How to ensure your kids don’t spoil your retirement plans.

How to ensure your kids don’t spoil your retirement plans.

It is important you make sure your children have enough insurance as you approach retirement.

Why is this important?

  1. In the event your children die, suffer a permanent disability or become traumatically ill, you can be certain your grandchildren receive financial support; and
  2. You can make sure your retirement plans and lifestyle are protected.

How this strategy works…

Whether you plan on travelling, spending time with family and friends or simply relaxing at home, you have much to look forward to when you retire. But life can throw a few curve balls every now and then and as a result, things mightn’t work out as you’d planned.

For instance, think about how your retirement plans would be affected if one of your children died. Would you change your plans so you could support their spouse and your grand children? What about if one of your children became disabled or suffered a traumatic illness? Would you put their needs before your own? Can you imagine the financial (and emotional) burden these events could place on you?

To prevent this situation from having a drastic effect on your finances, you should make sure your children have adequate insurance in place.

If they don’t and the reason why relates to affordability, you may want to consider assisting them with the cost. You could take out Life, Total and Permanent Disability (TPD) and Trauma insurance for them.

Financial Planning Expert can help you ease the financial strain of these catastrophic events. We can help you and your children determine how much insurance is needed so that your retirement plans are protected, and make sure your children (and grandchildren) receive the financial support they need if disaster strikes.

David and Samantha are planning to retire next year. They have both worked hard to build up their savings for retirement and are planning to spend a year travelling once they stop work.

However, just before David and Samantha were due to retire, their youngest son Dennis was involved in a tragic skiing accident and became a quadriplegic.

Before the accident, Dennis was the main income earner while his wife Julie had taken a career break to look after their two young boys.

Unfortunately, Dennis had not seen the need for total and permanent disability (TPD) insurance. Without Dennis’s income and increased household expenses due to medical bills, Julie and the boys could not cope financially.

Naturally, David and Samantha wanted to help out in any way they could. They cancelled their travel plans and agreed to look after Dennis and their grandchildren so Julie could return to work.

Therefore, as a result of Dennis’s accident, David and Samantha could not enjoy the retirement lifestyle they had planned and wondered whether they would ever be able to take the trip they had been looking forward to for so long.

If they’d spoken with Financial Planning Expert this situation could have been avoided. Insuring Dennis would have provided a lump sum payment to replace his income, meet household expenses and cover medical costs. Had they done this, David and Samantha’s retirement plans would have been protected.

Important note: This case study illustrates the possible consequences for you, your children and your grandchildren if adequate insurances are not in place. By speaking with Financial Planning Expert you can make sure your children’s insurance needs are sufficiently addressed and learn about other potential issues and protection strategies.

Other considerations…

  • Your adult children should consider arranging sufficient insurance to:
  • Clear all their debts;
  • Provide an ongoing income stream to meet household and lifestyle expenses; and
  • Cover medical, childcare and housekeeping costs.
  • If your children can’t afford to buy insurance and you assist them with paying for it, you should consider owning the policy. By doing this you can make sure you remain in control of the lump sum payment at claim time;
  • If you decide it is appropriate for your children to put insurance in place for the longer term, it may be more cost-effective to choose a level premium structure instead of stepped premiums.

Financial Planning Expert can help you ensure your children (and grand children) receive the financial support they need in the event of death, total and permanent disability or traumatic illness and protect your retirement plans. Contact Financial Planning Expert on 1300 721 174 or for an obligation free discussion.

This advice may not be suitable to you because it contains general advice that has not been tailored to your personal circumstances. Please seek personal financial and tax advice prior to acting on this information.

Opinions constitute our judgement at the time of issue and are subject to change. Financial Planning Expert Pty Ltd does not give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document.

© Copyright 2011-2014 Financial Planning Expert Pty Ltd

ABN: 71 545 756 841 Australian Financial Services License: 402042

Phone: (03) 9708 8126




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    Financial Planning Expert is an independent financial planning business based in Melbourne. We provide genuinely independent and conflict free financial advice. We’re experts in self-managed superannuation fund (SMSFs) advice and strategy, retirement planning, property and share investment advice, life and income protection insurance, tax planning, asset protection, estate planning and advice for Australian expatriates.