9 in 10 urban Indians worry about savings not lasting through retirement: Study

The survey brought in some concerning findings such as 1 in 4 people has not even thought of retirement, while 50 per cent believed that their savings will be exhausted within 10 years of retirement.

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The ‘health preparedness index’ ranked the lowest at 41 emerging as a key concern.

Urban India’s Retirement Index (on a scale of 0 to 100) stood at 44, according to a recent study ‘India Retirement Index Study’ (IRIS) that maps the retirement preparedness of consumers in India.

The India Retirement Index Study was done by Max Life Insurance in partnership with Karvy Insights. The retirement-focused survey reveals the state of urban India’s preparedness to lead a healthy, peaceful, and financially-independent retirement life.

The study measures retirement preparedness on the basis of 3 components – health, financial and emotional index. The degree to which Indians feel financially secure for retirement or the ‘financial preparedness index’ stands at 50, indicating concerns over financial wellbeing. The ‘emotional preparedness index’, with respect to community support including family and friends for emotional, social needs during retirement, scored high at a notable 62. The ‘health preparedness index’ ranked the lowest at 41 emerging as a key concern.

The survey brought in some concerning findings such as 1 in 4 people has not even thought of retirement, while 50 per cent believed that their savings will be exhausted within 10 years of retirement. Along with that, for most people retirement was not amongst the top goals of investments/savings and only 2 out of 5 invest towards retirement. 67 per cent of urban India considers life insurance as the most suitable product for retirement savings.

Some of the key findings that highlight India’s outlook, priorities and challenges, towards retirement and retirement planning;

  • Urban India’s outlook towards retirement: Retirement evokes positive sentiments, yet the survey revealed that 1 in 3 Indians does not want to retire. While health and financial preparedness for retirement is low, the survey reveals that urban Indians have an overall positive outlook on retirement. 68 per cent associate it with positive thoughts such as more time to take care of family, hassle-free living and greater independence. Despite this, 33 per cent of respondents did not want to retire. 19 per cent cited they prefer to retire between the ages of 56 and 60. In comparison, 12 per cent preferred to retire even later between 61 – 65 years.
  • Attitude towards retirement investment: The report states, 47 per cent of urban Indians invest in retirement for financial independence. Due to an overwhelming sense of insecurity, 47 per cent of Indians are investing 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.
  • The ideal age to start planning: The report states that, while 70 per cent are aware of retirement corpus amount, yet 1 in 4 believe the ideal age to start planning after 65 years. According to the survey, nearly 80 per cent of the respondents feel they should have started investing earlier towards retirement. 41 per cent said it should be done along with other financial responsibilities. At the same time, 26 per cent or nearly 1 in 4 believe that the ideal age to start planning for retirement is when they reach 65 or their phase of second innings, further widening the gap towards sound retirement planning.
  • Depend on children for retirement support: The survey found that 45 per cent believe their children will aid them in old age whereas 36 per cent said they have adequate family wealth or other financial sources which will cater to their needs during retirement. A concerning 23 per cent said they haven’t even thought about retirement planning.
  • Investing in various retirement products: 67 per cent of urban India consider life insurance the most suitable product for retirement savings; only 40 per cent have invested in it. Bank deposits were found to be the second most suitable product by 41 per cent. 31 per cent cited real estate as most suitable, 26 per cent said physical gold and 25 per cent preferred to invest in mutual funds/ETFs/SIPs.

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