Rising inflation emerging as a key trigger for retirement planning, survey shows

With inflation in India on the rise amidst economic uncertainty, a greater 29 per cent, as opposed to earlier 18 per cent, identify it as a key trigger for retirement planning, according to second edition of the ‘India Retirement Index Study’ (IRIS) launched by Max Life Insurance in partnership with KANTAR, a marketing data and analytics company. 

The survey reveals the underlying preparedness levels for retirement in the country over the last year. India’s Retirement Index stood at 44 (on a scale 0 to 100) which reflects lag in urban India’s action on retirement planning in the one-year period. Health and financial preparedness stood at 41 and 49 per cent, respectively, while emotional preparedness witnessed a significant dip from 62 to 59 indicating increasing dependency on family, friends, and social support during retirement. Through a digital study 3,220 respondents were surveyed across 28 cities comprising 6 metros, 12 Tier I and 10 Tier II cities.

Prashant Tripathy, Managing Director and CEO, Max Life Insurance said, “As India’s life expectancy increases and health trends change, the country’s elderly population is projected to grow nearly 41% to 194 million by 2031. There is also a review underway of the retirement age in India to align it with the increasing life expectancy. As industry and wider ecosystem take steps in a positive direction, the robust and well-represented study reveals that Indians are also realizing the need to plan for retirement early. However, the awareness is yet to translate into action in terms of proactively saving and investing. When it comes to retirement planning, all Indians must embrace ‘earlier the better’ philosophy and start planning at a young age, to ensure their retirement years provides them an opportunity to live a healthy and financially independent life. As we unveil the findings of IRIS 2.0, we urge India to realize the importance of timely retirement planning and encourage them to work towards securing their future.”

Interestingly, 59 per cent (as opposed to the earlier 56 per cent) believe that their savings will be exhausted within 10 years of retirement. In fact, 86 per cent respondents over age 50 years regret that they didn’t start investing earlier towards retirement.

Soumya Mohanty, Managing Director and CCO, Insights Division, South Asia, Kantar, remarked on the findings of the survey, “IRIS 2.0 offers a compelling perspective on how urban Indians view and plan for retirement. It aims to help Indians comprehend the approach and give due importance of planning for retirement in their lives. In today’s world, it’s important to stay financially independent at all times, especially during one’s retirement years. We are pleased to partner with Max Life Insurance in safeguarding urban India's financial security across all stages of life.”

IRIS 2.0 reveals urban Indians maintain an overall positive outlook on retirement. 70 per cent associate it with positive thoughts such as ‘more time to take care of family’, ‘tension free life’ and ‘greater prospects of luxury/travel’. In contrast, 30 per cent or 3 in 10 associate retirement with negative sentiments, of which 6 per cent cite that they ‘might not be very fit and healthy’, 5% fear ‘not having enough financial savings’. 

Despite this, financial considerations rank lower in order of priority when it comes to retirement planning. While 59 per cent think ‘health’ as the most critical aspect during their retired life, only 31 per cent consider ‘finances’ the most important and 10% regard ‘emotional support’ as most crucial. 

But there is gradually an increase in awareness of the right age to start retirement planning. A significant 44 per cent said that retirement is the first thing one should plan for when they start working, while 33 per cent felt that one should start planning for retirement before the age of 35. Yet, 37 per cent have still not invested in any financial products for retirement. Dependence on family wealth and children continue to be prime barriers for retirement investment. 42 per cent have not invested for retirement because they believe they have enough family wealth to fall back on, 39 per cent believe their children will take care of them, whereas 23 per cent do not know where to start – revealing a glaring gap in financial awareness. 

Despite the trend of nuclear family households continuing (65%) – urban India’s dependence on family remains high when planning for retirement. At 54 per cent, over half of urban India or 1 in 2 prefer living with their children post retirement. Moreover, 26 per cent Indians, as opposed to an earlier 21 per cent now worry about being lonely during their retirement life. 

With a retirement index of 51, East outperformed other zones on overall preparedness towards retirement. West came a close second with retirement index of 46 while South stood at 43 and North at 41. With a retirement index of 46, metros felt most prepared for retirement. Tier 1 cities demonstrated a retirement index of 44, followed by Tier 2 cities at 42. 

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