A fifth of the total employed people said they don't anticipate any difficulty in independently managing their finances after retirement, said a HSBC report
Most of India’s working class is not planning for life after work with only one in three saving into a retirement fund. A fifth of the total employed people said they don’t anticipate any difficulty in independently managing their finances after retirement, said a report titled The Future of Retirement, the Cost of Ageing by HSBC.
HSBC polled 1,045 individuals in India for the report, and 17,405 people from across 16 counties and territories.
In India, people anticipate help from their family. Over 68% of working age people expect their children to support them at some point in their retirement. However, evidence from current retirees suggests such expectations are not met in reality, with only 30% receiving financial support from their children.
“You must start saving a percentage of your salary from the first pay check because the power of compounding can work wonders if you save for longer periods, say for 20-25 years," said Nisreen Mamaji, certified financial planner and founder, MoneyWorks Financial Advisors.
Globally, nearly half of the people in the working age are giving greater importance to living in the present and enjoying life now rather than planning for the future. As many as 56% people live on a day-to-day basis financially which could store up problems in the future, said the report. “Living costs have gone up so much today that most working people don’t save enough to plan their retirement but one should be able to set aside a small amount to avoid depending on others in their retirement," said Mamaji. While 51% are worried about residential care in their retirement, only 65% are aware about the costs of living in a residential home. About 19% people are saving for future nursing or care home fees.
As many as 69% people expect to continue working during retirement and 54% are hoping to start a business. But what most working age people don’t understand is the fact that retirement is likely to have two stages. The first stage is right after finishing work when you tend to be busy with familial commitments, agile and in better health. About 59% think this stage would last longer. The second stage is when you are likely to incur most costs and planning for this stage is most important. About 68% expect to fund this through pension schemes and only 54% said they’d fund it through personal savings.
You need to visualise the kind of retired life you want to lead and then make sure your cashflows are in sync with that lifestyle. For example, if you wish to travel more during your retirement, you will know how much money you need to keep aside.
It helps to separate additional income instead of spending it immediately. “Given growing expenses, it is a good idea to ensure money received from bonuses etc. goes into retirement savings," said Agarwal.
The report said managing finances is as important as planning them. Use online tools like saving calculators and budgeting apps to keep track of your money flows.If you think you can’t manage on your own, go for expert help.
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