With changing lifestyles, aspirations and career goals, some people are choosing to tie the knot late. This trend has led to couples becoming parents at 35-40 years of age. And after a child is born, many people are caught off guard if they haven’t planned well. So such parents have dual responsibilities - fulfilling the goals of their children while ensuring that their own retirement is taken care of.
In this article, we will look at how advisors can help clients who have become parents late.
Save rigorously
Needless to say, those who have married at the age of 35-40 years need to save more to meet their as well as their children’s goals. This is possible only if clients cut down their expenses and this may require compromising on their lifestyle.
Advisors caution that taking too much risk to achieve short term goals should be avoided. Hemant Rustagi of Wiseinvest Advisors says that those who have started their family late should not put all their savings into equity. “Since parents financial responsibilities can continue even after retirement, it is always advisable to invest in less risky products. A right balance between debt and equity is essential,” advises Hemant.
Children education
The biggest concern for these parents is to fund child’s education. “By the time the child finishes graduation, parents reach the stage of retirement. They can take loan for their child’s education but they can’t take loan for their retirement. Thus, we advise our clients to take loans if necessary, but not to compromise with their retirement savings,” says Nikhil Kothari of Etica Wealth Management.
“Children may aspire to study abroad. However, we advise not to send children abroad if they have started late. Also, it can be difficult to fund for this goal,” suggests Suresh Sadagopan of Ladder 7 Financial Advisories.
Opt for a second career
Advisors suggest that people can opt for a second career in consulting firms or take up part time work. This will reduce some burden since the children will still be dependent on parents during the phase of retirement.
Don’t dip into retirement kitty
People have a tendency to dip into EPF or PPF to meet their other goals. “It is very important, to ensure that such clients’ do not dip into their retirement kitty. EPF or PPF should be used only for the purpose of retirement,” says Nikhil.
Longer term life cover
Also, Nikhil suggests that couples should take a life insurance which has a longer tenure. People usually take into account their own age while buying life insurance. However, couples who have become parents late need to factor in the age of their kids while buying insurance cover.
To sum up:
- Save aggressively, cut down on expenses
- Save in a mix of equity and debt
- Advise clients to work even after retirement
- Make sure that your clients don’t withdraw from retirement corpus to fund another goal
- Ensure that your clients have a health and life insurance to protect themselves and their kids from any unforeseen events
- Opt for a longer term life cover
