0:00 spk_0
Number one, it’s start early. Uh, 2, it’s, look, these are daunting processes. I can tell you firsthand. It is not, you know, this is not off the shelf stuff. It’s not what you’ll learn in a financial literacy class in, in high school or college.
0:20 spk_1
In this episode of Decoding Retirement, we’re going to tackle two things. First, we’re going to break down why financial planning is so critical for families affected by autism, and then we’re going to challenge conventional wisdom so that you’ll think differently about how you plan for or live in retirement. We’re going to start with CEO of Autism Speaks, Keith Wago.Financial planning is so critical for families affected by autism. They need to think about their retirement plans. They might need special needs trust. They might need to think about A accounts. And those are just some of the topics we’ll tackle today with our guest Keith Wargo. He’s the CEO of Autism Speaks. Keith, uh, welcome.
1:00 spk_0
Well, thanks for having me, Bob. Please, pleased to behere.
1:03 spk_1
It’s a pleasure. So let’s start here.Uh, why is it so critical that, um, that people’s families with affected by autism think about financial planning?
1:13 spk_0
Well, financial planning is probably one of the most urgent and frankly under discussed needs, as you said, um, uh, for, you know, the long term. Uh, autism is a lifelong condition, uh, and many families spend a lot of time thinking about their, their, you know, their children and planning the, the, you know, the therapies and the work that needs to be done upfront on that, um, through through childhood. But the fact of the matter is we have in this country, we have 6 million adults who are autistic.Uh, and 70 to 100,000 age out of services, uh, children services every single year. So there’s a huge need, uh, and oftentimes it is, uh, it’s under researched by, uh, by families who are frankly in the moment trying to work with their, uh, with their loved ones and their families and their children to, uh, to get them the services they think they need. So we think it’s really important to have this on the radar screen as early as, uh, makes sense.
2:06 spk_1
Yeah.So, uh, here we, you know, spend a lot of our focus on retirement planning, and I’m curious from your perspective whether families affected by autism need to save differently, maybe save less for their own retirement and save more for their children, or how do you strike a balance when you think about saving for your own needs as well as the needs of your child?
2:26 spk_0
Yeah, I mean, it’s something we, uh, it’s something we hear about all the time, and obviously it’s a very personal decision depending on your uh your resources. Um, we think it’s important for individuals to uh focus both on their own retirement and their own needs, as well as be thinking about, uh, their, their children’s needs, um, and that can be challenging, right? That is uh that that’s a lot to take on.Um, you know, in some cases it may be that, you know, delaying retirement may be possible or unavoidable, um, but we think the most important thing is to be informed, uh, and to really think about structuring and setting things up, uh, up early. It’s definitely more complex, uh, and more complicated, and, you know, it’s something we, uh, talk to individuals and families about uh all the time to help them, uh, help them understand the resources that are out there, uh, but it’s definitely complex and it’s daunting.
3:18 spk_1
So one of the accounts that um families affected by autism set up would be a special needs trust. One, maybe walk us through what that is and then some of the mistakes that people make when they’re setting that up and how they can avoid those mistakes.
3:30 spk_0
Yeah, so I think this special needs trusts are sort of, you know, foundational. They’re a building block and, you know, really every family should should look into them. They should think about it early, um, they should probably think about it as early as when their child is in their early teens.Um, and the, the biggest mistake, frankly, is waiting too long and cause here’s what happens. The reason that a trust is so important, um, is that if an individual, let’s say there’s a, you know, well-meaning family member who, you know, who through a bequest through a will or through their death or whatever, or any other ways, uh, gives a gift directly to the uh to the individual that we’re talking about, that can and often does disqualify them for, uh, for government benefits.Um, and so the trust is really important because that is, that is a really important mechanism. It is, it is one of the primary mechanisms to set up, uh, set up savings that will not have an impact on an individual’s ability to tap into to government resources.
4:28 spk_1
Right. And, and then in, in terms of setting it up, obviously you need a lawyer. Uh, and when I think about trust, there’s a cost to setting one up is, is it the cost similar to setting up other types of trust, whether it’s aCharitable remainder trust or uh other type of trust.
4:43 spk_0
Um, I’d say that, so first of all, there are a lot of resources out there. There’s a lot of advisors and individuals who specialize in this. I spent all of my time going throughout the country, um, meeting with families and doing conferences. We just held 5 summits, uh, across the country, 5 different cities, where in each one of them we had a specialist like this who was there to help these individuals, help families set up these trusts.So I’d say, you know, it is a legal process, it is a legal process, sure, so there is an expense involved, but what I have found is there’s a lot of, you know, well-meaning and, and you know, excellent lawyers who look at this as part of their mandate, um, but aren’t looking at it as sort of a, you know, it’s a lot simpler, it’s a lot simpler, frankly, than a lot of the trust and and systems that are put into place.Uh, but family, so I think that, you know, again, there’ll be a cost for sure, um, but it generally I think is, you know, you find a lot of folks who want to support families and, and not have it be yet another burden on what already is going to be something that, uh, you know, has to be, has to be managed through.
5:45 spk_1
Yeah, so let’s talk about A accounts. What, what are they and how are they used and how are they funded and what advice do you have for people?
5:52 spk_0
Yeah, so, you know, Acasts came into effect. I think it was, uh, yeah, I was actually there in Washington this for the celebration of this. My recollection is that 20 years ago, um, we as an organization, there are many others, but we as an organization advocated very hard for, uh, for their creation. Um, they’re similar in a lot of ways, your audience, I think, will be familiar with this. They’re similar in a lot of ways to 529 plans.Um, in that they’re funded through after tax dollars, um, but the growth of the, the, those assets, um, uh, you know, when, when they start to be pulled out, um, it is as on a tax-free, the tax-free, you pay taxes on the, uh, on the, you know, on the gains, um, on the case of the distribution.Um, the limit is right now, uh, at $18,000 per year, um, and, you know, different in 529 plans, which I think is really important to know, is that, you know, where 529 plans really are for qualified, uh, educational expenses, that the the government definition for what a qualified use of resources from a from a uh from from an A account is much broader. And so it could be for housing.It can be for food, it can be for transportation. Um, there are some regulations and rules, but it’s important that individuals educate themselves in that.Um, but it’s much broader. Um, and so we think about this is really, uh, we get the question all the time, I do, you know, should, should I do it, uh, special needs trust or should I do an A account? Uh, and the answer really is they should go side by side. Um, if the resources, if the resources are there to fund them, they should go side by side, because again, the ability to kind of have a lot of flexibility around the 529 plan and how, how it’s accessed and how those funds are utilized.Um, the restrictions there are quite low, whereas by definition, when you build a trust, you want it to have, you know, you want it to have a lot, a lot more, you know, longevity to it, and depending how it’s structured, there may be, you know, there may be age age restrictions or may be restrictions on, you know, how much of those assets can come out at any particular time.Um, so we, and again, in an ideal world, we think that those should be, those should be used side by side.
8:00 spk_1
Keith, when we took a break, I promised that we would talk about what happens to government benefits when a child with autism turns uh age 21, the age of majority. Uh, what do people need to know?
8:12 spk_0
Yeah, so I think what’s important to know is really on your on your 22nd birthday, uh, an individual is no longer eligible for the for school services, the school services that are entitled through, uh, the Department of Education and the individual and the IDEA Act, um, it’s been in place for, um, for decades. Um, at that point, um, there are state services, there are other services, but it well it’s really important to understand is the primary.Uh, funding source for adults, uh, is is related to Medicaid. Uh, and that provides services for employment, provides services for, um, uh, uh, medical, obviously is, is, is foundational, uh, but also in the case of individuals who are on, uh, Medicaid waivers, uh, provides, uh, funding for, uh, for services, perhaps uh uh additional caretaker for, um,Uh, recreation sources for, um, home, basically it’s, it’s so called home and community-based services. So it’s a broad umbrella, it is, uh, it is, it’s a part of the federal program, but like all Medicaid uh systems are actually, um, you know, are actually uh uh provided through state structures. So it’s important to understand that what federal program but really mandated and and implemented on the state basis.
9:33 spk_1
Uh, so we’re talking as the Senate is now debating the one big beautiful bill, and there’s a great deal of talk around Medicaid being cut. I’m curious for your thoughts around.What families with children with autism need to know about the possibility of funding go away, going away for what is probably a large source of um uh help for children of this, right, with autism. Yeah, I
9:58 spk_0
mean,we’re look, we’re watching this really closely. We’re we’re we’re, we’ve been around for, we’re celebrating our 20th anniversary and we have a long legacy of uhUh, of advocacy in, in Washington and on a state level. Um, one of our, our kind of cornerstone achievements over the 1st 20 years, uh, was to, um, uh, was to get all 50 states to provide insurance coverage for, uh, for autism therapies. That’s a, that’s a crown jewel of what we’ve done. We’ve worked with administrations on, you know, both political parties. We look at autism as being a nonpartisan, non-partisan issue, and we’re working right now with uh.Uh, with both the legislative branch as well as, uh, uh, the executive branch to make sure that, uh, it’s understood these needs are there.
10:43 spk_1
Yeah. So I, I know firsthand that parents who have children with autism, uh, worry that as they age, uh, or pass away, who will take care of their child. What advice do you have for those folks who are on the precipice of this happening or who are dealing with it?
11:00 spk_0
Yeah, I mean, this is one of the most difficult and heartbreaking and, you know, and, and challenging needs. I mean, um, um, uh, I’ll throw a stat out for you, which is a little bit off topic, but only 25% of individuals with uh with autism um live outside of the the homes of their of their caregivers. Um, and at this point, the majority, about 50% of those caretakers or family members or whatever are over the age of, uh, or 60 or over.Um, so we know that this is a really critical topic, and, and, you know, so what I would say is, it’s not, you know, it’s important to, to start implementing the tools that we’ve already, you know, that we’ve already kind of talked about in this discussion, but we also think you need to build that support network and not just financially, but, you know, socially and and and legally. Um, and so that can mean, it doesn’t mean in every case it’s necessary, but having a legal guardian, uh, to having letters of intent.Uh, and really to evolve trusted family members in, in the, in that planning of, of what will the future, uh, what will the future look like, um, that that’s, that that’s critically important in order to make sure that, uh, um, that the best, you know, the best plan is there and can be, uh, can be implemented for uh for the individual and what the individual’s input.Um, when, you know, when that is, uh, when that, when that is, uh, uh, possible. So all that sort of stuff, the kind of planning that one would do, you know, for a general retirement, that, that comes into the equation as well, right? Trustees and, and, uh, um, and, and, you know, and, uh, um, you know, that, that sort of planning all comes into, uh, all comes into into question here.
12:37 spk_1
Yeah. All right, so, uh, last question, and I think I already know the answer to this, but what’s the one piece of financial advice you would give to uh every family affected by autism?
12:44 spk_0
Yeah.I think, you know, #1, it’s start early, uh, 2, it’s, look, these are daunting processes. I can tell you firsthand, it is not, you know, this is not off the shelf stuff, it’s not what you’ll learn in a financial literacy class in in high school or college. Um, some of the applica yeah, you know, applying for, you know, government programs can be, you know, can be confusing.Um, but get going, you know, get going early, educate yourself, and tap into the resources that are out there cause I can’t emphasize that. There are, there are some really great organizations, really great people, uh, doing this work, wanting to support and wanting to make sure that, you know, that the folks can have as much peace of mind and ease of mind as as possible. But um,Um, and I say, you know, I always say whenever I’m speaking at a, you know, if, uh, uh, at a to an organization or to an organization or a group that, you know, it takes a village and rely on, you know, re rely on those trusted members of your family, rely on those trusted members of your, you know, your social network, um, to help build this whole thing and, and, and put it all together in a, in a thoughtful manner, because there’s there’s lots of folks out there just, you know, it’s just focusing on doing it and earlier is definitely better than later.
13:55 spk_1
All right, Keith, I wanna thank you for sharing your knowledge and wisdom with us and our viewers and our listeners. It’s uh so greatly appreciated. Thank you.
14:02 spk_0
That’s my pleasure, Bob. Thank you. Thanks for having me.
14:05 spk_1
We’ll take a break and when we come back, I’ll be talking with Zebody about the retirement reality check you need.So much of retirement advice seems like, well, Hablum, save enough to get your company matched, withdraw 4% per year when you retire. Stocks for the long run.It’s all shall we say, a bit conventional. Well, my next guest is someone who has spent decades studying retirement finance and is known for challenging conventional wisdom. My guest is Body. He’s professor emeritus at Boston University. He’s the author of Wry Free Investing, Risk Less and Prosper, and several textbooks that are required reading for business school students. See, welcome.
14:45 spk_2
Thanks for such a uh graciouswelcome.
14:49 spk_1
I can’t tell you how thrilled I am to have you on the show. We’re longtime friends. I’ve admired your work for a great many years. Uh, so let’s start here. Let’s start with what investors who may not be familiar with your work, need to know about what you think is the biggest misconception that people have about preparing for retirement.
15:09 spk_2
It startsWith the issue of consumption.Is the objective.Not investment returns necessarily. yes, investment returns are very important.But the most important thing is maintaining a certain standard of living.So the, the first thing that I, uh, discover when I start talking to people about it isThat they don’t really get the economist distinction between nominal and real.Rates of return orIncome and spending. The diff the difference being.Nominal is just the number of dollars, not corrected for inflation.And real income and and spending.I corrected for inflation.Now, right there, it can get confusing.And what I’ve discovered when I talk to people about this is, it’s about there that they tune out.BecauseWhat do you mean? Rio versus Domino, well.The problem is, what base here are you gonna use?For adjusting for inflation,
16:48 spk_1
certified financial planners aren’t taught this necessarily as part of their curriculum. It this is, as you said, the economist’s point of view on financial planning. Is that fair to say?
16:58 spk_2
It is fair to say, but it’s also the only way that makes sense.Because what if what you’re concerned about is your standard of living, then what you care about is what your income is gonna be, and your spending is gonna be adjusted for inflation.If I just give you two numbers, if I say to you, OK, I make, I’m gonna make $200,000 now, how does that compare to today?I don’t know without a projection of inflation. So the place that I start explaining.Finance, personal finance.Series I saving spots.Why?Because there you have it, the difference betweenReal and I.They offer us a fixed.Real rate of interest.For 30 years.OK. They don’t pay anything, they it’s all compound interest, like a savings account, savings bonds.Now, if you understand how these bonds work and why they are the safest possible place.Just to invest your money.Then you’re gonna have a decent handle on how to think about inflation and taking inflation into account properly.My guess is, I, I don’t know how what percentage it is. My guess is there are lots of professional financial advisors.Well, if you say Series AI savings, should I invest in series I savings plan?We’ll sayNo way.
19:00 spk_1
So you’ve written these books about worry-free investing, safety first principles of investing, and you have famously said, yeah, and I, and I’ve seen you debate, uh, Jeremy Siegel in the past, um, who does, uh, advocate for stocks for the long run. And, and you tell people that stocks are risky for retirement planning, which goes against the grain of what most advisors tell people, maybe just talk a little bit about that perspective, um, about maybe why stocks are risky.
19:27 spk_2
Yeah.Right, so, so first of all, let me say.That this is something I am accused of being wrong about.OK, not just because Jeremy Siegel disagrees with me, but because virtuallyThe whole establishment, if you talk about anti-establishment, this is the thing that gets me into trouble, and, you know, IThe first thing I say is, well, if you think I’m wrong about this, you must think Paul Samuelson is wrong about this, because I, I learned from Paul, you know, the famous economist, that the notion that stocks are not risky in the long run is a fallacy.It’s a misunderstanding of how to think about risk.And in fact,I er he was one of my teachers. He was my most important teacher at MIT when I did my doctoral work. His explanation is, just as the longer you go into the future.TheyMore likely it is that you’ll get closer to the mean. The probability that you’ll earn uh less than that if you invest in stocks, gets smaller and smaller the further you go out.OK, so that is true, and it’sIt leads one to think.Oh, so they’re safe in the long run.ButThe worst possible outcome that you can have.Gets worse and worse the further out yougo.
21:22 spk_1
I’d love to ask more questions about things we didn’t get to, maybe in another episode you’ll come back and join us, but in the meanwhile, thanks for uh sharing your knowledge and wisdom with us.My pleasure. Before we go, we had a piece of viewer mail asking about Lisa Featheringill’s property purchase with her son and how it was legally structured. Lisa was nice enough to send us video explaining how she did it.
21:44 spk_3
The property is titled as tenants in common, which means that my ownership share will pass according to my will, specifically to my husband.If I pass away, he would then co-own the property with our son. Now, if both my husband and I pass away before the home is sold, then our estate planning documents will determine the next steps. But we also create a shared equity agreement which details the financial terms. My contribution, which was the original down payment as well as paying for improvements, is considered an investment.When the property is sold, I’ll get my investment back, and then my son and I will split the net proceeds, net of the mortgage, equally. So this is not considered a gift for gift tax purposes, rather a financial arrangement, like a joint purchase.
22:33 spk_1
Thanks for watching Decoding Retirement and be sure to follow us on YouTube or wherever you get your podcasts.
22:40 spk_4
This content was not intended to be financial advice and should not be used as a substitute for professional financial services.