Retirement planning: An unpenetrated concept in India

When we talk about retirement planning, people often shrug it off, giving irrational reasons. For many, retirement planning is a low propriety financial goal, where a child’s education, marriage, and even lifestyle plans such as international vacation comes before retirement planning in their priority list. Even the recent retirement survey, conducted by PGIM India Mutual Fund, highlights the same.

The survey revealed that retirement plans rated low on people’s priorities, with children, spousal security, and even fitness & lifestyle ranking higher. This shows a lack of awareness of the right kind of financial planning even among those, who did plan for retirement. At the same time, the survey also uncovers that Indians are seeking better quality advice from employers & financial advisors and are exploring products to balance aspirations as well as financial stability. Even though retirement is not a priority, Indians are more anxious about their future and worry about their cost of living, healthcare issues & the lack of family support in the future.

Image Source: PGIM India Mutual Fund

Some of the key findings of the survey unveil that, the income of urban Indians is more tilted towards spending which forms almost 59 per cent of their income. This suggests that savings and investing is pretty less. In turn, this is making people increasingly anxious about their future.

The survey also showed that almost 51 per cent of the respondents have not made financial plans for their retirement. Further, those who are unprepared for retirement, 89 per cent of them do not have any alternative income.

Even while planning for retirement corpus, only one among five Indians has accounted for inflation. This reveals that those who have planned for retirement, most of them must have underestimated their retirement corpus. In fact, 48 per cent of respondents are not even aware of the amount required for life after retirement, while 52 per cent are aware of the corpus required.

Further, among the 48 per cent of respondents who were unsure of their required corpus, 69 per cent of them ended up making no retirement plan at all. Conversely, of the 52 per cent, who say that they are aware of the required corpus, 66 per cent have a retirement plan. However, when it comes to investing for retirement, 41 per cent of the respondents said that they had concentrated their retirement investments on life insurance, while 37 per cent preferred fixed deposits.

This shows a strong need for Indian financial services to focus on retirement planning to help Indians make astute financial decisions and ease their anxieties. However, 39 per cent of the Indians say that they have no trusted advisor to guide their retirement planning as one of the concerns related to retirement.

Retirement planning in India as a concept is still unpenetrated, which is a very unfortunate thing. This is because retirement is one such thing for which you won’t get any loan unless you opt for a reverse mortgage, which is also not popular in India due to emotions attached to the asset. Hence, people should think about whether they have enough money invested today to take care of their expenses and health cost during retirement. If not, better late than never, start planning for your retirement!