Most Indians worry inflation, critical illness may hurt retirement savings: Survey

ICICI Prudential Life Insurance, in its survey,’Is India prepared for retirement?’, found that retirement is viewed positively as a time full of possibilities. It is seen as a time when one can make a fresh start and live life the way one wants to. A large number of individuals view it as a phase of maintenance, upgrading, and growth.

Continuing with the current lifestyle into their retirement is the topmost priority, as indicated by 83% of respondents. Over three-fifths of the respondents indicated that their retirement goals include enjoying life, staying connected with friends, travelling abroad, feeling financially secure, and having peace of mind in this new chapter of their lives.

ICICI Prudential, in association with Quantum Consumer Solutions, surveyed over 1,100 individuals to understand the consumers’ attitudes toward retirement, money, and annuity plans. The survey provides deep insights from diverse perspectives, including government employees, private sector employees, businessmen, self-employed, and retirees across the age bracket of 45 to 75 years from cities with a population of more than 2 million.

Though the phase of retirement evokes positive emotions among respondents, at the same time, they are also cognizant of the need to factor in inflation and rising medical expenses while planning for their life’s new chapter. This, some felt, could impact their standard of living.

Currently, 11% of total income is channeled towards retirement-specific savings. The survey reveals that the respondents consider an average corpus of ₹ 65.4 lakh as ideal for retirement.

To prepare for retirement, individuals are recognising the importance of products that are risk-free and offer guaranteed returns for life, such as annuity plans. Annuity plans are specifically designed for retirement and provide regular life-long income for self and spouse. The survey also revealed a high interest in investing in annuity plans among 65% of respondents who have not invested in annuity plans so far.

Interestingly, the findings reveal the emergence of a second front– a set of individuals who are well prepared to lead a financially independent retired life. They start investing for retirement even before they turn 40 and put aside an average of 17% of their income towards retirement. They invest mainly in NPS and retirement/annuity plans, besides fixed deposits, to become retirement-ready.

Manish Dubey, Chief Marketing Officer, ICICI Prudential Life Insurance, said, “India’s retirement population is growing rapidly and is projected to show a 41% increase by 2031. Additionally, with increasing life expectancy, a large segment of people will be looking for solutions to plan for a longer retirement.

The study found that more individuals are now viewing retirement as an opportunity to explore their interests, follow their passions, and spend time with family and friends. Retirement planning is a long-term process, hence individuals should start saving towards this goal as early as possible. This will enable them to generate adequate regular life-long income.

As per the findings of the study, 65% of people surveyed expressed their intent of investing in annuity products as part of their retirement planning process. In contrast, only 32% of respondents have actually invested in annuity products, highlighting the gap in retirement planning.”

Retired individuals look for regular income devoid of market volatility. Annuity products offer regular guaranteed life-long income, therefore a robust retirement plan should include this product in the portfolio. “New-age annuity plans like ICICI Pru Guaranteed Pension Plan Flexi enables consumers to make regular contributions and systematically build retirement savings,” the insurer said.