According to the U.S. Department of Agriculture, it will take roughly $240,000 to raise a child from birth to age 18.
For a special needs child, those expenses can quadruple.
The Center for Disease Control and Prevention reports the likelihood of a school-aged American child receiving a diagnosis of Asperger syndrome, autism or a related developmental disorder rose more than 70% between 2007 and 2012.
Roughly 1 in 50 children in the United States are diagnosed with autism today, a rise from 1 in 1,000 in 1980.
Autism is now estimated to cost the nation $137 billion per year and it can have a devastating financial blow on families who pay hundreds of thousands of dollars for therapy and care.
Experts say while any household with a special needs child is going to face financial challenges, a little early planning can go a long way in easing the financial burden.
The costs of raising a special needs child can vary dramatically depending on the disability and severity.
Advocacy group Autism Speaks reports that the cost of caring for a person with autism can run an estimated $1.4 million over the course of their lifetime.
The cost can jump to more than $2.3 million for those who are impacted with intellectual disabilities (having an IQ of 70 or less).
Michael Rosanoff, Associate Director of Public Health for Autism Speaks, says even with health insurance, parents of autistic kids can be hit with mountains of bills that aren’t covered.
Many turn to second mortgages, home equity loans, credit cards, and raid their retirement funds to find the money wherever they can get it.
“The cost of autism is staggering. It can cost a typical family $60,000 per year and expenses are rising even further,” says Rosanoff.
An estimated 8% of kids under 15 in the United States have some sort of disability and about half of those are considered to be severe.
Tech writer Jeffrey Howe’s son Finn has been diagnosed with a number of ailments including CVI (cortical vision impairment), ASD (autism spectrum disorder) and DCD (developmental cognitive disability).
Howe says while all special needs children are different in their actions and needs, almost all come with very high costs.
Some of the Howe’s annual expenses include a caregiver ($9,555), diapers ($1,800), occupational therapy ($10,200) and out-of-pocket care ($5,400).
Other expenses can be difficult to calculate. For example, Finn has broken toys, shattered picture frames and even poured a half-gallon of milk on the floor.
While there’s no consensus from the medical community to explain why, autistic children also tend to suffer from unrelated medical conditions.
By the time Finn was 3 years old, he had been put under five times for everything from exploratory endoscopy to surgery to correct his crossed eyes.
“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,” he says.
Saving and preparing
John Nadworny, CFP, ChFC, is a financial planner and co-author of The Special Needs Planning Guide: How to Prepare for Every Stage of Your Child’s Life.
He says parents should plan financially for their special child’s needs just as they would for college tuition.
That often means saving as much as possible as early as possible to take advantage of compounding and build a fund for when more services may be needed later in life.
But Nadworny says funds should be put in a parent’s name because having too much in the child’s name can disqualify them for any type of state or federal aid.
“If they have more than $2,000 in their name they will ultimately be disqualified from SSI and Medicaid. Any [assets] should be put in your name” he says.
Trying to build an asset base and put some money away while keeping it out of their name can create some complex planning issues for special needs families.
They can’t designate their disabled child as a beneficiary in any will or life insurance policy without jeopardizing their eligibility for federal or state assistance.
Nadworny recommends parents consult with a professional to create a special needs trust that can be used to cover any services government programs don’t provide.
Such arrangements typically designate a trustee (usually a sibling or close relative) and a professional trustee (bank or attorney).
While it’s often hard enough just to scrape by with current expenses, Nadworny says parents still have to think about the future.
“Most people are living in a day-to-day [crisis] but they still have to think about the future and that tomorrow will come,” he says. “Just save something, whatever you can.”
Except for the highest-income households, almost everyone will struggle with the costs of autism, says Rosanoff.
For many families, saving isn’t an option as they cope with the costs of therapy in childhood.
He says early diagnosis and early intervention with the Early Start Denver Model (ESDM) can save a tremendous amount of money in the long run.
While ESDM therapy can double costs in the initial years, it results in less need for services later down the line. A study at the University of Pennsylvania found the break-even point occurs before children reach high school.
“Earlier intervention can be more expensive up front but is saves more money in the long run and leads to better outcomes. It’s more cost-effective over time,” says Rosanoff.
Parents of autistic children should also prepare for a loss of income. Rosanoff says that on average, mothers of children with autism earn 35% less than mothers of children without autism.
As more time is required to care for the children, there’s simply less time to work.
Fathers’ incomes and careers can suffer as well as they may pass on promotions for more flexibility to help with the child.
For extreme cases of autism where the child needs lifetime care, that career drain can carry on indefinitely.
“It can be a major loss of productivity for families. While their costs are going up, they start making less,” he says.
Howe says it was a major challenge for he and his wife to work out their careers around caring for Finn. He also worked with Nadworny to get some expert advice on how to deal with the mounting bills.
The Howes made a decent upper middle-class income but it still wasn’t enough to deal with the high costs of autism.
They started picking through their expenses and making cuts. They even downsized, moved and made some career changes and adjustments.
Long term care in the future
Nadworny says it’s important to plan financially for children as they age.
With proper treatment and care, even children with Downs Syndrome can live a normal life expectancy into their 70s and 80s meaning they’ll still need financial support long after their parents are deceased.
While there is government aid available, it can vary dramatically by state.
Nadworny says with the number of special needs children on the rise and the fact that budgets are being slashed, there will likely be less help available in the future.
“Many people have this preconceived notion that the government is going to take care of them. That might have been true in the past but there isn’t a [free] group home waiting,” he says.
Howe says one important step is to re-evaluate your own life insurance. Parents typically ensure they have enough to provide for their spouse and for their child’s education.
But because Finn will never be able to care for himself, Howe needs to carry a policy big enough to cover Finn’s living expenses for the rest of his life.
“He will need care for the rest of his life. We calculated we would need about $3 million in life insurance. For most families, it’s not even realistic but they should still be thinking about it,” says Finn.
Nadworny says something is better than nothing and parents should at least start with a term policy to have some sort of coverage.
Howe says he has also be able to use Mint.com to get a better grasp on his budget and spending.
Being able to precisely track all of Finn’s medical expenses in one place has better allowed them to keep on top of bills and keep their finances in better order.
“With a little bit of customization, we’ve been able to track things a lot better. Being able to just glance at my desktop and see if something is going astray is wonderful,” says Howe.
Craig Guillot is a business and personal finance writer from New Orleans. He covers insurance, investing, real estate, retirement and debt. His work has appeared in such publications and web sites as Entrepreneur, CNNMoney.com, CNBC.com, Bankrate.com and Investor’s Business Daily. He is the author of “Stuff About Money: No BS Financial Advice for Regular People.”