Are Indians afraid of retirement? Find out

Indians know retirement planning is vital, but don’t want to talk about it, according to the PGIM India Mutual Fund Retirement Readiness Survey 2020, conducted recently. In fact, retirement is seen by Indians as an important but distant prospect. However, they are eager for high-quality advice and products that will help them balance their current aspirations with the imperative to secure their future.

As per the survey, across all ages and occupational profiles, Indians admit that retirement planning is an “absolute necessity”. But they put off thoughts of retirement for as long as possible – many won’t even talk to their families about it, to avoid alarming them.

‘Financial freedom’ is embraced as a desirable end-goal, but retirement is perceived as detracting from financial freedom, rather than contributing to it. There is a tendency to focus on positive prospects (e.g. saving for education or weddings) rather than morbid ones (e.g. Mediclaim, health insurance or term policies for accidents).

Indians prefer to focus more on proximate contingencies. Even when they bring themselves to confront the morbid possibilities of life, they are likelier to plan for worst-case scenarios that could befall them at any time – like accident, sudden death or terminal illness – while retirement is seen as a distant prospect, especially by those below 50.

Indians rarely plan for retirement as a standalone objective. Most Indians do not have a ring-fenced ‘retirement fund’ – either because they haven’t begun retirement planning yet, or because they just have all-purpose funds and investments that may later be used for retirement, in case any of these other worst-case scenarios do not materialise.

More than half of urban Indians have not planned financially at all for their retirement. 51% of respondents said they had made no financial plans for their retirement (although this number drops to 25% among those who have an alternative income source). More worryingly, 42% have neither an alternative income source nor any retirement plans.

The silver lining, however, is that Indians are eager to learn more. Most Indians, in fact, are keen to have a knowledgeable financial advisor. When asked what they look for in an advisor, 77% of Indians said they would prioritise in-depth knowledge of products, while 67% said market awareness was important, and 61% said they looked for sensitivity to customer needs. Only 25% of respondents emphasised the need for personal interaction, perhaps suggesting that Indians don’t necessarily need constant close interaction with their advisors, provided they can trust their financial acumen.