According to Principal Financial Well Being Index 2014, while 70% people say they are financially prepared for retirement, just 49% know how much money they would require post-retirement
The Principal Financial Well Being Index, which touches upon the perceptions and attitude of Indians towards financial planning, retirement planning and availing the services of financial advisors, found that overall individuals are financially prepared for retirement showing an increase in savings and investments. However, only 49% people claim to know how much money they require post retirement and just 53 % people keep inflation in mind for retirement funds.
The second edition of the Principal Financial Well Being Index in India has been conducted along with Nielsen in 11 centres (Mumbai, Delhi, Bangalore, Chennai, Kolkata, Hyderabad, Ahmedabad, Pune, Lucknow, Chandigarh and Jaipur) and a total of over 1,550 respondents were interviewed during the last quarter of 2014.
On questioning participants on their retirement planning, 70% say they believe they will be financially prepared for a comfortable retirement. Overall 49% people claim to have started investing for retirement at age of 26–30 years. Yet, 67% say they are worried about their long-term financial future and 63% feel stressed about their current financial situation. 65% often worry about their job security.
On other aspects of financial planning, only 28% said that they had some kind of emergency corpus available. As many as 73% of the households are satisfied with their current levels of savings, this is despite the facts that 63% of the households say that their savings have stayed the same in past one to two years.
Rajan Ghotgalkar, Country Head – India, Principal International said, “It is exciting as well as encouraging to see the optimism in Indians, reaching a new high as we enter 2015. While the sentiment is upbeat, it is very crucial for households to continue focusing on taking concrete steps towards building their financial future. The Well-Being Index is a source of some very useful insights on how we perceive and feel about our economy and our finances. We hope this will help all the stakeholders to collectively educate and empower investors”
Unemployment, rising inflation and fuel inflation continue to be top concerns in the economy in the next one year. Few are concerned about rupee volatility in foreign exchange, environmental issues and economic reforms. Overall 52% respondents feel that the prices of groceries, fuel and other household items will go up in next one year.
On surveying people’s attitude towards spending, the study found that there is a slight increase in conservativeness when it comes to spending as compared to last year. Just 30% of the respondents increased their spending slightly compared to last year.
On their expected spending for the current year, most Households expect spending to increase across all categories such as education, family care, food products and apparels. Children expenses (education & marriage) and Buying a House/property continue to be big-ticket expenses expected in 2015.
As many as 59% of the respondents say they are not planning a holiday in 2015. The number has decreased from 73% in the last year. On coming to spending on festivity, 24% of the respondents said they will spend more compared to last year and 62% said they will spend about the same compared to last year.
Financial advisers too plan an important role. About 58% of the respondents say that they rely on financial professionals when making important financial decisions. Setting financial goals (54%), Tax saving / planning (47%) & investment advice (46%) are the top three reasons for consulting a financial advisor. Retirement planning also figures prominently with 41% respondents consulting financial advisor for the same.
Overall 68% respondents feel that a financial advisor plays an important role. 57% people cite knowledge (know enough on their own) as the foremost reason for not consulting a financial adviser. 54% do not want to pay a fee, 33% do not trust financial professionals. Almost 70% people consult financial advisors referred by their friend / family & co-workers. Financial advisers experience (57%), qualification (51%), trust (44%) & reputation (42%) are the key attributes that people look for in an adviser.
Along with the above findings, the study attempts to highlight the Indian household’s perception of their own financial health and economy in general and how these perceptions have changed over the last year. Overall optimism on the economy has increased in the last one year. Around 55% of the 1,585 respondents say that the economy will improve or get even better over the next one year.