Despite growing inflation, retirement planning is still not among the top priorities for most Indians. While Indians invest in various schemes and policies during their job life, only 24 per cent have even thought of savings for their retired life, revealed a recent study by Max Life Insurance, India Retirement Index Study. It was conducted among the age group of 35-65 years, across 28 different cities in India in November 2021.
Financial planners stress on the importance of retirement planning as that is a stage when your income sources dry up to a large extent. Moreover, with rising life expectancy, there are more number of years to provide for after retirement.
“As life expectancy rises and health patterns shift, retirement is set to become an important priority for a sizeable part of the population. Accentuated by the pandemic, the recent economic climate witnessed lower wage growth, financial uncertainty and job losses, resulting in further straining individual, household incomes. It is, therefore, important to understand the sentiment and challenges of our consumers today as we prepare for tomorrow,” says Prashant Tripathy, managing director and CEO, Max Life Insurance.
The study finds that India's Retirement Index Study (IRIS) stands at 44, with looming concerns over health and financial preparedness and high emotional preparedness as India banks on support from family or society. IRIS denotes the degree to which Indians feel prepared for the retired life on a scale of 0 to 100.
Purpose of Saving For Retirement
Of those who do invest for retirement, more than 60 per cent invest in retirement planning specifically to manage their health and medical expenses in their sunset years.
While 63 per cent of the people find it critical to save for medical emergencies during the retired life, hardly 8 per cent of the respondents said they invested for emotional support, finds the study.
Almost 47 per cent of Indians invest for retirement to ensure there is ‘no need to depend on others for financial needs’, with 38 per cent investing with the aim to ‘maintain a lifestyle during retirement’.
Barriers For Retirement Planning
The majority of the respondents believe in starting retirement planning from an early working age; 80 per cent of older age group respondents regret not starting earlier. But 23 per cent of them have not even thought about retirement planning
One of the major reasons that refrain people to save or invest for their retirement is a psychological setup that compels Indians to believe that family will take care during their old age. While 45 per cent of the Indians believe that they will get support from their children during retired life, more than 35 per cent believe that they have enough family wealth or other sources to cope up in the retired life
Lack of Financial Preparedness
Financial preparedness for retirement is low in most of the cities. Although, health has been recognised as the most critical aspect in retired life, the majority of the respondents did not go for a health check-up in the last three years. The tendency to neglect health is highest among people in the age group of 41-45 years (more than 50 per cent in this age group have not gone for a check-up in the last three years).