There Are No Easy Answers
It is said that the baby boomer generation is most likely the last generation to go to school, find a job, get married, start a family, and retire from said job. This is no longer the way for millennials and their children. For so many reasons, that simple straight line no longer exists. Career uncertainty and the lack of every day jobs has changed, and as a result, the economic and academic landscape has changed with it. We are no longer guaranteed employment upon graduation. This has placed a lot of stress on students who have worked hard to finish school; their career is still a proverbial step or two away.
Financial Post did a survey with students who were enrolled in school in 2018, and from the results, what was even more upsetting than the lack of employment opportunities available was the number of Canadian students graduating with an average debt load of $26,800. This debt can take as much as 10 to 15 years to pay back.
What’s more, with its recent changes, the Ontario Student Assistance Program (OSAP) is no longer a viable option for a lot of students. The original grace period of six months to start repaying your loan has been rescinded. As well, 70% of grants given are now being converted to loans, with repayment beginning immediately upon graduation.
RESPs are no longer serving the average family’s best interest. The changes in CRA rules are now showing the consequences of not keeping up with the times; the government grant – 20% of your annual deposits with an annual maximum of $500, to a lifetime maximum of $7,200 – has not seen an increase in over 10 years. That amount was helpful 10 years ago, but without considering today’s financial inflation, not as much. To benefit from the full grant amount, you would have to invest $36,000 over 17 years. For children born this year, that amount will barely cover a semester.
So, where does insurance lie with all this doom and gloom? If you invest in a Participating Whole Life policy for your child, you will receive annual tax-free dividends for life. The best part of this is that the investment grows for 100 years, even though you only pay for 20 years. This allows your child to have money during all the key milestones of their lives. There would be money for education, buying a home, starting their own business – everything a Gen Xer will need to be successful.
Families who do not have life insurance on the parents also place inordinate amounts of stress on their children, should a tragedy occur. Many families have to drastically change their lifestyles to accommodate for the loss of a parent’s income. There are so many different ways to make sure your family is covered, from the least expensive Term Life policy, to the more complex Universal Life, but having any kind of life insurance is better than none!
They say that death and taxes are the only guarantees in life; making sure your family is ready for both of those events is completely up to you, but it can absolutely guarantee an easier transition.
