Are Indians prepared for their retirement? Yet another survey result shows that they are not. Most participants of the survey said they did not have a retirement plan. Even those with a plan thought Rs 50 lakh is a large enough corpus to take care of their retired life. Also, if an individual was not sure about the size of his retirement corpus, s/he was unlikely to make a retirement. These along with some other surprising findings were thrown up by PGIM India Mutual Fund Retirement Readiness Su ..
According to the survey, 51% of the respondents had not made any financial plans for their retirement. The survey also revealed that most urban Indians are saving and investing less and allocating nearly 59% of their income for living expenses. Because they are saving and investing less, these individuals were also anxious about their future, said PGIM retirement survey.
Around 89% of the respondents believed they are not prepared for retirement, as they did not have any alternative income.
On average, urban Indians aim to build a corpus of around Rs 50 lakh. Our respondents, who had an average annual income of around Rs 5.72 lakh, at an average age of 44 years, believed that they would need a corpus of around Rs 50 lakh for retirement, or about 8.8 times their current annual income, said Ajit Menon, CEO, PGIM Indian Mutual Fund.
The size of the corpus should not come as a surprise as a clear majority did not consider inflation while planning for their retirement.
Around 48% respondents were not aware of the amount required for life after retirement.
Surprisingly, mutual funds do not figure prominently among the list of investments to plan for the retirement, the survey showed. Most Indians seem to be banking on insurance products and fixed deposits. “Around 41% of respondents said they had focused their retirement investments on life insurance, while 37% preferred fixed deposits.”
“People like to plan for happy goals like travel, education, etcetera, or unforeseen events like health issues. For some reason, retirement is seen as an unhappy eventuality,” explains Ajit Menon. “That’s why we at PGIM India want to term this goal as financial freedom. You can achieve financial freedom anytime and at any age,” he adds. Read the full interview here: At 5% inflation, required retirement corpus will double in 14 years, says Ajit Menon of PGIM India Mutual Fund