Only 46% people claim to have started investing for retirement
Moneylife Digital Team 22 February 2016
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.
Comments
MG Warrier
9 years ago
The results of the survey should worry Government and working population in equal measure. Government should own up the responsibility for dismantling existing social security systems including pension schemes in the organised sector without compensating the affected workers by raising their income so that they make alternative saving arrangement to provide for post-retirement life. Ideally, wages, yes, from daily wages to remuneration packages of company executives, should carry a distinct component which the worker/employee should save for post-retirement life. This is more relevant in India as we do not have social security systems which are available in developed countries. Now, senior citizens and retirees are described as a burden on working population.
After about seventy years after independence, if senior citizens and retirees who have worked for 30 t0 40 years are not having income or assets allowing them a dignified life, that itself is proof enough to show that the wage structure has been defective. The position needs to be rectified across government and public/private sector establishments, at least at this late hour.
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