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Why is it Good to Have a Retirement Plan Before Your Marriage?

An early retirement plan is important as it helps prevent the situation of running out of money at the time of retirement. Read ahead to know more about it.

  • 2,534 Views | Updated on: Jun 14, 2024

Imagine a scenario where someone asks you about your retirement plan just before your marriage. Sounds weird, right? But let us tell you, this is the perfect age to plan for retirement. Early retirement planning is as important as short-term goals planning.

    Key Takeaway

  • Start retirement financial planning as soon as you start earning.
  • Compound interest plays a crucial role in the case of early investments.
  • Planning early or before marriage can reduce the burden of the future.
  • You and your spouse can get tax benefits if you invest in a retirement plan.
  • You must have a diversified investment portfolio with different weightage for each asset.

Today’s generation generally spends more than they save. They are casual about financial planning and have less room for savings and investments. However, planning funds early in life, especially for retirement, can help you easily sail through your second innings. Want to know more? Read ahead.

What is Retirement Planning?

Retirement planning refers to the process of determining one’s retirement goals and creating a comprehensive strategy to achieve them. It includes identifying various income sources, limiting expenses, implementing a saving plan, and managing assets and liabilities. It is advisable to save for retirement early in life or before marriage to plan your financial well-being.

The Importance of Retirement Planning Before Marriage

Early retirement planning gives you the advantage of the time for the investment to grow and provide benefits. By allocating a small part of your monthly income regularly, you can have a huge chunk at the time of retirement.

Moreover, you will better understand the importance of early retirement planning with the following point:

Healthy Financial Life

Investing in the right retirement plan early in life gives you a financially independent life after retirement. This is essential because of the restricted sources of regular income post-retirement. The earlier you start investing, the more money you get after retirement.

Health Coverage

There are many options in retirement plans which provide health coverage as well. This saves your money, which otherwise would have gone into buying health plans for future medical uncertainties.

Cost Saving

Any insurance and investment plan bought early in life can save a good amount of money in terms of premiums paid towards the plan. Delaying the investment process is never recommended for long-term investment goals.

Benefits of Early Retirement Planning

Before starting a new journey with your life partner, you must financially secure your and your partner’s future. As marriage is about commitment and responsibilities, you should start investing in long-term plans, including retirement investment options, because of the following major benefits:

Also Read: 7 Benefits of Early Retirement Planning in India

Secures Higher Return on Investment

Compound interest can make your investments worth doing at an early stage. It is the interest you earn on your principal sum, along with previously accumulated interest. Therefore, when you start planning retirement investments in your mid-20s or before getting married, you have more time for those investments to grow and benefit.

Unprecedented Emergencies

Emergencies do not knock on the door before arriving. A retirement corpus helps you and your family sustain any kind of sudden situation, especially a medical emergency which needs a good amount of money. By having the best retirement plan, you can anytime fall back on your funds according to the requirements.

Gives Tax Benefits

You and your spouse can avail of the tax benefits on your income if you both start investing in retirement investment options. You can get tax exemption on the premium paid for a retirement plan under Section 80C of the Indian Income Tax Act, 1961.

Reduces the Burden

Before starting a family, you have fewer responsibilities and expenses. However, once you get married and start planning your family, the jar of duties grows bigger. By adding a particular amount into the jar of retirement at an early stage, you will be able to eliminate the burden of saving a huge chunk within a few years before getting retired.

Tips for Early Financial Planning

Managing finances is not easy, especially when you are young with limited knowledge about financial planning. To help you in this process, here are some tips for young people planning to start their investment journey:

Determine Retirement Needs

You must have a realistic approach while planning post-retirement expenditures. This will help you determine the required amount for your retirement portfolio. While evaluating the expenses, you must keep in mind the medical expenditure that comes along with aging.

Plan your Budget

Keeping a check on your expenses is extremely important. This is the first step to save for retirement. You must allocate your income in such a way that after your daily expenses, including funds for recreation and wellness, you have a significant amount to invest toward your future.

Portfolio Allocation

Once you start planning your retirement, it is important to diversify your investment portfolio. It involves spreading investment across different asset classes to reduce the overall risk associated with the investment. Thus, you should not aim to include assets that are highly correlated to one another.

Wrapping Up

By following the mantra of “planning in advance keeps you ahead in the future,” you can build a strong financial wall for yourself. This involves doing some financial planning calculations to navigate the risk of the future. You must sow the seed of a retirement plan as early as possible to reap its benefits in the future.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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