India’s rich heading into a poor retirement2 min read . Updated: 19 Dec 2019, 08:55 AM IST
- The Wealth Expectancy Report 2019 released by Standard Chartered Bank showed that India’s rich have a wealth expectancy of just ₹3.67 crore
- Wealth expectancy is the net worth that rich individuals are estimated to have at the age of 60
The Wealth Expectancy Report 2019 released by Standard Chartered Bank showed that India’s rich have a wealth expectancy of just USD 518,000 ( ₹3.67 crore). Wealth expectancy is the net worth that rich individuals are estimated to have at the age of 60. According to the report High Net Worth Individuals (HNWIs) have a wealth expectancy of USD 986,000 ( ₹7 crore) followed by USD 374,000 ( ₹2.65 crore) for the affluent and USD 195,000 ( ₹1.38 crore) for the emerging affluent. According to the bank, these figures are woefully short of funding retirement for the wealthy whose life expectancy at the age of 60 is 23. A net worth of USD 518,000 will give monthly consumable wealth of just USD 1,332 ( ₹94,485) according to the report far short of their current income of USD 4,969 and desired income of USD 4,449 per month. The consumable wealth is simply the running down of assets over time, given a life expectancy. The predicted wealth levels will fund their desired retirement lifestyle for just 5-9 years for the different sub-groups.
“India remains one of the most buoyant economies in the world, with a growing class of wealthy citizens to match. Yet Indian wealth creators have relatively small wealth expectancy, including a low level of statutory pensions, resulting in a large wealth expectancy gap: only 32 per cent will achieve more than half of their aspirations, and 68 per cent will be less than halfway there," said the report. The top goal of India’s wealth creators was children’s education, followed by setting up or funding their own business and buying an investment property.
The bank interviewed 1,000 wealth creators in the 10 markets covered in the study and used the financial information and used the financial information they provided to calculate their wealth expectancy. Wealth expectancy was calculated by taking the total net wealth at age 60, including financial assets and property assets, less any liabilities such as mortgages and child-raising expenses. Total wealth expectancy does not include any available state pension or other benefit provisions.
The report also found that 77 per cent of Indian wealth creators believe money is essential to happiness, more than in any other market in the study. In fact, wealth is considered so important that many Indian wealth creators are anxious about their financial future: 64 per cent of the affluent group said they worry so much about money that it affects their health, and 62 per cent of the emerging affluent felt so overwhelmed by financial planning they fail to put a plan in place at all. The emerging affluent are also the least likely group in India to seek professional investment advice, said the report.
“In our clients, we see that people are not even thinking about retirement. They are mostly saving for short term goals. Whatever retirement saving is there is mostly through mandatory deductions like EPF," said Vinit Iyer, a Pune-based independent financial advisor. The report’s findings highlight the importance of a stronger push towards retirement savings in India’s financial system. They also highlight the risk of decreasing the percentage of mandatory contributions to instruments like EPF.