9 in 10 urban Indians worry about savings not lasting through retirement: Study
4 min read . Updated: 07 Dec 2021, 01:08 PM IST
Premium- According to the study done by Max Life Insurance Company Ltd. in partnership with Karvy Insights, urban India’s Retirement Index (on a scale of 0 to 100) stands at 44
Max Life Insurance Company Ltd., in partnership with Karvy Insights, on Tuesday launched the first edition of its ‘India Retirement Index Study’ (IRIS) that maps the retirement preparedness of consumers in India. The retirement-focused survey aims to reveal the state of urban India’s preparedness to lead a healthy, peaceful, and financially independent retirement life.
According to the study, urban India’s Retirement Index (on a scale of 0 to 100) stands at 44. The study further 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.
Commenting on the launch of IRIS, Prashant Tripathy, Managing Director and CEO, Max Life Insurance said, “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."
Through a self-administered digital study, 1800+ respondents were surveyed across 28 cities comprising 6 metros, 12 Tier I and 10 Tier II cities to understand urban India’s readiness to lead a healthy, secured and financially independent retirement life.
Sonia Pall, CEO, Karvy Insights, remarked, “IRIS presents us with useful insights with regards to urban India’s attitudes towards retirement savings, investments, and the overall idea of financial protection during one’s golden years."
The survey brought to light that 4 out of 5 Indians are hopeful of being ‘hale and hearty’ in their retirement years. 63% said good health would be the most important aspect for retirement followed by financial support (29%) and social support (8%).
URBAN INDIA’S OUTLOOK TOWARDS RETIREMENT
•Retirement evokes positive sentiments, yet 1 in 3 Indians do not want to retire
While health and financial preparedness for retirement are low, IRIS reveals that urban Indians have an overall positive outlook on retirement. 68% associate it with positive thoughts such as more time to take care of family, hassle–free living and greater independence. Despite this, 33% or nearly 1 in 3 respondents do not want to retire. 19% cited they prefer to retire between the ages of 56 and 60. In comparison, 12% preferred to retire even later between 61 – 65 years.
•Retirement readiness highest in West Zone and Metros, North and South Zones least prepared
With a retirement index of 49, West zone outperformed other regions in terms of overall preparedness towards retirement. East came a close second with retirement index of 45 with both North and South standing at 42. The survey also noted that the West zone was the most prepared financially, emotionally, and health-wise for retirement. Similarly, with a retirement index of 47, metros felt most prepared for retirement. Tier 2 cities demonstrated a retirement index of 44, followed by Tier 1 cities at 43.
ATTITUDE TOWARDS RETIREMENT INVESTMENT
• 47% urban Indians invest in retirement for financial independence
Due to an overwhelming sense of insecurity, 47% Indians are investing for retirement to ensure there is ‘no need to depend on others for financial needs’, with 38% investing with the aim to ‘maintain lifestyle during retirement’
• 70% aware of retirement corpus amount, yet 1 in 4 believe ideal age to start planning after 65 years
The survey found that 70% respondents were aware of the retirement corpus amount, highlighting urban India’s awareness on increasing costs and the financial requirements to sustain their current lifestyle during retirement.
According to the survey, nearly 80% of the respondents feel they should have started investing earlier towards retirement. 41% respondents said one should start planning for retirement along with other financial responsibilities. At the same time, 26% 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.
• 45% depend on children for retirement support
While identifying the challenges to retirement investment, the survey found that 45% believe their children will aid them in old-age whereas 36% said they have adequate family wealth or other financial sources which will cater to their needs during retirement. A concerning 23% said they haven’t even thought about retirement planning.
• Only 24% consider ‘savings for retirement’ as a financial priority, despite 56% believing that savings will be exhausted within 10 years of retirement.
The pandemic has further exacerbated long-standing issues around income generation, leading to 56% of the respondents believing that their savings will be exhausted within 10 years of retirement. Only 24% consider ‘savings for retirement’ as a financial priority
• 67% of urban India consider life insurance the most suitable product for retirement savings; only 40% have invested in it
The survey also highlighted Indians investing in various retirement products. 67% of respondents consider life insurance as the most suitable product for retirement savings whereas only 40% were found to be investing in it for their retirement. Bank deposits were found to be the second most suitable product by 41%. 31% cited real estate as most suitable, 26% said physical gold and 25% preferred to invest in mutual funds/ETFs/SIPs.
