NEW DELHI: India may be one of the youngest countries in the world today, but 30 years hence, it will have a large population in the retirement age, and given how few people are preparing for retirement, a perfect storm is brewing on that front, warns a survey.
At a time when rising prosperity and improving healthcare have greatly increased average life-span and traditional family structures have begun to fragmentise, creating greater anxiety about the future, the lack of farsightedness among the young Indians may pose a big problem, suggests the findings of a survey that Nielsen conducted for PGIM Mutual Fund.
The numbers are disappointing: 51 per cent of Indians do not have a retirement plan. Barely one in five considers inflation while planning for retirement. Life insurance and bank FDs are top choices for those who plan for retirement, and this underlines the essential conservatism in most retirement plans.
In short, Indians are grossly unprepared for their retirement. “With a large ageing population and shrinking working age population, future governments will be struggling to provide for their elderly, making it imperative for individuals to have their own plans,” said Ajit Menon, CEO of PGIM India Mutual Fund.
Indians know retirement planning is vital, but do not want to talk about it. There is a tendency to focus on positive prospects (saving for education or weddings) rather than morbid ones (mediclaim, health insurance or term policies for accidents), shows the Nielsen-PGIM survey.
“Indians rarely plan for retirement as a standalone objective. Most Indians do not have a ringfenced ‘retirement fund’ – either because they haven’t begun retirement planning yet, or because they just have all-purpose funds and investments that may be used later for retirement, in case any of the worst-case scenarios do not materialise,” the report said.