Retirement top goal for young parents, not child’s wedding

Gone are the days when children’s wedding expenses made it to the top of financial goals for parents. Young parents in India are beginning to reorient their goals, with stronger emphasis on their own retirement and children’s education. At a time when social media is being bombarded with glitzy celebrity wedding pictures every few months, Gaurav Verma, 43, director of government and regulatory affairs of a medical technology company, and his wife Gunjan don’t want to specifically save for the weddings of their two daughters Vasudha, 16, and Veda, 8. They instead want to focus on their own retirement and their daughters’ careers.

The Verma family is not an aberration, and the way Gen X is prioritising its goals is evolving significantly. Gen X includes people born between 1965 and 1980, according to Pew Research Center. “People are taking their own retirement seriously and are waking up to the fact that even after regular income stops, expenses won’t stop or reduce. Also, Gen X parents don’t want to depend on anyone for their needs,” said Shweta Jain, certified financial planner, chief executive officer and founder, Investography Pvt. Ltd.

Mint spoke to at least five financial planners, including Jain, who confirmed that the urban mass affluent was now more focused on their retirement and the education of their children rather than organising their wedding. According to Aegon Retirement Survey 2017 by Aegon Center for Longevity and Retirement, 59% Indians are habitual savers and make sure they save for retirement systematically, while, globally, just 39% people are saving for retirement in an organised manner.

Education over wedding

Patnala Basanth Kumar, commissioner of Visakhapatnam Metropolitan Region Development Authority was recently in the news for organising a simple wedding for his son, where the bride and bridegroom’s family spent about ₹18,000 each. Though Kumar’s son Abhinav is a bank manager and his daughter-in-law a doctor, the families decided to avoid the pomp and show.

“Most parents now set a base limit of a few lakhs and say this will be my contribution rather than saying ‘I will not pay for the wedding at all’. It could be even jewellery if not cash,” said Jain.

The Vermas, too, want their daughters to manage the wedding expenses, but they wish to host a reception for the girls and hand over heirloom jewellery. “Why should we give all our hard-earned money to someone else to take care of our daughters? Instead, we would want to spend on their education and make them capable of taking decisions for themselves,” said Gaurav.

Pune-based Vijay Kumar Nudurumati, general manager at a leading conglomerate, who has a 19-year-old daughter Vaishnavi said he’d encourage his daughter to share the wedding expenses as that would give her a sense of responsibility and make her realise where all the money is going. “We’ve told our daughter that spending for her wedding would be more of a secondary provision,” said the 51-year-old. Nudurumati and his wife Padma are focusing only on planning their daughter’s education and their own retirement so they can live independently.

To be sure, expenditure on Indian weddings is still large. According to a 2018 report published by Evoma, a Bengaluru-based wedding planning company, Indian families spend about 20% of their wealth on their daughter’s wedding. The total value of the Indian wedding industry is estimated to be over $50 billion, second only to the US, which is pegged at $70 billion.

In India, families typically overspent on weddings earlier, but with education becoming more expensive, the focus has shifted. “People are beginning to realise that when you spend on weddings, you’re actually just spending on other people. Whereas, education is for the child’s future and self development,” said Mrin Agarwal, financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra. “Money spent on weddings is never going to pay you back,” she added.

The new retirement goal

The trend of parents reorienting their goals from children’s wedding to their education and their own retirement is a recent phenomenon, and the salaried class seems to be leading the trend.

“It’s not that parents don’t want to spend on the child’s wedding but the awareness for saving for retirement is picking up. People don’t want to rely on their children is one reason and the other is people today don’t want to work till the age of 60,” said Mrin Agarwal, financial educator, founder director of Finsafe India Pvt. Ltd and co-founder of Womantra.

Nudurumati said focusing on saving for retirement stems from the fact that in today’s nuclear families, children neither have the time nor the resources to take care of their parents in addition to their own families. “Having lived an independent life, the idea of becoming a dependant after retirement is not sweet. This triggered the idea of planning for retirement early on,” he said.

The Vermas already have a plan in place for their retirement. “At the right age, we’ll mobilise our funds and move to our home-town in Punjab, closer to the rest of our family. There, we plan to work among under-privileged children,” said Gunjan.

Gaurav’s parents were medical professionals and has no pension, but Gunjan’s parents were in government service and received a pension. “Having seen both the cases and being a subject matter expert in a private organisation, we realised the importance of building a retirement corpus,” said Gaurav.

Another reason for the reorientation is the fact that children are getting married relatively later in life compared to the previous generations which means they may be able to save up themselves. “Also, with children moving to different countries, they may not even want to have a grand wedding so parents today don’t want to compromise on education or retirement goals by planning for a wedding which may not happen at all,” said Jain.

Lifestyle expenses have gone up too. People are now spending on travel and better quality of life rather than putting away all the money for a wedding.

The next step

Planning for the two goals of retirement and children’s education is critical. “Before you start off, it’s important to make your children realise that not everything is going to be paid for. The biggest mistake most parents make is assuring children that they would pay for the most expensive education but this just puts the parents in a lot of distress,” said Agarwal.

Parents should get the child to contribute in some way even for their education. For example, they can pay for the tuition and ask the child to pay for the living expenses. If you’re taking an education loan, ensure your child is paying at least a part of it.

“Don’t bring up your children to believe that you’ll take care of everything and they can do whatever they wish to. The same applies to wedding expenses as well,” added Agarwal.

Make solid estimates while you plan for the child’s education and your retirement by taking into account all factors such as inflation and your income level. If you have specific interests such as travelling, consider them too when you plan for retirement. With your intention to retire sooner, don’t fall prey to financial products that are of no good. “Avoid falling for ‘get rich quick’ schemes,” said Jain.

Keep your goals reasonable and ensure there’s a good balance when you save for them. Agarwal said retirement planning must start before you plan for your child’s education because nobody’s going to help you in your retirement. It’s important to have a sufficient corpus in place.