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Dual Incomes To Dream Retirement: DINK Couple’s Guide

By setting clear retirement goals and managing surplus income with proper investment tools, dual-income no-kid couples or DINKs will be better off financially, mentally, and socially in old age.

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Tirth Dhiren Gala, CA & CFA, Moksh Finserv
Photo: Tirth Dhiren Gala, CA & CFA, Moksh Finserv
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Many of us aim to save more for retirement as our income grows over time. However, the idea of saving more with a surplus income isn’t always true, especially since higher income often leads to higher expenses. This trend is particularly pronounced in families where the couple have no kids. These couples are commonly known as DINKs, or Dual Income No Kid Couples.

It has been observed that with two earning members having fewer future responsibilities, these couples have tendency to indulge in higher spending habits. There are typically two types of expenditures: mandatory and discretionary expenses. Mandatory expenses include things like rent, loans, and bills, which tend to increase over time due to inflation. On the other hand, discretionary expenses cover lifestyle choices such as parties, travel, and luxury items. The real danger lies in overspending or giving in to the temptation of extravagant purchases. Unfortunately, it is often seen that couples get carried away with discretionary spending instead of prioritizing and securing future with their time and money.

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Moreover, global trends indicate that as these couples age, they start feeling isolated as their social circles shrink and others prioritize their families. Consequently, many plan to fulfil their dreams of travel or exploring new hobbies in retirement. This phenomenon is becoming increasingly noticeable in India as well. However, turning these dreams into reality requires additional financial resources. These couples often have a surplus at their disposal which offers them the choice between indulging in a lavish lifestyle or making prudent investments towards a worry-free and early retirement.

In the traditional Indian mindset, retirement often coincides with the expectation of having children to rely on for support. However, for DINKs, careful planning for their later years becomes crucial. Moreover, with the rising life expectancy, the possibility of encountering health issues in old age looms larger. Thus, provisioning for medical expenses, hired help or assisted living facilities should be part of the plan which calls for an additional future cost. Considering these potential challenges, the first and foremost step is to have a comprehensive medical insurance.

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Another common pitfall is the tendency of such couples to invest in additional real estate, often viewing them as potential source of income during retirement. However, these couples overlook the practical challenges of managing multiple properties as they age. Also, liquidating real estate is easier said than done. Among the other available options, mutual fund can be one of the optimal tool for investment given the flexibility offered through investment channels like Systematic Investment Plans (SIPs). Here, couples have the option to select from various funds, such as equity, debt, or hybrid, aligning with their risk tolerance and financial objectives. This adaptability empowers DINKs to construct a personalized investment portfolio for long-term wealth accumulation, ensuring financial stability during retirement years.

How should DINKs plan their investment through mutual funds?

With dual incomes and no dependents, these couples typically have a higher risk appetite than most average investors. As a result, it is advisable for them to prioritize investing more in equities during the initial years and gradually transition towards debt or hybrid investments as they approach retirement age, thus ensuring added stability. While the general rule advises allocating 20% of income towards long term investments, these couples, with their surplus income, should aim to contribute even more to their investment portfolio. With this, they will be able to either accumulate more corpus at the age of retirement or even get an early retirement.

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For this, DINK couples should start by setting clear retirement goals basis their financial situation, like what they earn, own and owe. It is important to make a realistic budget that matches their goals and income, and to save money regularly. Following a disciplined approach, they can prioritize investing for retirement over unnecessary spending, using methods like Systematic Investment Plans (SIPs) and gradually invest more using Top-ups as their income increases. Also, upon receiving, extra money like bonuses or business profits, they can consider adding it to their retirement savings. After retirement, they can use tools like Systematic Withdrawal Plans (SWPs) to ensure consistent cash flow, allowing them to enjoy the sunset years of their life.

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Disclaimer

The views are personal and are not part of the Outlook Money editorial Feature.

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