instead of a nursing home. Honoring the parent’s desire becomes a family value of shared responsibility of time and money, particularly if there are gaps in long-term care insurance coverage. A client has to figure out how much of the gap he or she can handle, along with whether any other family members will help meet this goal.

Having the mid-year talk also plants the seeds for follow-up conversations during Thanksgiving, Christmas, or other year-end holidays. Starting the conversation early takes the edge off the discussion and channels the energy toward building and protecting family legacies during a time of celebration and reflection.

The Sandwich Generation literally cannot afford to delay these conversations. This group suffered proportionally worse than other generations during the most recent economic crisis. The financial pressures from high student debt, coupled with a decade of low returns and negative home equity, continue to squeeze the financial wind out of these households. Caring for parents and children adds further financial strains to household budgets with little or no capacity for additional expenses.

Sandwich Generation, let the talks begin!

—————————————-

Lazetta Rainey Braxton is a certified financial planner and CEO of Financial Fountains. She assists individuals, families, and institutions with achieving financial well-being and contributing to the common good through financial planning and investment management services. She serves as president of the Association of African American Financial Advisors. Braxton holds an MBA in finance and entrepreneurship from the Wake Forest University Babcock Graduate School of Management and a BS in finance and international business from the University of Virginia.

MONEY health

Raising an Autistic Child: Coping With the Costs

A new study pegs the lifetime cost of caring for a child with autism at $1.4 million. For parents, there are no easy solutions.

When Linda Mercier’s son Sam was around two years old, she knew something wasn’t right.

Sam was becoming withdrawn, not speaking or playing with other kids, and focused on specific tasks like lining up his toys. Eventually the mystery was solved: He was diagnosed with an Autism Spectrum Disorder, or ASD.

That was the beginning of a very long road, one that has involved significant time, effort — and money, plenty of it. Hundreds of thousands of dollars so far, Mercier estimates, on tutors, therapists and lost wages.

The good news: Same is now high-functioning, and in many respects a completely normal 13-year-old. The downside: The price tag to get to this point has been massive.

“Only a parent of a child with special needs can ever understand the struggles, and the financial commitment, of raising and recovering an autistic child,” says Mercier, a business owner from Winnipeg, Canada. “It’s an endless battle — and an expensive one.”

Indeed: A new study in the medical journal JAMA Pediatrics has pegged the total lifetime cost of supporting an individual with an ASD at an astonishing $1.4 million in the United States. If there is also intellectual disability, the total rises even more, to $2.4 million.

RELATED: Paying for My Special-Needs Child

Such costs typically include an ongoing mix of special education programs, medical care and lost wages. After all, many parents of autistic children reduce their work hours, or even quit their jobs altogether, to help their child full-time.

The study is the most recent to tabulate just how crushing these figures really are.

“I can believe it,” says Mercier, when told of the million-dollar-plus price tag. “Easy.”

Even the study’s lead author admits to being taken aback by the final number.

“I was really surprised,” said Dr. David Mandell, director of the Center for Mental Health Policy and Services Research at the University of Pennsylvania. “The old estimates were from 8 or 9 years ago, and at first I was skeptical they needed updating.”

New studies are providing more current cost estimates. “What we found was shocking,” Mandell said. “This is a huge hit on families.”

Journalist Ron Suskind knows about that financial hit first-hand. His son Owen, now 23, was diagnosed as being on the autism spectrum about 20 years ago, a journey Suskind has recounted in the book “Life, Animated.”

Owen has made remarkable strides, thanks to what Suskind calls “affinity therapy,” or tailoring treatment depending on the child’s particular way of understanding the world.

In Owen’s case, his preferred frame of reference is Disney movies. Using that template, Suskind and his wife got to work unlocking Owen’s full potential. But it did not come cheaply.

The organization Autism Speaks estimates that it takes around $60,000 a year to support someone with an ASD, Suskind says, adding that treatment for Owen cost about $90,000 a year.

“When we first got the diagnosis, the doctor asked me what I did for a living, and I said ‘newspaper reporter.’ He said, ‘I’m so sorry to hear that. You know, private equity is a nice way to go.’”

MOVING FOR SERVICES

The costs are so prohibitive that many affected families actually pick up and move to states that offer a superior array of therapeutic services. Suskind calls it a “Grapes of Wrath”-style migration, of families ultimately headed for locales like New York or Massachusetts. (To choose the right place for your family, check out Autism Speaks’ state-by-state resource guide.)

There is also a measure before Congress that aims to mitigate the financial burden for families: So-called ABLE accounts would be patterned after 529 college-savings plans, but specifically geared toward those with disabilities. The tax-advantaged savings could be put toward expenses like education, housing, therapy and rehab.

RELATED: Paying for My Special-Needs Child

One piece of advice from Mandell: Don’t automatically think that you have to drop out of the workforce in order to manage your child’s case full-time.

It’s the natural human instinct to want to do so, of course. No one knows your child and his or her needs like you do, and navigating multiple layers of city, state and federal services can indeed be a full-time job.

But when one parent drops out of the workforce, just as out-of-pocket expenses start to mount up, “it can become very financially difficult,” Mandell says.

He urges families to take a long-term view of caregiving. “In some cases it might be better for the mother to stay in the workforce, and then hire additional support to provide case-management services,” he says.

For Linda Mercier, the towering costs hit her family budget every single day. It meant cutting back wherever possible, taking second jobs and foregoing trips to visit family. All well worth it, of course, since Sam has been such an inspiring success story.

But there’s no question that raising a child with an ASD is a sobering financial reality.

“I would tell other parents of special-needs children that there is hope,” says Mercier. “It can get a lot better, and it does. But it takes a whole lot of money to get there.”

RELATED: Paying for My Special-Needs Child

MONEY Financial Planning

Paying For My Special-Needs Child

The cost of son Finn's care has forced author Jeff Howe and his family to make some tough choices. ©Annabel Clark 2013

Raising a special-needs child is frustrating, chaotic, rewarding — and very, very expensive. The author shares his family's challenges caring for their severely autistic son.

Our kid is nothing like your kid.

I don’t mean that in an every-child-is-unique-as-a-snowflake way. I mean that my wife, Alysia, and I are pretty sure that Finn hails from some distant, unknown planet.

His favorite foods include dirt and discarded water balloons. He spends hours a day in a headstand. He giggles maniacally at any expression of pain or distress. Recently I caught him shattering our water glasses on the patio. While I went for the broom, he dumped a quart of milk onto our kitchen floor. I tried to scold him, but he was already engrossed in one of his favorite hobbies: smelling his right foot.

What’s wrong with this child? There are a lot of ways to answer that question.

We have some acronyms, for instance: He’s been diagnosed with CVI (cortical vision impairment), ASD (autism spectrum disorder), and DCD (developmental cognitive disability). My favorite, PDD-NOS (pervasive developmental delay not otherwise specified), is the most accurate. It’s doctor-speak for “We have no earthly idea what’s wrong with your child.”

I often find myself grasping for otherworldly metaphors to explain our experience. Imagine E.T. came to your house but never figured out how to phone home. No spaceship. No tearful departure. Just you, the other humans in the house, and E.T. He can’t really communicate, so domestic dramas take place through wild gestures and improvised sign language.

“We are not of his world,” Alysia and I tell ourselves. “And he is not of ours.” The best we can do is help our alien child negotiate the baffling planet on which he’s found himself.

A quarter of U.S. households have a member with special needs. More than 8% of kids under 15 have a disability, and half of those are deemed severe.

What we share in common with the parents of all those special-needs children is that our kids have almost nothing in common: Within the “autism spectrum” alone there is far more diversity than there is within the rest of the human population. As one clinical psychologist told me, “Saying you study autism is like saying you study the world of non-elephant animals.”

Special-needs parents do share one thing: the eviscerating cost of our children. It’s one of the awful ironies of this unchosen life. Not only do we divorce more frequently and suffer from more mental health problems, but we pay dearly for the privilege.

According to Autism Speaks, the cost of caring for an autistic person over his or her lifetime is $2.3 million. Families shoulder much of that burden, and the strain on state and federal governments threatens to tear away whatever safety net remains.

RELATED: Raising an Autistic Child: Coping With the Costs

Some of the expenses can be tabulated, like the $1,800 a year we spend on diapers for our 5-year-old or the $24,000 a year we pay for a caregiver we wouldn’t otherwise employ.

Others are harder to calculate. Finn mutilates toys, shreds books into confetti, shatters picture frames, and tears at our emotions in ways we can’t fathom. Is my budding rheumatism at age 42 a product of this long-term stress? Then there are the inevitable tensions between Alysia (who is also 42) and me, as we claw at each other for some small pocket of oxygen — a night out with friends, a few days of escape, a quiet place to work in an otherwise suffocating environment.

Despite it all — the broken glass, the tantrums, the bite marks, the feces Pollocked across his bedroom wall — I quite love my sweet, strange boy. There are mornings when I get up early and steal into Finn’s room. I drift back off to sleep, but wake to find him smiling mysteriously and running his hand over my cheek, entranced by the sensation of stubble against his inner arm. Then he giggles and tries to do a headstand on my stomach. Finn is my son, and I love him. It has come as unwelcome news, then, that it’s not clear how we’ll afford to give him everything he so desperately needs.

Annabel was born two years before Finn, so I knew all about wellness visits. Mother takes baby to the doctor. Doctor puts baby on a scale. Baby laughs. Mother smiles. Everyone is very, very well.

Tragedy, on the other hand, is what happens to other people. The fire. The cancer. The bus. And then, in the silence between the first and second ring on my office phone, it was my turn. It sounds melodramatic to say that I knew, even before I’d picked up the receiver, that my old life had already “broken, quickly, like a stick,” as author Lorrie Moore once wrote. But it’s true.

“What’s wrong?”

“We have an appointment with a neurologist,” Alysia said, her voice flat. “Dr. Dalton thinks Finn might have developmental delays.”

“Delays,” I said. I could hear my colleagues laughing in the adjoining room. It was bright and sunny in the magazine office where I worked.

“What does that mean?” I asked. Alysia didn’t know. “He should be smiling at Annabel,” she said. There were other concerns. His eyes were deeply crossed, and his legs hung funny. He lacked muscle tone. The issues were “global.” Later that afternoon we went to our local coffee shop to talk. Alysia cried. I didn’t.

“We could be dealing with this for months,” she said between sobs. “Or years.” Years? Was that all? Fine. The train is delayed. The ball game is delayed. Our baby is delayed, but will be here, smiling, well, in a year or two.

As it happens, Finn didn’t smile his first year; he barely gained weight until he turned 2; he didn’t walk until he was 3.

Once unresponsive, he began erupting into inconsolable spasms of rage or chewed his cheek into a bloody mass. Alysia and I were left brittle and exhausted. We saw a psychologist, who diagnosed us with another acronym, PTSD — post-traumatic stress disorder. Contrary to the TV-movie version of special-needs parenting, there’s no heroism in our daily lives, only jury-rigged schemes, constantly changing, to help get us through each day.

Finn immediately exacted a serious toll on our finances. Alysia gave up her job as a freelance radio producer. Cost: $25,000 a year.

Despite this, we needed a full-time caregiver to free us up for our new job as advocates — manning the phones and scheduling the legions of occupational, physical, and speech therapists that began trooping in and out to try to help Finn.

For reasons no doctor fully understands, autistic kids often suffer from seemingly unrelated medical conditions. By the time Finn was 3, he had been put under five times, for everything from an exploratory endoscopy to surgery to correct his crossed eyes.

Our grief in those first few years rendered us zombies, sleepwalking through our social and professional obligations. Alysia and I had never been organized; now the sea of insurance forms, medical reports, and test results threatened to swamp every surface of the house. Relegated to professional parent, her creative dreams deferred, Alysia became the primary caregiver, and we became dependent on my career. That put enormous strains on our relationship.

Our version of financial planning at the time was to cross our fingers and hope the checks coming in totaled more than the checks going out. And until recently they had. Alysia now writes essays and memoirs; I teach, and write freelance about business and technology.

In 2006, I coined the term “crowdsourcing” in a feature for Wired magazine. A fat book advance was followed by well-paid speaking engagements and then, in 2009, a Harvard fellowship. I joked that God gave us a lot of money, and a son to spend it on.

In short, our life after the diagnosis was characterized by financial fortune and unending upheaval. We moved three times, enrolled our children in three different daycares, and conferred with nearly a dozen neurologists, pediatricians, dietitians, gastroenterologists, geneticists, and ear, nose, and throat doctors. In the pursuit of speaking gigs or the next great story, I traveled to Bangkok, Milan, Moscow, Kazakhstan, Yangon (formerly Rangoon), and Vienna.

More than two years after Finn’s diagnosis, we had had enough.

In 2010 I accepted a tenure-track post teaching journalism at Northeastern University, and we bought a three-bedroom house in Cambridge, Mass. For the first time in our marriage, we had employer health insurance and a retirement package. Alysia returned to writing and sold a memoir about growing up with her poet father, Steve Abbott.

Our neighbors turned out to be lovely people with a daughter the same age as Annabel; they quickly become best friends. It was almost like a real life. Finn received extensive therapy — speech, occupational, and physical — at a special program in the public preschool, but we failed to enroll him in after-school services. We were simply exhausted after spending years trying to wheedle benefits out of various state and city agencies.

Now we’re plagued by perpetual guilt that we could — should — do more for our son. But like a lot of families with a disabled child — even families like ours, with some means — we’re faced with a Sophie’s Choice: If we empty the bank for therapy for our disabled child, it necessarily means not spending as much on his “neurotypical” older sister. It’s an awful thing to contemplate: No parents should be forced to compute the ROI on their kid.

Sometimes Finn will throw a tantrum and, for no reason at all, pull Annabel’s hair. “Stop, Finn. No!” I’ll scream, reacting with primeval rage at the sight of this attack on an innocent. Annabel simply won’t have it.

“Stop, Daddy,” she will scream through her tears. “Don’t yell at him.” If it were up to her, our every last dollar would go to her brother, the subject of her every poem, her every drawing, the first thought she has on waking and tumbling into his room in search of a hug that is rarely reciprocated. But, of course, it’s not up to her.

* * *

John Nadworny is familiar with scary math. His youngest son, James, recently turned 22, the point at which school districts relinquish responsibility for a special-needs child.

James has Down syndrome; Nadworny’s family has spent two decades preparing for this day. They bought an apartment building near their home, west of Boston. James and two other disabled adults will live with their caregivers. Rents will generate $65,000 a year for the family. That’s not enough: James requires round-the-clock care, daily “programming” to keep him engaged and intellectually fulfilled, and, not least, transportation to and from those various activities.

Nadworny’s experience is helpful, and not just because of James. Nadworny runs a financial-planning practice and is the author, along with a business partner, Cynthia Haddad, of The Special Needs Planning Guide. He says our acute distress makes us like a lot of other families with a disabled child.

RELATED: Raising an Autistic Child: Coping With the Costs

The number of children diagnosed with autism has skyrocketed in recent years, from fewer than 1 in 1,000 in the 1980s to 1 in 50 kids today.

Well before Finn hits 22, a wave of disabled children will “age out,” requiring massive amounts of state assistance. So just as baby boomers start putting unprecedented stress on government benefits, a slightly smaller but still significant population of disabled people will be in need of government help too.

“People assume the state will be there to help with their child,” Nadworny says, “but that’s a really risky bet.”

After an initial meet and greet, Nadworny asks us to submit our tax returns, bank statements, and the data on our mortgage and car loans. We provide the necessary paperwork, then file into his office a few weeks later. Nadworny looks nervous. “Frankly, the numbers we have could easily overwhelm you,” he says. Alysia and I look at each other warily. There is, we learn, good news and bad news. Looking at our balance sheet, we see that our assets come to a healthy $930,000, which means while we’re not one-percenters, we’re firmly ensconced in the upper middle class.

Most of our wealth is tied up in our house; the rest is socked away in an ill-considered mix of stocks, fixed-income securities, and other investments. We have no rainy-day fund of liquid assets. Because my book and speech income are so variable, over the past five years, we’ve made anywhere from $80,000 to $270,000, averaging $160,000 or so. Our expenses are high as well, hitting $165,000 in 2011 and $185,000 last year. In the years we run a deficit we tap savings to make up the shortfall.

We hired a bookkeeper last fall to detail our spending and make some sense of the deficit. She found that $30,000 a year went to mortgage payments, $4,400 to utilities, and $9,200 to taxes in 2011. Another $50,000 consisted of reasonable, discretionary expenditures, much of it one-time costs to furnish our new home. The remaining $24,000 is what Alysia and I call a “stupidity tax.” We paid nearly $1,000 in credit card fees and interest payments and an additional $2,300 to sustain my Nicorette habit.

As journalists, we might justify the $2,000 we spent on books and movies as necessary brain food, but as special-needs parents, those expenditures start looking a little more frivolous. So do the $5,300 we spent on clothes in 2011 and the whopping $6,000 we handed over to various restaurants and cafés. Finally, there’s the $6,000 in cash withdrawals.

How much of our money goes to Finn in one form or another? Certainly the $24,000 we spend on our babysitter cum favorite aunt, Gee. If not for Finn’s disability, we could easily manage two children without additional help. Then there’s the $9,000 in out-of-pocket health care costs, $5,400 of which goes toward deductibles for procedures for Finn.

The first step in getting our finances on track, Nadworny tells us, is to control our spending. Then we need to put together a proper savings plan that isn’t locked away in home equity. “You have to live in your house,” Nadworny notes. “So it’s not generally considered a measure of wealth.” We know that at some point in the future we’ll be able to sell it, probably for a decent profit, but it doesn’t help things much now.

And while our $380,000 in savings is decent for our age and income, only 15% is invested in tax-deferred vehicles. Not great, maybe, and something we can surely fix, but it’s where we are at the moment. We have an additional $16,000 in college savings, and in the course of working on this story, we discover $16,000 in a New York State pension fund for Alysia. But all that is chicken scratch against what we’ll need to sustain Finn when he “ages out” of the system.

In the meantime, I’m worried we’re inadequately prepared for any kind of disaster. While Northeastern University provides our family ample health insurance, its $160,000 life insurance policy is a drop in the bucket of what Alysia would need were I to die prematurely. We don’t have any life insurance for Alysia. We haven’t written a will or designated a guardian for the kids. We are, Nadworny implies, an urgent case.

RELATED: Raising an Autistic Child: Coping With the Costs

It isn’t as if our long-term goals are lavish: We’d like to retire at 70. We want Annabel to go to any college she chooses. And we want Finn, of course, to have a happy, healthy, richly engaging life.

The bill for achieving those goals? We need to save $800 a month for Annabel’s college alone. We should be contributing the allowable maximum of $17,500 a year to my employer-provided retirement account.

And Finn? “The fact is, you’ll have to rely on government benefits,” says Nadworny, who has already warned us that gaining access to those benefits is incredibly time-consuming. Disabled adults are eligible for Supplemental Security Income as long as their total assets don’t exceed $2,000. Even the measly $4,500 we put into a 529 — a tax-deferred investment vehicle for college savings — must be transferred out of Finn’s name.

All this creates a host of planning issues for special-needs families, since they cannot designate their disabled child as a beneficiary in any will or life insurance policy without jeopardizing his or her eligibility. There are, instead, special-needs trusts that specifically address this concern, but that’s still uncharted territory for us.

The bottom line? Unless we receive some windfall, our combined savings and the SSI benefit won’t come close to covering the $100,000 a year, in 2012 dollars, it could well take to care for Finn, who will need 24-hour attention, continuous learning, and a way to get to and from wherever he needs to go.

We’ve reached the point where our house, basically, is Finn’s trust fund, meaning we’ll be able to apply the proceeds from the sale of that to his care. That, of course, assumes that we won’t still need a big house to take care of him as an adult and that we can make enough money by downscaling to make a dent.

“The problem you have, really, is Gee,” Nadworny says. He looks stricken as he says it.

“Think of it this way,” Nadworny says. “You’re paying your nanny $2,000 a month. “That’s $2,000 you are not saving. That’s equivalent to a” — Nadworny’s fingers fly across his calculator — “$365,000 mortgage. On top of your $417,000 mortgage.”

The metaphor isn’t perfectly fair, of course. We pay neither property insurance nor upkeep on our beloved sitter. Nadworny’s point hits home nonetheless, and with a brutal calculus that’s impossible to avoid.

To the extent we have anything approaching a normal life, Gee makes it happen, a life in which both partners pursue their dreams, attend social events with our friends, and our daughter receives the sort of two-on-one attention that would be her lot if we hadn’t had Finn. But a normal life, by Nadworny’s accounting, might be a luxury we can’t afford.

* * *

Months pass after our first set of meetings with Nadworny. We make some changes right away. We link all our accounts to the online budgeting tool Mint.com, which proves a harsh taskmaster.

Suddenly every expenditure is flashed across my screen when I open my computer in the morning. When we exceed our monthly budget, Mint tells us, in garish red reminders. It’s worked: I’ve quit chewing Nicorette. I haven’t bought a fancy dress shirt in some time. I make a mean smoked bluefish paté that I bring into the office to spread on a bagel.

Of course, these are nips and tucks. Caring for a special-needs child requires a mix of government benefits and personal expenditures. We’ve overcome our congenital phobia toward paperwork and managed to get Finn signed up for a “personal care assistant,” to be paid for through CommonHealth, part of the comprehensive health care legislation passed by then-governor Mitt Romney.

Are we eligible for other benefits? Good question: Part of the struggle families like ours face is the detective work it takes to even discover the benefits hidden, like Easter eggs, in the nooks and crannies of state and federal policies.

We know the CommonHealth money will provide us with $9,555 to retain Gee part-time to help Finn eat, bathe, dress, and “toilet,” the euphemism his teachers use to mean changing a 5-year-old’s diapers. It is a testament to Gee’s heart that she has begun taking Finn, gratis, for a few hours each weekend to give us a spell from his infrequent but violent tantrums.

We’re on track to spend $144,000 this year, and thanks to a new book contract I just signed, we should be able to put at least $50,000 into savings.

Now we have to figure out where to put it. The first step, Nadworny advises, is to max out my contributions to the university’s retirement plan. It will contribute $2 for every $1 of mine, up to 10%.

We’ll roll over the New York State pension Alysia found into an IRA, and maximize her contribution — currently $5,500. Finally, we’ll reduce our tax exposure by starting a simplified employee pension, or SEP, IRA. Originally created to give small-business owners a way to set up pension plans for their employees, it also allows people like us, who make most of their money as independent contractors, to create alternative vehicles for retirement.

To remove any possible asset from Finn’s name, and because he’s unlikely to go to college, we’ll shift the $4,800 in his 529 plan into Annabel’s account, bringing it to $16,000. And, finally, we’ve begun the process of applying for life insurance policies. I’ve recently taken out a $500,000 term life insurance policy to supplement the policy offered by Northeastern. Following Nadworny’s advice, Alysia is applying for an additional $500,000 policy for herself.

And that brings us back to Finn. One byproduct of our economies is that we’ve freed up money that allows us to increase our spending on him. Previously he received all his therapies through the school district. In the fall we entered him in a highly regarded occupational-therapy program. We’re spending $850 a month and consider it worth every cent.

The final frontier for us (and, I suspect, many other families like ours) is to create a will and trust for our children. This is not straightforward. There are specialized vehicles that provide for the care of a kid like Finn without endangering his government benefits. There is also, critically, something called a letter of intent, which spells out the terms of care for a person who can’t express those needs himself. But someone needs to serve as trustee; another person needs to serve as guardian.

How do you ask even a close family member to shoulder what we have taken on? There is, in our case, no obvious contender and no obvious solution.

So there are challenges. We’re used to those. “Don’t look for sudden progress,” a well-meaning neurologist once told us. “Autistic kids get better. But it happens very, very slowly.” Maybe it’s the new therapy, but lately it seems that Finn is experiencing what a less weary parent might call a breakthrough. One day this spring he hugged Annabel, out of the blue. Alysia and I exchanged looks of awe, then joined in. Just like any other family.

RELATED: Raising an Autistic Child: Coping With the Costs

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