The Role of ABLE Accounts in Financial Planning for Children With Disabilities

Jeff Vistica
August 28, 2023

An ABLE account, short for Achieving a Better Life Experience, is a specialized savings account designed to empower individuals with disabilities by offering a flexible and tax-advantaged way to save for qualified disability-related expenses.

Here’s what you need to know to determine if and how an ABLE account fits into financial planning for your child.

What is an ABLE account?

An ABLE account is a tax-advantaged savings account analogous to a 529 college savings account. ABLE accounts provide individuals with disabilities a means to save funds without jeopardizing their eligibility for various government benefits like Supplemental Security Income (SSI) or Medicaid.

Qualification criteria

To be eligible for an ABLE account, your child must have been diagnosed with a disability before turning 26. The  disability can be physical, intellectual, developmental, or a combination thereof, and it must meet the Social Security Administration's definition of disability.


One of the most significant advantages of ABLE accounts is the potential to accumulate savings without affecting eligibility for crucial means-tested benefits. Usually, individuals with disabilities are restricted to a low threshold of assets to maintain eligibility for programs like Medicaid and SSI. With ABLE accounts, Medicaid benefits are not impacted, and balances below $100,000 don’t impact SSI benefits.

Tax Advantages

Another compelling aspect of ABLE accounts is the tax benefits they offer. While contributions to ABLE accounts are not federally tax-deductible, the investment growth within the account is tax-deferred.  Withdrawals from ABLE accounts are tax-free if used for qualified disability-related expenses.

The role of ABLE accounts

Here’s how ABLE accounts fit into the broader landscape of financial planning for children with disabilities:

Funding future expenses: One of the primary roles of an ABLE account is to provide a dedicated savings mechanism for disability-related future expenditures. From medical treatments and assistive technology to education and housing costs, the financial demands of living with a disability can be substantial. ABLE accounts allow families to proactively save for these expenses in a tax-advantaged manner, ensuring that their children's needs are adequately met as they transition into adulthood.

Supplementing government benefits: Government benefits like SSI and Medicaid play a pivotal role in supporting individuals with disabilities. These benefits often have strict income and asset limits. ABLE accounts can be complementary by enabling families to save money for additional expenses not covered by government programs, providing a safety net for unexpected costs, and enhancing the overall quality of life for individuals with disabilities.

Financial independence and empowerment: ABLE accounts empower individuals with disabilities by fostering a sense of financial freedom. These accounts allow individuals to have more control over their finances and decide how their funds are allocated. This autonomy can boost their self-esteem and enhance their overall well-being.

Education and employment opportunities: ABLE accounts can play a role in financing educational pursuits and vocational training for children with disabilities. By saving for tuition, books, and other education-related expenses, families can contribute to their child's future success.

Flexibility in spending: The range of qualified disability-related expenses that ABLE account funds can cover is expansive. These expenses include education, housing, transportation, assistive technology, healthcare, and legal fees. This flexibility allows families to adapt to changing circumstances and prioritize their child's well-being.

Making the most of ABLE accounts

Here are some practical tips to maximize the benefits of ABLE accounts.

Understand eligible expenses: Familiarize yourself with the range of qualified disability-related expenses ABLE accounts can cover. Being well-versed in these expenses will help you make informed decisions when allocating funds.

Set clear financial goals:  Define your goals for your child with disabilities. Whether funding education, improving quality of life, or ensuring long-term financial security, having clear goals will guide your savings strategy.

Contribute regularly: Consistent contributions are crucial to building a substantial ABLE account over time. Establish a contribution schedule that aligns with your financial capacity and goals.

Leverage gifting: Family and friends can contribute to your child's ABLE account. Instead of traditional gifts for birthdays or holidays, encourage loved ones to contribute to your child's future.

Monitor investment options: Many ABLE accounts offer a range of investment options. Assess these options and select investments that align with your risk tolerance and financial objectives.  

Final thoughts

Beyond the technicalities of ABLE accounts, what resonates deeply is the compassionate intention behind these accounts.

ABLE accounts are not just about savings and investment growth; they are about hope, empowerment, and the shared dream of providing a fulfilling life for those we cherish. They offer families the opportunity to look beyond limitations and focus on possibilities.  

The warmth in knowing that you are not alone, the comfort in understanding that there are tools designed to assist you, and the joy in witnessing the blossoming potential of a loved one are what make ABLE accounts more than a financial product. They are a symbol of empathy, love, and community.

As you consider the role of an ABLE account in planning for your child's future, remember that it's more than numbers and legal terms. It's a hand extended by society, reassuring you that we are here to support, care, and walk this path with you.

At Vistica Wealth Advisors, we are experienced in financial planning and investing for families with children with disabilities.

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