Retirement Plan Before Your Marriage: Why it makes sense? - The India Saga



Retirement Plan Before Your Marriage: Why it makes sense?

Consider a scenario in which someone inquires about your retirement strategy just before your marriage. Sounds strange, right? However, you…

Retirement Plan Before Your Marriage: Why it makes sense?

Consider a scenario in which someone inquires about your retirement strategy just before your marriage. Sounds strange, right? However, you must have heard about this mantra “Begin retirement financial planning as soon as you begin earning”. Experts seem to believe that this is an ideal age (before marriage) to begin plan retirement planning. Preparing your finances early in life, particularly for retirement, might help you effortlessly navigate your second innings.

What is Retirement Planning?

Retirement planning is the act of identifying one’s retirement goals and developing a detailed strategy to attain them. It includes recognizing multiple revenue sources, minimizing expenses, implementing a savings strategy, and managing assets and liabilities. Saving for retirement early in life or before marriage is a good way to plan for your financial future.

The Importance of Retirement Planning Prior to Marriage

Early retirement planning allows you to take advantage of the time when your investment can increase and generate benefits. You can save an extensive amount of money for retirement by devoting a small portion of your monthly salary on a regular basis. Knowing how much to save depending on your income can be easily done using a retirement calculator.

Healthy Financial Life: Investing in the correct retirement plan early in life allows you to live a financially independent life in retirement. This is important due to the limited sources of consistent income after retirement. The earlier you start investing, the more money you’ll have after retirement.

Cost Saving: Any insurance and investment plan purchased early in life can save a significant amount of money in premiums. Delaying the investment process is never advisable for long-term investment objectives.

Advantages of Early Retirement Planning

Before embarking on a new journey with your life partner, you must first protect your own and your spouse’s financial future. We all know marriage entails commitment and obligations; hence, you should begin retirement planning by investing in long-term plans, including retirement investment options, for the following significant advantages:

Ensures higher return on investment: Compound interest can make investing worthwhile at an early stage. It is the interest you earn on your principal investment plus any previously collected interest. You can easily know the return on your investment using a retirement calculator. As a result, if you begin putting together retirement investments in your mid-20s or before marriage, you will have more time for them to grow and profit.

Unprecedented emergencies: Emergencies don’t knock on the door before coming. A retirement fund can assist you and your family in dealing with any unexpected circumstance, particularly a medical emergency that requires a significant amount of money. With the best retirement plan, you may access your money whenever you need it.

Provides tax benefits: If you and your spouse begin investing in retirement investment alternatives, you will be able to benefit from exemptions from taxes on your income. Section 80C of the Indian Income Tax Act of 1961 exempts the premium paid for a retirement plan from taxation.

Reduces the burden: Before starting a family, you will have fewer duties and expenses. However, if you marry and begin planning your family, the jar of responsibilities expands. By putting a set amount into the retirement jar at an early stage, you will be able to eliminate the strain of accumulating a large sum within a few years before retiring.

Certain aspects to know about  Early Financial Planning.

Managing finances is difficult, particularly when you are young and have little experience in financial planning. To assist you with this process, here are some ideas for those looking to begin their investment journey:

Determine Retirement Needs: When planning for your post-retirement expenses, you must be practical. This will assist you in determining the appropriate amount for your retirement portfolio. When analyzing expenses, keep in mind the medical costs associated with age.

Plan your budget: Keeping an eye on your costs is critical. This is the first step in saving for retirement. You must organize your income so that after covering your everyday expenses, including funds for well-being, you have sufficient funds to invest in your future.

Portfolio Allocation: When you start planning your retirement, you should diversify your investment portfolio. It entails diversifying investments among asset classes in order to lower the total risk of the investment. Thus, you should avoid including assets that are significantly connected with one another.

Should married couples have a joint retirement account?

A joint retirement account can be quite useful for couples. It can also instil the habit of careful savings and inspire you to find new methods to save. However, simply establishing a combined retirement account may not be sufficient in the long run. Because savings are a place to park your money rather than multiply it (unless you form a joint retirement fixed deposit or recurring deposit), they are not perfect for getting you through your golden years comfortably. Furthermore, while any bank account, whether single or joint, has the ability to double your money, the interest rates (which range from 6% to 7%) are insufficient to do so. 

Instead of joint retirement accounts, consider investing in a joint (or single) annuity pension plan or another type of retirement plan. An immediate or delayed annuity plan is one of the best ways to protect your golden years. Such a retirement plan provides a guaranteed source of income from the start of the annuity plan to the end of your or your spouse’s life. 

An annuity is a regular income source that is provided to the policyholder or the nominated individual under the annuity plan on a monthly, quarterly, semi-annual, or annual basis. You can select between an Immediate and Deferred Annuity Plan.

Mostly, these are the annuity options:

Immediate life annuity: As soon as the annuity plan begins, the annuitant begins receiving payments that will last his or her entire life. In the event of his/her death, the spouse receives the annuity payments.

Immediate Life Annuity with Return of Purchase Price: As soon as the annuity plan starts, the annuitant begins receiving payments for the rest of his or her life. In the event of his/her death, the spouse receives the annuity payments. When both annuitants die, their nominated nominee receives the complete purchase price paid by the annuitant when purchasing the annuity plan as a death benefit.

Wrapping Up

You may build a solid financial wall for yourself by adhering to the motto, “Planning ahead of time keeps you ahead of the curve.” This requires some financial planning considerations to navigate future risks. You must plant the seeds of a retirement plan as soon as feasible in order to reap its rewards in the future.