According to Principal’s Financial Well Being Index 2015, 45% of respondents don’t know how much money will be available to them post retirement
The third edition of Principal’s Financial Well Being Index highlights the decrease in overall optimism about economic outlook vis-à-vis 2014. The study provides insights on the perceptions and concerns of the Indian Households about the economy, household spending, savings and investment attitude and other related trend. When it comes to financial savings, out of the 1,400-odd respondents across 11 cities, 44% of them have not yet started investing for retirement. Out of the sample, as many as 45% of respondents don’t know how much money will be available to them post retirement, and 44% of respondents have not factored in the impact of inflation for their retirement fund. Yet, “Staying happy & stress free (63%) and having enough savings (56%) are the main thoughts for post-retirement finances,” according to the report.
The survey targeted households with an annual household income above Rs5 lakh. Children education (65%), household expenditures (64%) & medical expenses (60%) are the top three expenses expected to increase after retirement. Children’s marriage (59%) also features prominently in the list. Majority (62%) of the respondents plan to retire between 56-60 years. The need to secure their future (64%) and a lack of existing support (49%) are the main reasons cited for starting investments for retirement.
Nearly half the respondents consult a financial advisor for retirement planning, with as many as 59% respondents stating that they would be willing to pay a fee for the services of a financial advisor. Overall 68% respondents felt that a financial advisor plays an important role in their financial decisions. Nearly 54% of the respondents rely on the help of financial professional when making important financial decision. Investment planning (55%), setting financial goals (52%) & tax savings (52%) are the top three reasons for consulting a financial advisor.
The respondents have a good saving rate. Savings and investments account for 40% of the income. But still, life insurance (59%) and fixed deposits (55%) are the most preferred investment options. The main reason for this is that safety is the topmost criteria for selection of investment products followed by returns. Out of the sample, 73% of the respondents claim to be extremely / somewhat satisfied with their current level of investments. Concern for savings & investment, followed by loan/credit along with future concerns are the top reasons for decreased spending.
Optimism about the overall state of the economy has come down as compared to 2014 but is not as pessimistic as it was in 2013. Unemployment (68%), corruption (68%), rising inflation (67%) continue to be top concerns in the economy in the next one year. Thirty-six percent of the respondents say that they are extremely/very worried about home loan interest rates while only 11% are not at all worried. Jobs, education and electricity are the top three areas where people want government to focus in the coming year.