retirement advice needed for disabled mustachian

[mmmellen]

I am a disabled woman of 51 years in the USA who is no longer able to work due to a brain injury.  I will be receiving 16,000/year if not accepted to receive private disability.  I am not eligible to receive SS benefits as I worked as a teacher and we do not pay into the SS system.  If I am found eligible to receive disability payments, I will be getting 2,600/month, and will have to get my own healthcare coverage for myself and my two children.  I own my own home as I purchased it with settlement money from the accident which injured me.  Unfortunately, I will probably never be able to work again.  I received some money which has been sitting in a savings account only because I have only a few hours of "normal" brain functioning during the day and I have been working with my cousin to try to catch up on filing back taxes.  It took me 3 years to work on getting the money from my mother's estate.  My oldest child is set to go to college in Sept. of 2015.  I want to somehow invest this chunk of money as my future is uncertain and do not want it to count as money I have available to pay for his college, as then I will not be able to survive in the future.  I know I can put some of it in a roth ira, but I no longer work and do not know if I can put some money into some kind of 401K type of account.  I have 53,000 in a 401K I had when I was working which I will try to leave there.  My ex does not contribute at all as he is "unemployed", although he could easily get a job if he wanted to, and I do not expect he will ever contribute. 

Does anyone know how I could best invest this money to prepare myself for the future?  I would appreciate any help you could give me. 

P.S.  I just bought an adult size tricycle thanks to the MMM blog (and I love it!), but still have to use the car regularly due to my limited functional time.

Thank you for sharing any ideas you may have.

[scrubbyfish]

Please be sure to contact a disability advocacy group. I'm in Canada, and both my (minor) child and I are designated 'disabled'. I could tell you lots of stuff if you were up here, but you're not :)    So, my best tip is to contact a disability advocacy group in your area and ask them for a list of all federal, state, regional, and municipal financial supports for people with disabilities. In Canada, there's a range of things -from free swimming, to car insurance discount, to a 300% government contribution on a Registered Disability Savings Accounts.

The freebies relieve the budget to allow us to invest, trusts protect asset-tested income supports, and the special disability investment accounts help the long term.

[mmmellen]

Thank you Scrubbyfish,

I will see what I can find out, but I am pretty sure there is not much help here in the USA as my sister works with some disabled clients and has not been able to find anything other than what I already am pursuing (ie private disability).  I will, however investigate this further.  It sounds as though you have some great programs in Canada!  I hope I will find some more help here!

[Argyle]

I'm afraid I don't know very much about this, but one thing I know is that in some states (for instance Pennsylvania), disability payments are tax free.  I had a friend who moved for this very reason.  So you might want to stay aware of how that might impact your plans.

Best wishes to you -- this is hard.

[mmmellen]

Yes, disability payments are considered tax free federally, I'm not sure about in my state, but I think they are.  Unfortunately, my income will be very low, under poverty level, by the time I reach 65, so I probably will not be paying much, if anything, in taxes.  Private disability is only paid out until age 65.

Please be good to your children's teachers.  We receive next to nothing in benefits, have to fund our retirements 100 % in many cases (no matches from our employers), and if we become disabled, have very little recourse.  My city did not even offer long term disability benefits until I was only able to work part time which means I get 60% of my part time salary (if my benefits are approved), and it is fully funded, like our retirement, by the teachers.  Nothing is contributed to this insurance, or our retirement, by our employers. It is all deducted from our pay checks.

[mmmellen]

I just realized I forgot to mention that I will not receive disability payments (if accepted) after age 65.  I will, however have a small retirement payment, much reduced because I was not able to work for many years.  Luckily, I have too great children and am grateful to have lived through the accident to be able to enjoy watching them grow!  I know there are so many people out there with many more problems than I have!  Everything is relative.

[scrubbyfish]

Hi mmmellen: Lots of folks on the forum will be able to relate to the non-benefits. Heaps of us were or are self-employed, on contract, etc, so in the same boat. Yes, all the more reason to plan for all sorts of life scenarios!

To clarify a couple of ideas I presented earlier: A lot of the benefits my son and/or I access are not specific to disability, but rather to the very low income that can result from that circumstance. So, do ask a disability advocate for a list of all programs/benefits available to folks with a disability, but also ask a poverty advocate or poverty agency for a list of all programs/benefits available to folks with low income. It can take considerable research to find helpful programs, but generally we won't find out what's out there until after we've asked multiple people the right questions. Challenging, but worth it!

Finally, some programs are specific to the disability. For example, my son benefits greatly by being in British Columbia in that it has a special "Autism Funding" program. It acknowledges that it covers only 1/3-1/4 of direct autism costs a family faces in a year, but still, it's way better than nothing and super helpful! Does your sister serve people who have brain injury? Be sure to talk to people who do, as well as to other people with brain injury. A brain injury support group, for example, may be an excellent source of information about unadvertised programs that may help financially, whether directly or indirectly.

[mmmellen]

Thank you again, scrubbyfish,

I guess I am more concerned about the money I inherited being protected in a retirement account.  Since I am no longer working I cannot contribute to a 401K or 403 retirement account, although I can continue to put money away in an Individualized
Retirement Account.  This lowers the amount I can save in retirement accounts.  If I were still working, I would have more options and be able to put more money away in actual retirement accounts.  Since I am not working, my money will not be protected from being considered available for using for my son's tuition (money in retirement accounts are not counted as being available for tuition payments).  My problem is not that I do not have money to contribute to my retirement, but that I don't know if there are special retirement accounts for disabled people.  I did, however try to look this up online, but after not finding any information, I finally wrote to my senator's office to see if they could give me any info.

As far as the benefits I was referring to, in the USA everyone, except for some teachers and some other municipal workers, are required to pay into the Social Security system and are covered by these benefits.  Even self-employed workers, small business owners, consultants and part time workers are covered by this program as they, and their employers, are required to pay into them under the federal law.  Not only are many teachers not in the SS program and not covered by these benefits, but we do not even have the option to pay into the system if we wanted to, and would not be able to collect the benefits even if we paid into it previously with other jobs.

It is all very confusing, and most teachers do not even realize the impact of not being in the SS system until something happens to them.  Also, most everyone who is not a teacher is shocked when they find out many teachers are not covered by SS, as it is a federal law for everyone else to be in the system.

Thank you again for your advice.  I really appreciate it

[Catbert]

You can only put money in an IRA if you have "earned income".  I don't think disability payments count as "earned income".  Maybe you or your sister has investigated this and know more, for your sake I'll be glad if I'm wrong. 

 

[seattlecyclone]

Since I am not working, my money will not be protected from being considered available for using for my son's tuition (money in retirement accounts are not counted as being available for tuition payments).

You may be able to get around this.

The Estimated Family Contributions formula guide details a couple of things that may be of interest: automatic zero EFC, and simplified formula EFC. The automatic zero EFC is what it sounds like: under certain circumstances, your son's EFC will be zero regardless of any other financial info. Under other circumstances, they will use a simplified formula to calculate the EFC that only considers income and ignores assets.

For either option, one of the following has to apply to you:

• You receive benefits from SSI, SNAP, TANF, WIC, or the Free and Reduced Price Lunch Program,
• You can file taxes on form 1040A or 1040EZ, or
• You are not required to file a tax return at all

If one of the above requirements applies to you, your son will qualify for an automatic zero EFC if your income is less than $24,000, or he will qualify to use the simplified formula (that ignores assets) if your income is between $24,001-$49,999.

Do you currently receive benefits from any of the programs mentioned above? If not, maybe you should look into them. I would imagine you would be eligible for some of them given your disability status and income. I could be wrong though.

Remember that regardless of your son's "expected family contribution," you are under no legal obligation to provide for your son's higher education. Your own needs must come first. Your son can work his way through school or take out student loans if necessary; you don't have that option for your daily living expenses.

[scrubbyfish]

I don't think disability payments count as "earned income".  Maybe you or your sister has investigated this and know more, for your sake I'll be glad if I'm wrong.

In Canada (all I know), this varies from program to program. Some count disability payments as "earned income" -they are taxable, deducted dollar-for-dollar for subsidy programs, etc- while some count it as "unearned income". So, yes, always worth checking out the specific regulations that apply to every single program of potential interest.

Also, I just discovered the strangest resource: a woman at the bank I go to came out of the woodwork and gave me some phenomenal financial planning tips relating specifically to our disability circumstances! Again, ask around everywhere because so many people (including those trained to know such things) know nothing and then these magical people (not specifically trained in such things) surprise us with copious knowledge!

[Cassie]

I also work for a state that did not put into SS. However, at 62 I could collect a small amount based on other jobs. However, they only let you have approximately 40% of what you actually earned. When you are the right age please check into this since most likely you will get a tiny benefit.  It is on the IRS website.  They have a section that specifically addresses these situations.

[Cassie]

Sorry I meant to say Soc SEc website. I must have IRS on my mind from just finishing taxes:))

[mmmellen]

Thank you all so much everyone!

This information does make me feel better.  I believe I will be eligible for SNAP benefits beginning in July.  At the current time I am still under sick time from my job, but that will run out at the end of May.  I will be sure to apply.

As far as the ss goes, I did not work enough quarters to qualify for any benefits when I am of retirement age, and I am not sure my ex-husband did either as he is an immigrant and has not been paying into ss for years (although he should have been under the law).  I will be sure to check this all out when the time comes.

Now I feel better about being able to invest the money I have so that I can continue to have it accumulate while I am receiving disability payments.  All I have to do is hope that my disability application is approved!  Luckily I have always lived a pretty mustachian life style and, if I am not approved, I would try to move to a place with a much lower cost of living.

I really do appreciate all of your feedback!