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The Financial Impact of Living with a Disability
Living with a disability, whether it’s a child or an adult family member, places significant financial strain on many families in Australia. With over 4.4 million Australians affected, it’s highly likely that most people either have a family member with a disability or know someone who is supporting a disabled loved one. The Australian Bureau of Statistics found that around 4.5% of children, or about 211,200 individuals aged 0 to 14 years, experience profound or severe disabilities. This not only impacts the individual but also the financial well-being of their family, often creating additional costs for care, medical treatments, and necessary lifestyle adjustments.
For families dealing with disabilities, the financial burdens can be extensive. On average, families living with a disabled person may need to increase their adult-equivalent disposable income by as much as 50% to achieve the same standard of living as those without a disability. This figure, however, can vary significantly based on the severity of the disability. For example, those with more severe disabilities may see a financial requirement increase by up to 102%, while individuals with fewer limitations may see an increase of around 19%.
The National Disability Insurance Scheme (NDIS) offers some relief by providing government-funded assistance, but this support does not always cover the full range of needs, which often leads families to explore additional financial solutions.
Navigating Financial Challenges with Expert Advice
When Jen, aged 60, and her husband Warren found their family impacted by a life-changing event, they turned to expert financial advice to help them navigate their new financial reality. Jen was involved in a car accident that left her permanently disabled, making it impossible for her to return to work. The loss of Jen’s income created an immediate financial strain, and the family faced additional costs for home and car modifications to accommodate Jen’s new needs. They sought guidance from a financial adviser to help them manage the situation and secure the support they needed to maintain their financial stability.
Jen’s adviser helped them access Total and Permanent Disability (TPD) insurance through Jen’s superannuation, which provided a claim payout of $400,000. This was a critical step in easing their financial burden, allowing them to make necessary home modifications and pay for ongoing care.
The adviser also helped them strategically withdraw the superannuation funds in a tax-effective manner, ensuring that the funds could be used to pay for ongoing costs like school fees for their son, Reece, and rehabilitation expenses for Jen. Furthermore, they applied for government assistance through Centrelink to support Jen during her recovery. By seeking professional financial advice, Jen and Warren were able to secure crucial financial resources that helped them manage both the immediate and long-term costs of living with a disability.
Long-Term Security and Financial Planning
The financial strain of disability extends far beyond the immediate challenges. For Jen and Warren, planning for long-term financial security was just as important as managing their day-to-day expenses. Their financial adviser didn’t just help them with immediate needs; they also provided long-term planning solutions to ensure Jen’s income loss would be compensated, and their family’s financial future would remain secure. The adviser recommended investment strategies that would help generate a reliable income stream from the remaining superannuation balance. This additional income would help offset some of Jen’s lost earnings, ensuring the family could continue to meet their regular living expenses.
In addition to investment advice, the financial planner worked with the family’s lawyer to update their estate planning. This included ensuring that their wills, powers of attorney, and guardianship arrangements were in place, particularly concerning the care of their son Reece. As part of their long-term planning, they also set up a special disability trust for Reece, ensuring that his needs would be met in the future, regardless of the family’s changing circumstances.
To help Warren adapt to his new situation, the adviser also provided financial projections to help him make decisions about bringing forward his retirement plan. The adviser helped Warren explore different options, weighing the pros and cons of retiring earlier to spend more time with Jen while maintaining financial security.
For families facing the challenges of living with a disability, seeking expert financial advice is essential. A qualified adviser can help families navigate the complexities of disability-related financial needs, ensuring both short-term stability and long-term security. With professional advice, families can make informed decisions about managing finances, protecting income, and ensuring a secure future for their loved ones, regardless of the obstacles they face.
Read more at Disability Gateway.
