equities, Financial Literacy, health insurance, investment, life insurance, Personal Finance, stock market

The Vicious Cycle of Sandwich Generation

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Most of the Filipinos are part of Sandwich Generation. If you are supporting your parents financially while you are providing for your children, you are a truly member of Sandwich Generation. If you are still single, or married without any children yet and you are supporting your parents now, you will be also be part of this generation when you have children. Welcome to the club!

Investopedia defines  sandwich generation as the generation of middle-aged individuals who are pressured to support both aging parents and growing children. The sandwich generation is named so because they are effectively “sandwiched” between the obligation to care for their aging parents – who may be ill, unable to perform various tasks or in need of financial support – and children, who require financial, physical and emotional support.

We can observe that it is a vicious cycle in our country because 63% of Filipinos will  be broke upon reaching the age of 65. Therefore, children have no choice but to support their parents on their old age. In fact, there is a law in our country  that says that we are obliged to support our parents. According to Article 195 of the Family Code, the following persons are obliged to support each other:

  • the spouses;
  • legitimate ascendants and descendants;
  • parents and their legitimate children and the legitimate children of the latter;
  • parents and their illegitimate children and the legitimate and illegitimate children of the latters;
  • legitimate brothers and sisters, whether of full or half-blood.

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I do not find it wrong to support our parents when they get old but for me it is ideal that we should prepare for our expenses when we retire or get old. We do not want our children to be obligated to support us financially. I read an article saying  that “Parents have the obligation to support their children until a certain age, but children do not have any financial obligation to their parents. Parents chose bring you to this world while you did not choose to be born.” It is sweeter if you help your parents out of obligation  but not  because you are being demanded.

It is not too late to get out of this Sandwich Generation by creating a Financial Plan now so that we can prepare financially when we get old.We will no longer be dependent to our children and they can focus on providing for themselves and even start to build their wealth. We do not want to get a share from their income because we are prepared financially when we retire.

Let me share with you helpful ideas to prepare for your retirement so that you will not ask money from your children and let your family get out of Sandwich Generation:

  • Start your Retirement Plan as soon as possible. You need to complement your SSS/GSIS when you retire because it will not be enough.
  • Prioritise saving money than spending. Set a budget and follow it.
  • Invest consistently for long-term for your financial goals in the future. Learn to invest in Stocks, Pooled Funds, Money Market, Bonds, and Real Estate.
  • Get your health insurance that will cover you long term if dread disease happens.
  • Get proper coverage of Life Insurance.
  • Learn to create another source of income aside from your job or start a business.
  • Learn to increase your Financial Literacy by reading books, attending seminars, watching educational videos and talk to Financial Planners.

Sandwich Generation is a tough situation that is why we need to get out of it by taking actions today  while we are young and earning well. It is good that we need to create a Financial Plan that will give us income when we get old. If we do not plan today, our children will suffer and then it will go down to our grandchildren and it will be a vicious cycle and none of our family members down the road will achieve financial independence. You are responsible to all your actions that you do today for what life you will have in the future. It is way better that even if you are retired and old, you can still provide for your family and not the other way around. The holy bible tells us about this principle as well as it is written at 2 Corinthians 12:14, it says: “Now I am coming to you for the third time, and I will not be a burden to you. I don’t want what you have–I want you. After all, children don’t provide for their parents. Rather, parents provide for their children.

Thank you very much for reading my blog.

Archie M. Yuki
Financial Planner, Certified Investment Consultant and Insurance Specialist
4th floor Karina Bldg., No. 33 Shaw Blvd. Pasig City
Tel No. 571-3274
Mobile Number. 0917-5769607, 0923-4941362

 

References:

http://www.investopedia.com/terms/s/sandwichgeneration.asp#ixzz4pK6wWXUk

http://www.philstar.com/health-and-family/2017/05/03/1696041/it-right-parents-demand-support-their-children-exchange-raising

http://www.juicyretirement.com/2017/07/25/feeling-squished-its-sandwich-generation-month/

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health insurance, investment, life insurance, Personal Finance

HMO Card or Health Insurance?

One of my friends asks me if what she should get if she wants to insure her health, will she get HMO/Health Card or Health Insurance?

I said, it depends to your needs. Some people can get Health Insurance while they are insurable and others can get HMO/Health Card while they are young and it is cheap.

Getting ready for the medical expenses is very important because it expensive to get sick nowadays and if you did not prepare for the medical expenses all of your savings will be wiped out and worst is you will get yourself into debts for you to pay the medical bills.

According to Philippine National Health Accounts (PNHA), Filipinos spent P526.3 Billion for health care in 2013 and majority were paid in cash.  Of that amount, 56.3 percent or P296.5 billion came from out-of-pocket spending. These are expenses paid for by individuals for medicine, medical consultation and hospitalization. It means that Filipinos could have save more money if we consider preparing a form of medical insurance rather than paying it through out of your pocket. It will help Filipinos to spend less on medical expenses if there’s a medical insurance.

Reference: http://bilangpilipino.philstar.com/news/2016/03/31/1567890/philippiness-health-expenditure-climbs-p526-b

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Let’s define HMO:

What is a ‘Health Maintenance Organization – HMO’

A health maintenance organization (HMO) is an organization that provides health coverage with providers under contract. A Health Maintenance Organization (HMO) differs from traditional health insurance by the contracts it has with its providers. These contracts allow for premiums to be lower, because the health providers has the advantage of having patients directed to them; but these contracts also add additional restrictions to the HMO’s members.

Read more: Health Maintenance Organization – HMO Definition | Investopedia http://www.investopedia.com/terms/h/hmo.asp#ixzz4RY7v7ih8

Let’s define Health Insurance:

Health insurance is a type of insurance coverage that pays for medical and surgical expenses incurred by the insured. Health insurance can reimburse the insured for expenses incurred from illness or injury, or pay the care provider directly. It is often included in employer benefit packages as a means of enticing quality employees. The cost of health insurance premiums is deductible to the payer, and benefits received are tax-free.

Read more: Health Insurance Definition | Investopedia http://www.investopedia.com/terms/h/healthinsurance.asp#ixzz4RYA2MX9D

The questions is will you get an HMO or Health Insurance? Which option will you choose?

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For me, it is both important. It should complement to each other. Ideally, I position HMO for your short-term needs and Health Insurance will be for your long-term needs. If you will get sick now while you are young, it is good that you have an HMO/Health Card while if you will get sick when you get old, you have your Health Insurance, while if you get sick at a young age while you have your HMO, you can supplement it with your Health Insurance. It is a win-win position to a person who has both HMO/Health card and Health Insurance.

While most of the Filipinos are employed, most of the employers provide HMO/Health Card to their employees which is a good thing but you are not sure if how long will stay to that company and also you will get old and if you get your own HMO/Health Card you will have to pay higher premiums.

Mostly, HMO’s can give you a Maximum Benefit Limit of Ph60,000 to Ph150,000 when a person will be hospitalized and your Health Insurance can give you from Ph300,000 to Ph1,000,000 coverage plus an investment component that will grow that can supplement your medical fund needs in the future. It means in Health Insurance, after you are finished paying for it for 10 years, your money still grows that you can withdraw in the future while on HMO, you just pay every year and your money will not grow. It is wiser to complement these two. You don’t have to spend a lot of money if you will get HMO and Health Insurance rather than if you get sick, it will cost you more.

If you want to know how to choose options how to create a fit HMO and Health Insurance for yourself and for your family you may reach me for a consultation.

Thanks for reading my blog.

If you want to know more about getting a medical insurance, you may fill out the link below and I will contact you soon.

 

Archie M. Yuki
Financial Adviser,Investment Consultant and Insurance Specialist
The Insular Life Assurance Ltd.,Co.
4th floor Karina Bldg., No. 33 Shaw Blvd. Pasig City
Tel No. 571-3274
Mobile Number. 0917-5769607, 0923-4941362
Email Address: archieyuki30@gmail.com