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Urban Indians worry about savings, not lasting through retirement, reveals Max Life retirement study

K. R. Srivats | | Updated on: Dec 07, 2021
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Max Life aims to become a prominent player in retirement space, says MD and CEO Prashant Tripathy

With retirement market set to grow exponentially, private life insurer Max Life Insurance, aims to become a prominent player in the retirement space, Prashant Tripathy, MD and CEO, has said.

“We are trying to set up a retirement vertical in the company. We are going to address retirement in a comprehensive way. We are going to focus in a big way on annuities. Over next 4-5 years, our annuities portfolio should grow by 7-8 times”, Tripathy told BusinessLine here.

Tripathy highlighted that Max Life is already an annuity service provider and recently pension regulator PFRDA had approved it for becoming a sponsor of a pension fund manager.

Also read: Max Life Insurance extends ‘Buy Now, Pay at Approval’ facility to wider modes of online transactions

Sharing the findings of the the first edition of its ‘India Retirement Index Study’ (IRIS), which maps the retirement preparedness of consumers in India, Tripathy said that the study revealed that 9 in 10 urban Indians worry about savings not lasting through retirement.

Also, 50 per cent of the over 1,800 respondents believe that savings will be exhausted within 10 years of retirement. One in four have not even thought of retirement and 67 per cent of urban India considers life insurance as the most suitable product for retirement savings.

Through a self-administered digital study, 1800+ respondents were surveyed across 28 cities comprising 6 metros, 12 Tier I and 10 Tier II cities to understand urban India’s readiness to lead a healthy, secured and financially independent retirement life.

According to the study, urban India’s Retirement Index (on a scale 0 to 100) stands at 44. The study further measures retirement preparedness on the basis of 3 components – health, financial and emotional index. The degree to which Indians feel financially secure for retirement or the ‘financial preparedness index’ stands at 50 indicating concerns over financial wellbeing. The ‘emotional preparedness index’, with respect to community support including family and friends for emotional, social needs during retirement, scored high at a notable 62. The ‘health preparedness index’ ranked the lowest at 41 emerging as a key concern.

Retirement evokes positive sentiment

Although retirement evokes positive sentiments, yet 1 in 3 Indians do not want to retire. While health and financial preparedness for retirement are low, IRIS reveals that urban Indians have an overall positive outlook on retirement. 68 per cent associate it with positive thoughts such as more time to take care of family, hassle–free living and greater independence. Despite this, 33 per cent or nearly 1 in 3 respondents do not want to retire. 19 per cent cited they prefer to retire between the ages of 56 and 60. In comparison, 12 per cent preferred to retire even later between 61 – 65 years.

Due to an overwhelming sense of insecurity, 47 per cent Indians are investing for retirement to ensure there is ‘no need to depend on others for financial needs’, with 38 per cent investing with the aim of ‘maintain lifestyle during retirement’.

The study found that 70 per cent respondents were aware of the retirement corpus amount, highlighting urban India’s awareness on increasing costs and the financial requirements to sustain their current lifestyle during retirement.

According to the study, nearly 80 per cent of the respondents feel they should have started investing earlier towards retirement. 41 per cent respondents said one should start planning for retirement along with other financial responsibilities. At the same time, 26 per cent or nearly 1 in 4 believe that the ideal age to start planning for retirement is when they reach 65 or their phase of second innings, further widening the gap towards sound retirement planning.

Investment in retirement products

The study also highlighted Indians investing in various retirement products. As many as 67 per cent respondents consider life insurance as the most suitable product for retirement savings whereas only 40 per cent were found to be investing in it for their retirement. Bank deposits were found to be the second most suitable product by 41 per cent. 31 per cent cited real estate as most suitable, 26 per cent cited physical gold and 25 per cent preferred to invest in mutual funds/ETFs/SIPs.

While identifying the challenges to retirement investment, the survey found that 45 per cent believe their children will aid them in old-age whereas 36 per cent said they have adequate family wealth or other financial sources which will cater to their needs during retirement. 23 per cent said they haven’t even thought about retirement planning.

Published on December 07, 2021

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