59% Indians Worried They Would Run Out Of Funds Before Their Retirement, Reveals Study

About 59 per cent of Indians are worried they would run of out funds before their retirement, according to the Insurance Indian Retirement Index Study (IRIS), a survey conducted by Max Life Insurance.

This, even as most Indians think that retirement is a very distant goal, and thus, planning and investing for retirement doesn’t feature on the top of our checklist, the study found.

Interestingly, only 41 per cent of Indians are prepared in terms of health, while 49 per cent of the respondents said they are financially prepared.

India’s retirement index stood still at 44 (on a scale of 0 to 100) in comparison to last year, the study said, adding that taking small steps towards building the corpus for a distant goal could help people achieve a bigger corpus for their retirement needs.

Says Prashant Tripathy, managing director and CEO at Max Life Insurance: “As India’s expectancy increases and health trends change, the country’s elderly population is projected to grow nearly 41 per cent to 194 million by 2031. As industry and wider ecosystem take steps in a positive direction, the robust and well-represented study reveals that Indians are also realising the need to plan for retirement early.”

Financial Planning For Retirement

India has a huge retirement-to-savings gap, which is expected to widen in the future decades, according to a World Economic Forum (WEF ) report.

According to the survey, 59 per cent of respondents believed that their savings will get exhausted within 10 years of planning for their retirement. In other words, they will exhaust their corpus before their retirement starts. A huge 86 per cent of people over the age of 50 years, in fact, regretted that they hadn’t yet started investing for their retirement sooner.

Nevertheless, there has been a gradual increase in awareness in terms of the right age to start planning for early retirement, the study revealed.

A significant 44 per cent of those surveyed said that retirement is the first thing one should plan for when they start working, while 33 per cent said one should start planning for retirement before the age of 35 years.

Tripathy adds: “As industry and wider ecosystem take steps in a positive direction, the robust and well-represented study reveals that Indians are also realising the need to plan for retirement early. However, the awareness is yet to translate into action in terms of proactively saving and investing.”

The study, however, highlighted that a huge 37 per cent of respondents were yet to invest in any retirement financial goods.

Dependence on family money and children remained a major impediment to retirement investment, the study said. A huge 42 per cent had not invested for retirement because they believe they have enough family wealth to fall back on, while 39 per cent believe their children will take care of them, while 23 per cent have no idea where to begin, suggesting a significant gap in financial literacy, the study found.

“Amid the continued skyrocketing inflation and market uncertainty, a greater 29 per cent, up from 18 per cent previously, see it as a crucial trigger for retirement preparation. Family and/or spouses encouraged retirement preparation to almost 50 per cent of urban Indians, while financial advisors nudged 43 per cent. This tendency indicates that a proactive approach to retirement preparation is still lacking,” the study revealed.

The study further said that when it came to the share of their wallet for retirement investments, 69 per cent believed life insurance was the best product. The second-most invested asset for building a retirement corpus was fixed deposits at 28 per cent, followed by health insurance at 19 per cent. Just 42 per cent of respondents said they were investing for their retirement.

Planning Healthy Retirement

About four out of five Indians (79 per cent), to be precise, believe they will be “hale and hearty” when they retire, though only 40 per cent exercise regularly, according to the study. Only half of the respondents (55 per cent) agreed to have undergone any preventative or wellness check-up over the previous three years, despite the epidemic bringing attention to the significance of health and wellness. The remaining 45 per cent had not had a health examination during that time, the study said.

“When it comes to retirement planning, all Indians must embrace ‘earlier the better’ philosophy and start planning at a young age, to ensure their retirement years provide them with an opportunity to live a healthy and financially independent life,” Tripathy adds.

Emotional Preparedness For Retirement

Indians, when compared to the West, are focused on work and family, and usually do not have extracurricular activities or hobbies to invest their time in, so when the retirement clock kicks in, they might feel the urge to latch on to their work or family.

Despite the continued prevalence of nuclear families (65 per cent), urban India continues to rely heavily on family when making retirement plans.

One in two urban Indians, or 54 per cent, prefer to live with their offspring after retirement. In addition, 26 per cent of Indians—up from 21 per cent—now worry about being lonely in their later years