Indians are focusing more on current expenses than future planning as a retirement plan is at the bottom of most people’s list of priorities. Indians are more concerned about financial security and children’s needs such as education, marriage, etc, said PGIM Retirement Readiness Survey 2020. While Indians further prioritise contingencies like illness or accidents, more than half of urban Indians have made no retirement plan at all and the average age by which they say they will have a plan is 51, the report added. Retirement planning comes even below the desire for a comfortable and stress-free lifestyle as many people are reluctant to take on long-term financial commitments that might affect their current standard of living.
Financial security remained an important concern, but its relative importance had fallen as only 30 per cent of the respondents now cited it as the most vital function of wealth. The report also showed the changing mindset of Indian consumers. Younger Indians have grown up with the comforts of the post-liberalisation economy and aspire for more, whereas older Indians have known scarcity and tended to prioritise financial security. Also, the urban Indians today are saving and investing less while allocating nearly 59 per cent of income to current expenses. Of this 59 per cent, household expenses account for 35 per cent, while the rest is split roughly between rent, EMIs, and home loan installments.
Meanwhile, apart from the changing priorities, low income compared with rising expenses to maintain standards of life have kept the retirement plans on hold. The incidence of retirement planning increases as incomes rise. 62 per cent of those earning Rs 50,000-75,000 have retirement plans mapped out, whereas only 44 per cent of those earning Rs 20,000-50,000 have a retirement plan. The report concluded that Indians may be willing to fund their retirement corpus from surplus income, but are less likely to do so by sacrificing current expenses.