Planning retirement without kids? Here’s how to make the most of it
Published by Mint
Abhishek Kumar's role: Quoted
Abhishek Kumar said couples without child-related costs find retirement income easier to reach, cautioned that both products lock up capital needed in emergencies, and suggested a planned withdrawal from a mix of equity and debt funds.
What Abhishek Kumar said
Is retirement planning easier for couples without children?
In my view, yes. A couple that does not have to pay for a child's education, a wedding and the many other costs of raising children has far fewer goals competing for the same money, so reaching the retirement income they need becomes much easier. The question then is how to turn that extra room into a stable income for later life without taking on avoidable risks.
Are joint life annuities and reverse mortgages risky for retired couples?
Both carry substantial risk, because in each case the principal is locked up, while an older couple may suddenly need a lump sum for a medical emergency. Under a reverse mortgage, you cannot sell or move out of the home even when an emergency strikes. A joint life annuity, on the other hand, asks the couple to commit a large amount upfront that then stays locked in for good.
What can a couple without children use instead of an annuity or reverse mortgage?
If it is planned out well, I think a mix of equity and debt held through mutual funds, with a systematic withdrawal plan (SWP) to draw a regular income, may suit many such couples better. The money stays invested and within reach for emergencies, instead of being tied up in a single product. The key is the planning: how much to hold in each and how much to withdraw.
In our words, from what he said in the piece. General information, not personal advice.
More of Abhishek's views on retirement
The article looks at retirement planning for double-income couples without children. It explains joint life annuities, which pay while either spouse is alive, and reverse mortgages, which pay against a home, along with their limits such as inflation, lock-in, high interest and bank conditions.
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Planning retirement without kids? Here’s how to make the most of it