Financial Protection & Your Adult Children
Life can often throw in a few curve balls. No one expects sudden death, accident or illness. What if the unthinkable did happen? How would you, your family or perhaps your business cope financially? Do you have your financial protection in place.
What’s your help really going to cost?
For example, if your children needed urgent financial help, you’d do everything in your power to give it to them. And you’d probably do it without thinking twice about what it means for your own financial position or financial protection.
As such, for parents, helping your adult children through a financial crisis like a serious illness or accident could be extremely costly when you’ve got your own retirement plans to consider. Financial pressures may also emerge on the death of your child or their spouse, especially where there’s a young family to be looked after.
By encouraging your children to take out appropriate levels of life insurance, you’re helping them create a valuable safety net for themselves, and their families. You are also helping to protect your lifestyle in retirement.
Think about the following:
- 95% of Australian families do not have adequate levels of insurance (1);
- 34 Australian families lose a working age parent everyday (1);
- Estimated cost of raising two children to age 21 is $537,000 (2); and
- In 2003 around 22,500 grandparents were already looking after their grandchildren (3)
How your children can protect your retirement
As the baby boomers approach retirement, the underinsurance of their adult children poses a genuine threat to their future lifestyle.
Consider the case of a retired couple who have $510,000 in super pensions and $20,000 in cash savings. If they budget on spending $45,000 per year between them, their annual cash flow needs can be met for 27.7 years. However, if they had to spend $400 per week on financially supporting a child, their $45,000 annual living requirements can only be satisfied for 9.9 years (or 13.5 years if they physically cared for their child and received a Centrelink Carer Allowance).
To find out more about helping your adult children with their own financial planning needs – contact us for a no obligation consultation.