Retirement Planning Tips for Married Couples

Start with a broad Financial Plan

First things first - make sure you don’t sweep money issues under the carpet. It’s vital that you sit down with your partner and discuss money – be transparent not just about the present state of your finances, but about your money values as well. Try and find middle ground.

The most important first step a married couple needs to take is to have a financial plan prepared – even if it’s a very basic, unembellished, goal-based plan. In doing so, you’ll undoubtedly uncover many issues related to your individual aspirations about the future. Your opinions on some of these may differ – that’s wonderful. You could agree to disagree for now, or try to find common ground. Either way, it’s going to be a very important activity.

Define your Retirement Planning goal

This is where you need to jointly give shape and definition to your joint retirement planning goal. It’s not all pina coladas on the beach, mind you! A qualified retirement planner or financial advisor  can be extremely helpful in extrapolating your current expenses and lifestyle well into the future, provisioning for your current savings and investments, and coming up with a robust plan to meet your target. Do bear in mind that women, on average, consistently outlive their partners by about five years. So that’s an additional retirement planning provisioning for half a decade that needs to be done for one partner right there.

Agreed, your retirement is probably over thirty years away at this point, but starting off early will give you a head start like you wouldn’t believe. There’s a popular financial planning concept called ‘cost of delay’ which is worth knowing – in a nutshell, this concept states that the cost of delaying long term goals by seemingly small lengths of time can be monumental.

Invest aggressively

Where should you invest for your retirement planning goal? Preferably, go for systematic investment plans  in aggressive, equity oriented mutual funds.  Going by statistics alone, you’ll likely be somewhere in the age bracket of 26-30 when you tie the knot – so this is an ideal age for you to ditch the risk aversion and embrace (calculated) risks.

One of the key reasons why people fall behind in the accumulation of a sizeable retirement planning corpus is their innate tendency to stick to low return investment for their long-term goals. This is where a qualified retirement planner can be useful, by performing a scenario analysis exercise and showing you the real cost of your risk aversion. For instance – a SIP of Rs. 10,000 per month in an aggressive, small cap fund yielding 13% per annum can grow to more than 4.3 Crores within 30 years. The same amount saved in a life insurance policy will likely yield a paltry sum of Rs. 83 lakhs. That’s a very significant cost to bear to stave off volatility, especially considering that investing through systematic investment plans can reduce risks in the long run.

What if your spouse and you disagree on the degree of risk to be taken for you retirement planning goal? It is, after all, a joint endeavour and both viewpoints need to be taken into account. If this is the case with you, it would be sensible for the retirement planner to gradually introduce higher yielding SIP funds in the retirement planning portfolio. Over time, as both partners become equally comfortable about the aggressive asset allocation, a portfolio shift can be implemented.