NEW DELHI: Prioritising security over immediate comforts has been such an abiding feature of the Indian financial psyche that it has even become a pop culture trope of sorts. But, the past few years have seen a marked shift in this propensity, and this may well leave many Indians high and dry when it their time to retire comes around.
According to a report from PGIM India Mutual Fund, prepared in partnership with Nielsen India, aspirational Indians nowadays are becoming far more focused on the present that the future. Sample this: “Retirement comes far down most people’s list of financial priorities. Most Indians cite their children’s needs (education, marriage etc.) and their family’s financial security as their top priorities.
After that, they are mindful of the looming possibility of medical emergencies, and the importance of physical and mental wellbeing. Further down the list, they desire a comfortable, stress-free lifestyle. Retirement planning comes way down in their list,” the survey reports. The shift in attitudes have taken place in a relatively short period of time.
According to the report, as recently as 2017, Nielsen’s Usage & Attitude Survey had found that 52 per cent of Indians said money was most important because it provided financial security.“But by 2019, 46 per cent of Indians were saying that money was most important for fulfilling dreams, while 44 per cent cited an improved lifestyle, and 39 per cent said it was about living comfortably.
Financial security remained an important concern, but its relative importance had fallen, and only 30% now cited it as the most vital function of wealth,” it said.
This may leave Indians exposed to vulnerabilities when they retire. “Once Indians start earning enough to have some money spare after fulfilling all their immediate priorities and goals, they tend to invest some money for the long-term.
This does, however, leave them vulnerable to running out of money if these funds have to be tapped for other contingencies before that,” the survey noted.
It also found that 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 points, while the rest is split roughly evenly between rent, EMIs and home loan instalments. Nielsen’s Survey finds that allocation of household income to savings and investments has fallen from 34 to 30 per cent over the past two years.
Taboos need to go
Report suggests that fund houses and other experts must change the conversation on retirement and explain how retirement planning does not diminish financial freedom, but enhances it, and enables a stress-free life