One of the key drivers behind of India’s growth story is its young population – also described as its ‘demographic dividend’.
But, with a projected sharp decline in population growth between 2021-2031, “today’s young are also tomorrow’s old,” said Ajit Menon, chief executive of PGIM India Mutual Fund.
He was commenting on PGIM’s latest Retirement Readiness Survey which found that, on average, Indians start planning for their retirement at the age of 33.
This, however, is relatively young when compared with their countrymen who are yet to embark on their retirement planning and intend to start around the age of 51.
“With a large ageing population and a shrinking working-age population, future governments will struggle to provide for their elderly, making it imperative for individuals have their own plans.”
Now, not later
The survey of 3,103 Indians across eight metro and seven non-metro cities gauged the attitudes to retirement planning.
It found that Indians are focusing more on current expenses than future planning.
“Retirement planning is positively correlated to income, not age, demonstrating that people are planning for their retirement when they have surplus money and can save without sacrificing current comforts,” Menon added.
The needs of children, such as education and marriage, and their family’s financial security were cited as top priorities.
The financial security of their spouse, medical emergencies, personal fitness and a good standard of living were other reasons cited by respondents for not saving for their retirement.
The report stated: “Many Indians are reluctant to take on long-term financial commitments that might affect their current standard of living.”
Breaking with tradition
A close-knit family has traditionally been the retirement plan for ageing Indians – but a growing trend of independence is emerging, with older people increasingly reluctant to rely on their children for their care.
“A quarter of Indians say the dread of being dependent on family is a major trigger for retirement planning,” Menon added.
But that doesn’t mean they know where to turn for advice.
Nearly four-in-10 respondents said they have no trusted adviser to guide them in their financial planning.
Just over half (56%) of Indians have taken any guidance; of whom only 47% turned to an independent financial adviser.
Menon said: “Our survey shows that Indians are eager for high-quality advice and products that will help them balance their current aspirations with the imperative to secure their future.”
