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Avoid money problems in retirement – talk to your kids about insurance now.

I was inspired to write this article after I took a call from two of our great clients, Bob and Anne. When I answered the phone, Anne was on the other end of the line and she had news to share. Her daughter, son-in-law and their three kids had moved home to their beautiful little corner of the Darling Downs.
Most of us, as parents, would be overjoyed at the prospect of having our kids, and grandkids, move home, after spending time living in another State. Unfortunately, this story has a sad side to it. In 2013, Anne and Bob’s son-in-law David was diagnosed with Motor-Neurone disease. The condition is terrible and, as I understand, it still defies the marvels of modern 21st-Century medicine.

David and his wife Lisa, both in their mid-30s, were shocked by the diagnosis. They had a wonderful life with three healthy and growing kids, great jobs, and a lovely home, outside Melbourne. In a heartbeat their world was turned upside down and their future turned bleak.

Anne and Bob worried endlessly about what would happen to David, Lisa and their grandkids. David would not be well enough to continue working for long. They had a mortgage to pay and children to educate and raise.

In an amazing, and selfless act, Anne and Bob came to me for advice and we began to make arrangements to buy David and Lisa a home on the Darling Downs in Queensland. This way David and Lisa could be close to family and friends for support and not have have the added stress of paying off a mortgage. From what Anne told me, David and Lisa were overwhelmed by what their family were planning, but also a little upset.

David and Lisa knew, by buying them a home, Anne and Bob were forgoing a big part of their retirement nest egg. After 40 years as successful small-business owners, Anne and Bob had done okay financially but $400,000 for a new home, for David and Lisa, was a big hit. That amount of capital could be around $20,000 a year in income, during retirement.

Anne and Bob know they’ll be okay but their plans for travelling overseas and spending time away in their caravan, during retirement, are probably gone. Being the loving parents they are you‘ll never hear a grudging word from them about the sacrifice they’re making – but it could have been different if David and Lisa had taken time to review their personal insurances.
Like many Australians the couple’s home, contents, and cars were fully insured. They also had health insurance, as well as some personal life and disability cover through Superannuation – but as it turns out the cover was not the right type and woefully inadequate for their needs. Sadly, with the right advice and the right cover, David and Lisa could have guaranteed their financial future without relying on Lisa’s parents.

No amount of money can make David well again – we need to hope and pray modern medicine can grant that wish. However, a good personal insurance plan could have eased the financial stress when they needed it most.

At CommonCents we know a good personal insurance strategy is one of the key pillars of every financial plan. And without the right pillars, your overall financial wellbeing is wobbly.
I hope this article opens up some important and honest conversations in your family, like it did mine.

For more information about how we can help get you financially fit, give us a call or pop in for a coffee.

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