It’s the new buzz word within the financial advice industry. Intergenerational advice involves, amongst other things, “the transfer of wealth from one generation to another”. Primarily this is more commonly known as Estate Planning but it commands far more strategic planning.
It’s no secret Australia is an ageing population and the Baby Boomers are now reaching their 60’s and 70’s. The oldest of the Gen Xers are now reaching 50, which means that approx. 20% of Australians will be retirement age (60) by 2020.
As financial advisers, we wish all retirees the very best in their retirement phase, however there are those that don’t get to kick back and do those things they’ve always wanted to do because their children suffer a traumatic event and are inadequately covered for this.
Take Joe & Jane for example. Joe is a 38 year old IT specialist, who is time poor and very busy. He’s is also a reasonably healthy & active person who provides for his wife and 3 kids. Although Joe earns a healthy wage, he does enjoy the finer things in life and takes the family on regular overseas holidays and undertakes the more extreme activities when abroad.
A snowboarding accident in Switzerland changed the whole family dynamic when Joe and Jane collided and were medi-vaced off the mountain. The prognosis wasn’t good as both suffered spinal injuries that turned them into quadriplegics. Accordingly, Joe’s parents had frequently mentioned this to Joe, to ensure the family would be covered in the event of an illness or accident. Joe’s response was always “It will never happen to me”
Joe’s parent, who had just reached retirement were suddenly thrust into raising 3 children under the age of 10 and this provided a tremendous drain on their mental and physical abilities. They also noticed that financially, with no insurance in place for Joe and Jane, their retirement assets were being depleted tending to their grandchildren.
Had Joe’s parents known that this was their retirement future, I’m sure they would have gladly paid for an insurance policy covering Joe and Jane to at least allow a level of financial security in their retirement. A lump sum amount from an insurance policy would have allowed them to hire carers as well as nanny’s whilst they looked at a getaway destination from the daily grind of looking after young children.
So ask yourself this. What sort of retirement are you looking forward to? Would a small insurance policy over your children allow you to enjoy your retirement, or would a second attempt at raising a young family put a hold on all the things you look forward to after your working life?