9 out of 10 urban Indians worried about permanent savings till retirement: Study

According to the study, the retirement index of urban India (on a scale of 0 to 100) stands at 44. The study further measures retirement preparedness based on 3 components – health, financial and emotional indices. The extent to which Indians feel financially secure for retirement or the ‘Financial Preparedness Index’ indicating concerns over financial well-being is at 50. The ‘Emotional Preparedness Index’ in relation to community support, including family and friends, for emotional, social needs during retirement scores a remarkable 62. The ‘Health Preparedness Index’ is ranked lowest at 41 emerging as a major concern.

Commenting on the launch of IRIS, Prashant Tripathi, Managing Director and CEO, Max Life Insurance, said, “As life expectancy increases and health patterns change, retirement becomes an important priority for a large segment of the population. Driven by the pandemic, the recent economic climate resulted in further strain on personal, household incomes as a result of low wage growth, financial uncertainty and job losses. It is therefore important to understand the emotions and challenges of our consumers today as we prepare for tomorrow.”

Through a self-administered digital study, 1800+ respondents across 28 cities, including 6 metros, 12 Tier I and 10 Tier II cities, were surveyed to understand urban India’s readiness to lead a healthy, secure and financially independent retirement life. survey was conducted.

Sonia Pal, CEO, Karvy Insights said, “IRIS provides us with useful insights into the overall idea of ​​retirement savings, investments and financial security during one’s golden years in urban India.”

The survey revealed that 4 out of 5 Indians are expected to be ‘healthy and hearty’ in their retirement years. 63% said that good health would be the most important aspect of retirement followed by financial support (29%) and social support (8%).

Urban India’s approach to retirement

• Retirement sparks positive emotions, yet 1 in 3 Indians do not want to retire

While health and financial preparedness for retirement are low, IRIS shows that urban Indians have an overall positive outlook on retirement. 68% associate it with positive thoughts such as more time to care for the family, a hassle-free life and more independence. Despite this, 33% or almost 1 in 3 respondents do not want to retire. 19% said they prefer to retire between the ages of 56 and 60. In comparison, 12% preferred to retire later, even between the ages of 61 – 65.

• Retirement preparedness highest in the west and metropolitan areas, the north and south the least prepared

With a retirement index of 49, the West region outperformed other regions in terms of overall preparedness for retirement. The former came second with a retirement index of 45, with both North and South standing at 42. The survey also said that the West region was the most financially, emotionally and healthly prepared for retirement. Similarly, metros felt most prepared for retirement, with a retirement index of 47. Tier 2 cities exhibited a retirement index of 44, followed by Tier 1 cities at 43.

Attitudes to Retirement Investing

• 47% of urban Indians invest in retirement for financial independence

Owing to the overwhelming sense of insecurity, 47% of Indians are investing for retirement to ensure that ‘there is no need to depend on others for financial needs’, 38% said to ‘maintain a lifestyle during retirement’ ‘ for the purpose of investing.

• 70% are aware of retirement fund amounts, yet 1 in 4 believe 65 years is the ideal age to start planning

The survey found that 70% of the respondents were aware of the retirement fund amount, the awareness of urban India on rising costs and the financial needs to maintain their current lifestyle during retirement.

According to the survey, almost 80% of the respondents believe that they should have started investing earlier for retirement. 41% of respondents said that retirement planning should begin with other financial responsibilities. Also, 26%, or almost 1 in 4, believe that the ideal age to start planning for retirement is when they reach 65 or their stage of the second innings, which is the direction of sound retirement planning. further widens the difference.

• 45% rely on children for retirement support

While identifying challenges to retirement investing, the survey found that 45% believe their children will support them in old age while 36% said they have sufficient family assets or other financial sources to support them during retirement. will meet their needs. About 23% said they had not even thought about retirement planning.

• Only 24% consider ‘saving for retirement’ a financial priority, while 56 percent believe that savings will be exhausted within 10 years of retirement.

The pandemic has further aggravated the long-standing issues around income generation, with 56% of the respondents believing that their savings will be exhausted within 10 years of retirement. Only 24% consider ‘saving for retirement’ a financial priority

• 67% of urban India consider life insurance as 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 the respondents consider life insurance as the most suitable product for retirement savings while only 40% were found to invest in it for their retirement. Bank Deposit was found to be the second most suitable product by 41%. 31 per cent preferred real estate, 26 per cent physical gold and 25 per cent preferred investing in mutual funds/ETFs/SIPs.