In the media recently, we have heard plenty of dialogue around the cost of housing and unaffordability. How difficult it is for young families to purchase houses that are – to be honest – outrageously priced. Especially if you are in Sydney.
We hear anecdotes of older parents, often at retirement age, helping their children out with house deposits or a fantastic new trend where parents build granny flats on their property for them to live in and their child’s family move into the main house. How’s that for thinking outside of the box?
But all’s quiet on the media landscape around the topic of parents helping adult children out when they face times of financial hardship brought on by illness, trauma, and accidents and in worst case scenario, death.
One story we heard recently – and it will tug at your heartstrings – was of a single mum who returned home to live with her Dad. He is retired and was happy to have his daughter and his five year old grand-daughter live with him to share expenses and help his daughter get back on her financial feet again after a tough relationship break-up. Sadly, the mum died unexpectedly. The grandfather, the beautiful man that he is, is raising his granddaughter and has found his retirement savings doesn’t cover off on the costs of raising a five year old and her future needs. It’s a sad story and quite often we don’t want to think about or even take action around the ‘what ifs’ but it’s so important we do.
Financial planners are seeing more and more clients who are in retirement mode dipping into their savings to assist their children with financial affairs.
Grown children with families who have no life insurance cover are relying on Mum and Dad to help them out. This has a huge impact on the retired parents’ savings and for such a small amount they could have had Trauma, Income Protection or Total and Permanent Disability insurance.
Here are three ways this can be avoided.
a. Parents take out cover on their grown children’s lives
Compare a small monthly premium to be paid as opposed to a large lump sum of money needed if one of your children is hurt, injured or passes away. This is peace of mind and a smarter use of your money.
b. Encourage adult children to look beyond today
While a parent / adult child relationship can be fraught with challenges, if you have a grown child that listens to you, give them guidance around planning for the future and talk about the ‘what ifs’. Guide them towards a financial planner focusing on the benefits being proactive can have on their finances and future.
c. Talk about it
Many people put life insurance in the too hard basket. This is because the topics around it – illness, trauma and death – are very unpleasant to discuss. But we need to talk about the elephant in the room. Talking about worst case scenarios and planning for them doesn’t make you a pessimist. It makes you smart. Very smart.
It comes down to everyone having the right to live their best life.
Retirees have worked and saved hard to get where they are. While most parents would do anything for their child and sacrifice their own lifestyle for that, when it’s completely avoidable with smart and simple strategies such as taking out life insurance cover in Australia, doesn’t it make sense to do it?
If you would like know more about your financial situation in the future and how you can avoid these situations, please feel free to take advantage of our complimentary consultation by clicking here.