Retirement planning on the rise, even among low-income earners
67% of Indians feel retirement ready, reveals PGIM survey
image for illustrative purpose
Memories of the harsh reality of the pandemic are nudging people to save and invest more to be financially secure. At an average age of 46 years, more than two-third (67%) respondents claim to have planned for their retirement
The significance of ‘retirement’ in the financial landscape of Indians is on the rise, making a noteworthy climb from the eighth position in 2020 to the sixth spot in 2023, as per the latest findings from the PGIM India Retirement Readiness Survey.
In the past, retirement was primarily linked to fulfilling familial responsibilities, but its definition has evolved over time. Today, it goes beyond mere obligations, encompassing the pursuit of self-worth and self-identity. Indians are now prioritizing their inner selves, embracing self-care, and exploring personal interests.
The survey highlights a growing trend among Indians who are keen on maintaining financial control without compromising their dreams. According to PGIM India Mutual Fund's Retirement Readiness Survey 2023, a substantial 67 per cent of Indians believe they are well-prepared for retirement.
Talking to Bizz Buzz, Ajit Menon, CEO, PGIM India Mutual Fund, said, “Retirement is the only goal for which you don’t get a loan. Investors need to plan their finances with a holistic approach by taking into account aspects like budgeting, protection, savings and investment requirements. Thus, the role of a trusted financial advisor is paramount in helping you achieve your life goals in a disciplined manner.”
“We saw a visible attitudinal and a behavioural shift overall, where the pandemic seems to have impacted certain significant aspects. The emphasis on self-Identity, self-care and self-worth have emerged as more important than ever alongside fulfilling roles and responsibilities towards one’s family,” he said.
As compared to the last survey, the proportion of consumers from the low-income group (20,000-50,000) who have a retirement plan has increased significantly. From 49 per cent in 2020, 67 per cent people now have a retirement plan.
Indians investing in mutual funds has increased significantly since 2020. Only 14 per cent of those who had a retirement plan said they were invested in mutual funds compared to 2022 where 24 per cent of those who have a plan have invested in it.
While the corpus required for retirement differs for each individual, people are realising they need a bigger corpus to retire. The corpus required after leaving a primary job has gone up from 50 lakh in 2020 to 73.44 lakh in 2022, on average.
Memories of the harsh reality of the pandemic are nudging people to save and invest more to be financially secure. At an average age of 46 years, more than two-third (67 per cent) respondents claim to have planned for their retirement.
51 per cent respondents who said they have a financial plan cited economic slowdown as one of the aspects that worry them about managing finances post-retirement. Consumers from metro, self employed and those with a monthly income up to 50,000 stressed more on unexpected aspects while planning for retirement.
Inflation is emerging as the main reason for concern post-retirement followed by health, cost of living, economic slowdown and lack of support from family, especially among salaried professionals. 56 per cent respondents cited inflation as the main reason for worry when thinking about managing finances post- retirement.
Accessibility, knowledge about markets and products are the top qualities investors look for in an advisor. Three in four consumers say ‘giving better returns on investment’ is the most valued aspect of managing money by an advisor.
Indians start planning for retirement, in practice, by the age of 33 and a majority of them have been adhering to the plan. There is growing awareness in metros about the importance of retirement planning triggered by external and unexpected events like economic slowdown, loss of job or an earning member, inflation, and so on. Consumers from metro (77 per cent), self employed professionals (83 per cent) and those with a monthly income up to 50,000 (78 per cent) stressed more on unexpected aspects while planning for retirement.
