Having a financial plan for the future is important for everyone, but it’s even more crucial if you are living with a disability. Building a financial plan takes time and effort, but it can also be a rewarding experience that gives you more peace of mind. Below, learn about a few steps you’ll want to take when creating a financial plan, and discover what resources are available to help you through the process.
Have a savings plan
A variety of studies have concluded that people with disabilities face a higher cost of living, which often creates a financial burden. Moreover, many of the expenses related to living with a disability are not covered by insurance, but rather must be paid for out-of-pocket.
As you are probably aware, programs such as Supplemental Security Income (SSI) and Medicaid can help those who are unable to earn enough income as a result of a disability. However, if you receive income-based assistance, you may feel hesitant to put too much money aside, as having over a certain amount in your savings account can make you ineligible for the assistance you depend on.
Luckily, there is a solution if your disability started before you turned 26 years of age. Under the ABLE Act of 2014, you can now put up to $15,000 per year into a tax-advantaged savings account known as an ABLE Account. Funds in your ABLE account generally will not affect your eligibility for income-based programs.
If you are not eligible for an ABLE account, a Special Needs Trust (SNT) may be a good alternative. SpecialNeedsAnswers explains that an SNT, similar to an ABLE account, is designed to hold assets on your behalf without jeopardizing your eligibility for income-based programs. However, you don’t need to meet the same requirements that you would to open an ABLE account.
Whether you are eligible for an ABLE account or not, it is worth comparing the pros and cons of each of these options so you may save ahead for the future. Both of these accounts can be highly beneficial in covering disability-related expenses that come up.
Create a budget
Like a savings plan, having a budget is an important financial planning step everyone should take. If you live on a fixed income due to your disability benefits, it’s even more crucial to have a budget.
Budgeting is often a challenge, but it doesn’t have to be. You try out different budgeting methods until you find one that works for you. There are also a variety of apps that can help you track where everything is going.
When making a financial plan, your budget can be used as a roadmap. Once you have identified where your money is going, it’s easier to find areas to cut back and save additional money.
Similarly, budgeting can help you start paying down debts and building a better credit score. If you need help working on your budget, the city of Akron offers free financial services. Many cities have financial counseling services available to people who have a moderate to low income.
Check your insurance coverage
If you have a disability, chances are you already receive health insurance coverage from Medicare or Medicaid. While medical insurance is crucial, it doesn’t pay for everything. As such, you might also want to consider purchasing additional types of coverage.
For example, buying burial insurance is one way you can protect your loved ones from facing high funeral costs in the event of your passing. This type of coverage can be used to pay for your final arrangements, but also for debts or medical bills that you may leave behind. The cost of burial insurance varies depending on what type of arrangements you wish to have, as well as how much you want left over for any final expenses you may leave behind. Budgeting, making a savings plan, and finding the right types of coverage all takes time. However, having a solid financial plan ensures you can afford the high-quality care you deserve both now and in the future.