Health, inflation, spouse’s well-being top retirees’ concerns: ICICI Pru Life Insurance study

Planning for peaceful retirement is not an easy task

Maintaining current lifestyles, travelling to spiritual places, and buying property top the list of the post-retirement goals of Indians, a survey showed.

The top priority for a vast majority of Indians (83 percent) is maintaining their current lifestyles, according to the survey to gauge retirement preparedness conducted by ICICI Prudential Life Insurance.

Travelling to religious places is on the to-do list of 78 percent of those planning their retirement, while 76 percent have property purchase on their minds.

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Of those surveyed, 72 percent were keen on starting a new business venture after retirement, according to the poll of more than 1,100 respondents across Indian cities. Most of the respondents (46 percent) were in the 45-50 age-group, while 44 percent were close to retirement (51-58 years). The remaining 10 percent belonged to the 60-75 age band.

“It is very clear that many individuals approaching retirement today are far more confident and feel comfortable starting the new chapter in their lives. They want to maintain their current lifestyle, travel, make friends and have a good life. Taking care of the spouse is also an important goal,” said Manish Dubey, chief marketing officer at ICICI Prudential Life Insurance.

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Health, inflation concerns abound

On the flipside, their post-retirement plans are dotted with several concerns. Over 67 percent of Indians are worried that they could be diagnosed with a serious, terminal illness that would exhaust their savings.

Another 66 percent are concerned about having to downgrade their current standard of living due to inflation. Concerns about the spouse’s financial well-being in case of their death dominate the mind space of 64 percent of the respondents.

Ideal retirement kitty size

According to the study, the average ideal retirement corpus that Indians have in mind is Rs 65.4 lakh. However, 69 percent of those polled said an amount of up to Rs 50 lakh would be adequate to tide over their retirement years.

An amount of Rs 50 lakh-1 crore was ideal for 24 percent of the respondents, and only 7 percent said they needed a retirement corpus of over Rs 1 crore.

“This amount (ideal retirement corpus) is understood by people as mostly money in the bank when retiring and does not include real estate or monthly government pensions,” the report noted.

“The number (ideal corpus for retirement) will vary. If you have crossed 40 already, you should definitely start taking retirement planning very seriously. The earlier you start, the better it is… not only for expenses but also for income (generation) during the retirement phase. The needs are multi-layered. You should look to create a customised plan for yourself,” said Dubey.

Start early

He said the age at which Indians start planning for retirement will come down.

“Smart planners start early. Our study shows a section of Indians are much more involved and conscious about the need for retirement planning. The starting age for retirement planning will come down as we go forward,” he said.

Those who are prepared started planning for retirement when they were close to 40. Those who were prepared set aside 17 percent of their income towards building a retirement kitty, while those who were underprepared earmarked 11 percent of their income.

Daily sustenance or monthly expenditure is likely to consume a large part (24 percent) of this target corpus, while 20 percent is likely to be allocated towards building a savings kitty for the spouse or other family members as a legacy gift. About 18 percent could be earmarked for further investments and 16 percent for routine or regular emergency medical needs.

Diversify for sound retirement portfolio

The National Pension System (55 percent), fixed deposits (49 percent) and annuity or retirement plans (32 percent) make up the top three choices of investment avenues for those who are well-prepared for retirement.

“A large number of people are currently not into annuities, but two-thirds of them intend to invest in annuities going forward,” said Dubey. Close to 65 percent of those polled said they would want to invest in annuity plans to generate regular income for their retirement.

Those planning for retirement ought to factor in longer life expectancy and diversify across asset classes to create a sound retirement corpus.

“You should plan for a very long tenure. Put in place a plan such that you do not have to depend on anyone. Adopt a portfolio approach – do not depend on only one or two types of instruments. Proper asset allocation will ensure diversified growth,” he said.