All parents who have a child with special needs knows the importance of saving for the future. In this article I am going to discuss your main options.
- Investments Products
You can invest your money in an investment product which can have a mix of assets such as cash, bonds, equity and property. Most investment products are sold by your bank or by Financial Advisors on behalf of insurance companies. All investment products come with a warning “You may get back less than you put in.” There is a reason for this and unfortunate thousands of families have found this out over the last few years.
Before ever signing any documentation, you first have to understand the product, more importantly the underlying risk involved and read the small print. Look out for hidden charges such as management fees, government levies and penalties.
Any profit your investment does make is going to be tax at 41% (referred to as “Exit Tax”) which as you are aware is a huge chuck off the final amount you will receive back from your investment.
- Savings Products
If by nature you are more cautious then you can take out deposit based saving plans. The advantage of these types of plans are that they are less volatile and risky. But because of this then your returns will generally be very little. In today’s market place you would struggle to find many deposit saving plans with a 1% return.
Similar to investments, your money will also have to pay Deposit Interest Retention Tax (DIRT). DIRT strips away lots of money in your saving accounts and passes it on to the government. All interest you receive is subject to this tax and is charged at around 41%. Some people I meet are total unaware of this tax on savings. The reason is that it occurs automatically each year without your knowledge.
- Government Bonds
This is where I have my savings. The reason I am so keen on them is that there is no hidden fees, charges, penalties and no taxes. This makes good sense to the more cautions of us out there and when the government aren’t taking 41% of the interest off then it a simple straight forward way to save. It is particularly good place to put a nest egg of money away because you can get access to your money within 7-days if something unforeseen was to happen.
Click on the link to see the range of products on offer by the Government though An Post. https://www.statesavings.ie/Pages/StateSavings.aspx
- Special Considerations
When you have a child with special needs then you have additional things you must consider. On a positive side you may be able to claim an exemption from paying DIRT & Exit Taxes on your child’s savings & investment if they have additional needs.
However, if you have substantial savings in your child’s name then again this might come back to haunt you when your child becomes a young adult and applies for means tested service or entitlements such as Disability Allowance. If you put the money in your own name then again this might impact your access to certain means tested payments such as Carers Allowance or a family Medical Card.
Always save for your child’s future and the earlier you start the better. The best way to save is by putting away a small percentage of your child’s current entitlements for their future.
Even if it is only €10 a week of the €309.50 per month you receive in Domiciliary Care Allowance. Eventually this small weekly amount will become something substantial.
Regular savings will and can lead to giving your child a better quality of life in to adulthood. This can pay for future professional fees, medical expenses, therapies, accommodation, basic food and clothing items to give your child a decent quality of life and more financial security.
I hope this article gives you a better understanding of savings & investment products and the considerations you need to think about when trying to save for your child’s future. To learn more about your options then attend one of our free workshops or view all the information online at https://localhost/fw/membership-join/membership-registration/