known unknown early retirement planning

Known Unknowns of Early Retirement Planning

What does a complex sounding concept like known unknowns of early retirement planning mean?

Let us dig right in to understand this.

It is hard to correctly predict how financial markets will perform over the next 10-20 years.

Several things will impact future inflation & investment returns that we don’t even know about today.

For example, a future pandemic, a natural disaster, or some major political event could upend the financial markets.

We can neither easily predict nor control these things that can impact financial markets.

These events are the so-called unknown unknowns.

On the other hand, there are some factors in your life that can be categorised as the known unknowns.

These are the big life decisions that you know you will have to make at some point in the future.

You have a degree of control over these decisions.

These decisions will impact your early retirement plan, but you can’t predict in advance how they will pan out.

It all depends on the choices you make when you reach the decision-making stage.

These are the so-called known unknowns of early retirement planning.

The Known Unknowns of Early Retirement Planning

There 3 major known unknowns of early retirement planning are decisions about your financial dependents, marriage, and kids.

known unknown retirement planning

Financial Dependents

Depending on your personal situation you may have some financial dependents. This is applicable even if you a single.

The first place to look at is the financial condition of your parents.

Are they financially independent or will they depend on you to take care of them financially in their retirement?

In case they are not financially independent, then your personal financial plan needs to cater for their financial needs as well.

You can help them prepare for their retirement even as you prepare for your own.

If you are parents are still in employment, you can help them save more effectively by using the knowledge you are gaining on your own financial journey.

The other thing to consider is their health-care coverage.

Medical costs go up with age and an unplanned medical expense for your parents could hit your own early retirement corpus.

Therefore, it is important to check if they have adequate financial coverage to cope with any unexpected medical emergencies.

This can be achieved via adequate insurance or a separate medical corpus.

Single Parent

While your dad may be financially independent due to his pension, will the same be applicable for your mom if he is no longer around?

Effective planning for the financial wellbeing of your parents should also include the phase when only one of them will be around.

Your parents are also the target group for being sold bad financial products. They are more likely to easily trust a financial salesperson.

As a result, they could end up with expensive and unsuitable financial products being sold to them.

This means you should be taking an active interest in how your parents are managing the retirement funds they have saved up.

You can help your own retirement preparations by helping them stay on track.

One of the best gift that parents can give to their kids is to be financially independent in their retirement.

Your parents may or may not be in that category for any number of reasons.

However, by being aware of their financial condition, you can plan your own journey more effectively.

This will also help you avoid any unpleasant surprises down the road as you get closer to your own early retirement.


Who you decide to marry and how life pans out thereafter has an enormous impact on your overall wellbeing.

The decision to get married and the financial personality of your spouse will have an out-sized impact on your ability to retire comfortably.

And this is not an under-statement.

Here is why:

Relationship with Money

We are all quite different when it comes to how we view the role of money in our lives.

Some prefer to live in the moment and not worry too much about the future.

Some others may border on extreme frugality and feel guilty about spending on even the smallest of luxuries.

While some couples run their financial accounts individually, when it comes to early retirement planning it is a joint decision.

It needs active coordination from both partners.

It can become incredibly challenging if both of you are not aligned on your common relationship with money.

Saving money for your early retirement corpus requires a disciplined approach to handling money.

While you may be good with saving but if your spouse is a natural spender that can make things particularly challenging.

Imagine you saving diligently for a month and then your spouse blows it all up on a single impulsive purchase.

Not only will that harm your retirement corpus, but it will significantly impact your relationship as well.

Spouse’s Dependents

Once you get married you may be taking over some new dependents.

It will be anyone that is financially dependent on your spouse.

This could be your in-laws or anyone else that your spouse would like to support financially.

As a result, the issues that we looked at with respect to your dependents will become applicable for your spouse’s dependents too.

The same analysis you conducted for your own dependents, should be conducted for your spouse’s dependents too.


Here are 2 statements about kids:

  • They are a bundle of joy (most of the time).
  • They can be a money pit.

Choosing if you should have kids is a huge life and financial decision.

There are varied ethical, biological, personal, and social factors that go into this decision.

It is also a decision that will impact your preparation for a decent retirement corpus.

Choosing not to have kids can significantly reduce the timeframe for you to retire. On the other hand, having children can push back that date back by many years.

Children can impact not just the sum of money you need to set aside to bring them up but also require a big commitment of your time in the prime years of your life.

The opportunity cost of having kids could even mean a significantly delayed or frugal retirement.

It is a financial commitment that can last a couple of decades or longer depending on how long you choose to support your children financially.


Planning for retirement is focussed on the future.

Future by its very nature is unknown and uncertain.

While you may not be able to predict the future moves of the market, but some life decisions you make will impact how the future turns out for you.

These are the known unknowns when planning your early retirement.

The decisions you make about your financial dependents, getting married and having kids can significantly impact your ability to retire early at your own terms.

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