I hope all parents are seated as they read these statistics!

•    Nearly one in four (23 per cent) of children aged 20-34 in Australia continue to live in the parental home.

•    There are 117,547 people in their early 30’s still living at home with their parents. They have lived out of the parental home and returned, many with their own young children. Financial reasons are the most common cited for this phenomenon, along with housing affordability and people marrying later in life and delaying childbirth. Many parents also do not want their children to leave home, for emotional reasons and to help them get a start in life. Some of these children already have debt of their own, paying off mortgages on investment properties and living at home to save money to make this possible.

For many of these adult children they will have paid jobs, can cater for their own spending and needs and hopefully paying some level of board to parents.

Whilst parents are generally out of pocket with the continued running costs of the home and financial support they provide to their children, have they ever considered what it would be like if their adult child depended on them fully due to a permanent disability or suffering a critical illness in which they can’t work.

Consider Joe, aged 25 living at home, he has completed his tertiary education and has been in his first job for over a year.  He recently had a car accident in which he was seriously injured and is now a paraplegic.  Due to having inadequate insurance cover (no income protection or total & permanent disablement or health insurance) the financial burden has fallen on his parents. It is more than likely this situation will substantially impact on their retirement savings.

In another case, let’s consider John, he is married and with 2 children, aged 10 and 12 and has their own home with a mortgage.  John passed away after suffering a long term illness and his family have been struggling financially and emotionally throughout the last 12 months in which John was unable to work. At the time John was diagnosed with his illness he did not have income protection and very little death cover.  This inadequate insurance did not even assist to pay out fully the mortgage.  John’s wife who has been out of the workforce for 12 years is considering returning to some part time work though will need to complete some work skills training before seeking work.  In the meantime John’s parents are helping support them financially and more than likely support the family in a major way financially until John’s wife can return to full time employment.

Parents will always act in the best interests of their children but it may be time to discuss at the dinner table just how much personal insurance cover your adult children have and whether they have planned for their families in an untimely death, illness or accident.

In 2003, there were 22,500 Australian families in which grandparents (or a grandparent) were guardians of their grandchildren (31,100 children aged 0-17)  The average cost of raising two children until the age of 21 can cost $537,000 according to the National Centre for Social and Economic Modelling. Also the average mortgage in Australia is $288,300. Again, without adequate life insurance, the financial burden will fall on parents/grandparents.

Most parents will say it is not their business but unfortunately it is your business when it may affect your plans. Not only will you remain on track to meeting your retirement goals but also ensure that you and your children’s families are not burdened financially in a time of grief.

Technical information for this article was provided by The Colonial Mutual Life Assurance Society Limited (CMLA which is a wholly owned subsidiary of Commonwealth Bank of Australia).

Frances Easton CFP, M.FinPlan, B.Bus Acc, is a representative of Alman Partners Pty Ltd, Australian Financial Services Licence No: 222107.

Note: This material is provided for information only. No account has been taken of the objectives, financial situation or needs of any particular person or entity. Accordingly, to the extent that this material may constitute general financial product advice, investors should, before acting on the advice, consider the appropriateness of the advice, having regard to the investor’s objectives, financial situation and needs. This is not an offer or recommendation to buy or sell securities or other financial products, nor a solicitation for deposits or other business, whether directly or indirectly.