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Help Me Retire

Dec. 2, 2021, 1:59 p.m. EST

I want to retire in two years, my wife and I have $3 million saved but we’re worried about our son with special needs — what can we do?

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By Alessandra Malito

Dear MarketWatch,

I’m almost 60, my wife is 57, and I want to retire by 62. Currently, I am earning roughly $125,000 to $150,000 a year, which supports my family. My wife stopped working at age 43 to raise our child, who is now nearly 18 and has moderate-severe Autism. I have no debt and own three houses. I live in one, one is empty (inheritance) and one is rented. I pay a mortgage on the home I live in ($1,350 a month, with only 20 payments left), and the other two are paid off. Cumulatively, they are worth on the market an estimated $2.6 million. I plan to rent the empty home but I’m not sure when since it is a little sentimental to me because my parents lived there until they passed not so long ago. Once rented, both rentals will bring in $6,000 per month. Other than the homes, I have $2.2 million in my 401(k), my wife has $600,000, we have $150,000 in savings, and $100,000 in my brokerage account. I don’t plan to apply for Social Security until Full Retirement Age at 66. I will apply for Medicare at 65 as will my wife and we are both in average to good health.

My main concern is my son, he needs full-time care and will never be able to support or live on his own. There are resources available to him, such as a regional center, Medi-Cal, in-home support services, and government funds, which all contribute to his life away from mom and dad when we retire. I don’t want to worry about my son’s happiness and well-being in a state system, so I was planning to contribute toward his other resources so he can live in the best possible care and ensure to the best of my ability that he will be taken care of and happy when we are not around. I plan to contribute around $100,000 a year on top of the other resources previously mentioned, which is close to another $100,000 a year. Is this enough? 

I would also like to maintain or elevate my lifestyle when we retire. Do you think this is feasible for our retirement and my son’s future?

Thank you,


See: How to plan your retirement when you have children with special needs

Dear R, 

It is so wonderful to see how much you’ve saved for your and your wife’s future and how you are planning for your son’s as well — kudos to you. 

You’re asking really important questions, and ones many other families are weighing as well. Retirement planning and special needs planning go hand in hand, especially for parents who are worried about their childrens’ well-being during and after their own lifetimes. You have to strike a delicate balance between taking care of your children, but also not putting yourself at risk of falling short in retirement. 

You and your wife have amassed a really wonderful nest egg — more than $3 million in non-real estate assets, and then the estimated $2.6 million among the three homes, as you’ve said. To a lot of people, it may sound like you’re all set to live out your lives and take care of your son, too. Although you do have the financial means to help, carefully consider how you’ll do so. 

For example, based on the assets you provide and assuming you and your spouse live to 92, the $3 million you have invested would be plenty, said Eric Bond, a financial adviser at Bond Wealth Management. But where will that $100,000 a year come from? Most likely, it will be from your retirement accounts as your savings and brokerage accounts don’t house enough to support that withdrawal rate. “Make sure you don’t deplete your savings and sacrifice your own financial security,” Bond said. You also need to have an emergency account set aside for any unforeseen circumstances, especially while maintaining two rental homes. 

I’m going to offer some resources for special needs planning in a moment, but I’d like to first address your retirement plans really quickly. You mention you want to have an “elevated” lifestyle in retirement. I’m not entirely sure what that means, but make sure you do before you leave the workforce. Try to estimate what your monthly expenses will be for this new lifestyle, and then determine where you plan to draw the money from, Bond said. “Longevity and then length of your retirement will also be a factor here — if your retirement lasts 20, 30 or even 40 years, do you risk depleting your savings by living an elevated lifestyle in the early years of retirement?”

This is absolutely not to say you shouldn’t splurge a little. After you both have worked so long, in and outside of the home, you both should enjoy your retirement years — just map out how you plan to pay for it on top of your goals for assisting your son with that $100,000 a year. 

Want more actionable tips for your retirement savings journey? Read MarketWatch’s “Retirement Hacks” column

Be as extensive as possible in your budget estimates. For example: Healthcare. Your son may be taken care of with the various resources you mentioned, but will you be paying for private insurance until you’re eligible for Medicare? That can get pretty pricey, so budget out your healthcare expenses before you retire.

As for your Social Security benefits, think carefully about when you claim those too. You mentioned starting at your Full Retirement Age, which is definitely better than claiming early when you can afford to do so, but you might even want to delay longer. The longer you wait to claim your benefits after your FRA and up to 70, the more you’ll get in those paychecks when the time comes. Run scenarios using your ages as well as your wife’s, who will receive her benefit based on yours if you predecease her. 

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