The Hindu Business Line : `Indians have optimistic attitude towards retirement'

INDIANS are in many ways an exceptional lot when it comes to planning for retirement, an international review of financial well-being by Principal Financial, the US-based retirement and investment services specialists, has indicated.

Most Indians have an optimistic attitude towards retirement and appear to be self-assured in their ability to save for it. The majority of them actually expect their standard of living during retirement to be better, a belief that stands in contrast to what may be called popular perception around the globe.

Seven in 10 think they are doing "very well" to ensure a financial secure retirement.

Participants from India, representing the top 25 per cent of the country's households by socio-economic status, mostly feel that they will get financial support from family members or live with them during their retired years.

Also, two in 10 agree that they can trust the Government to help them maintain their living standard post-retirement.

The well-being study, which pays considerable attention to retirement planning, points out that at least 25 per cent of the participants in each country report that they are behind schedule on this front. In the US, Japan and Brazil, for example, more than half have fallen behind. Mexico and Chile, however, are more likely to suggest that they are ahead of schedule - possibly because of their governments' defined contribution systems.

Indians too are more likely to report being ahead of schedule. "The strong emphasis that Indians place on family responsibility for retirement security" may help some of them to reach their goals, it is felt.

Elsewhere, most people do not really know whether they are ensuring a secure retirement. In the US, 45 per cent of the respondents have tried to calculate how much they need to save so that they can live comfortably during their golden years.

Only about one in 10 participants in Brazil, France and China report doing a savings needs calculation. "Another indicator of poor retirement planning is that participants in some countries have not done a good job of estimating the length of time that savings will need to last in retirement," Principal Financial has noted, adding that participants who live to retirement age actually have a 50 per cent chance of living beyond life expectancy.

So, even those who have correctly estimated the number of years their savings will need to last (based on life expectancy) may find themselves short of money.

The study covers Brazil, Chile, France, Germany, Great Britain, Italy, Mexico, Japan and the US besides Asian countries such as China, India and Hong Kong, All participants were aged 25 years or more and did not consider themselves retired. Principal Financial is active in India through its asset management business.

Some of the other highlights of the review are:

About four in 10 Indians receive no advice on financial planning.

Globally, experts that play a role in providing advice are mostly banks, insurance and pension companies.

More than one-third of Indian (as well as German and British) participants say they know the amount they need to save. Many, however, lack confidence in their ability to continue employment until their planned retirement age.

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