What Are the Top Concerns People Have Before Retiring?

Jul 10, 2018 | 1 year ago | Read Time: 4 minutes | By iKnowledge Team

To everyone’s surprise, Indian citizens are leading other nations in their preparedness for retirement. That’s not a statement, but the conclusion from Aegon’s Retirement Readiness Survey 2017. The survey, conducted in 15 different countries, talks about a range of issues concerning retirement. The 2017 survey focuses largely on health, among the other indicators.

As per the survey, Indians are best prepared for their retirement, as compared to their peers from developed countries, such as Germany, UK, USA, and Japan.

The Retirement Readiness survey ranks countries based on several different indicators. India’s performance indicates that the working people of the country are confident about retirement.

The survey dug into several questions about health. Employee health, health after retirement, and particularly, retirement planning was in focus.

Aegon Retirement Readiness

But first, what does the retirement readiness score mean?

The retirement readiness score of 5.9 measures the retirement readiness of the people all over the world. The questions in the survey cover areas of

  1. Personal responsibility (towards retirement and health)
  2. Retirement awareness
  3. Financial understanding
  4. Retirement planning
  5. Financial preparation
  6. Income replacement

Retirement Readiness Score

India’s performance increased to 7.6 in 2017 from 7.3 in 2016. This can be attributed to a variety of reasons, such as increased financial literacy, increased number of people opting for tax deductions on pension plans under Section 80CCC and 80CCD among others.

Here is a great post on tips to create wealth.

Aggressive financial literacy campaigns have helped people to think and make a solid retirement plan which reflects in the survey.

The survey also tracked allocation of global pension funds. As of 2016,

  • 46% is invested in equities
  • 28% in bonds
  • 24% in other assets
  • 3% in cash

The stock markets in several countries, including India, has seen high growth in 2017, this improving the earnings significantly. This has bolstered the amounts set aside by people for retirement, especially the pension plans invested in equity.

Retirement Readiness Score Across 15 Countries

How is the world funding their retirement?

Across the world, retirement benefits are mostly financed out of:

  • Government benefits
  • Employer benefits
  • Personal savings

Globally, 46% expected the Government to fund most of their retirement. In India, the figure was reversed. Only 27% expected to fund their retirements through Government benefits. Maximum portion of their retirement was intended to be self funded (43%), as compared to USA (29%), China (35%), Japan (30%), and Netherlands (20%)

Savings and Investments

 

When the reasons for starting a retirement plan were polled to the participants, Indians invested in their retirement when they got married or had a child. Some of them started because of their job.

Aegon Retirement Readiness Survey 2017

It is common for Indians to look into retirement, to provide for a family on getting married or whilst starting a family. The responsibility of providing for more dependents prompts several people in India to invest in a robust retirement plan to meet life goals.

Here is a great blog post on tips to save money if you’re just married.

That being said, a large number of people, till date, use fixed income instruments such as Fixed Deposits or debt to make up a chunk of their retirement funds. As per an RBI* report, 23% Indians set aside money for retirement. Most of the people, till date, depend on their children for funds for their retirement.

However, an encouraging trend among women in India is their forward thinking towards retirement and planning their funds. Indian women are leading in this regard.. Women in India are confident of meeting their retirement spends from their own pockets. The sign is welcome, because it shows an increased financial literacy among women, which translates to financial independence.

Womens Retirement Plans

What is the takeaway for me?

The one thing that the survey highlighted was the fact that investing in a pension plan or saving for retirement plan would ensure a comfortable retirement. Because of the effect of compounding, a smaller amount of salary set aside right now will lead to big benefits in the future. The longer you wait to invest in a pension plan, the more you’ll have to save to ensure a hassle free retirement.

Benefits of Saving Early

The best way to weather retirement as comfortably as possible is to invest as early as you can. There are a host of options to invest in, such as Aegon’s iReturn plan which is a term insurance plan that returns premiums at the end of the policy.

Aegon’s iGuarantee plan is a brilliant plan for retirement, where there are guaranteed payouts after maturity.

Apart from this, there are other saving options for retirement, such as PPF and the NPS, which are meant to give a comfortable retirement.

Retirement planning is not a complicated exercise. With several handy retirement calculators, list down your goals, and start saving for it, a little bit at a time. Over time, a healthy corpus will mean an easy retirement.

Indians have topped Aegon’s Retirement Readiness Survey 2017. It’s evident a big part of our population is thinking about living their golden years without worry. Have you saved for your retirement? Don’t think, just click, and save.

Source –

*https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=877#CH22

Advt. no.: IA/Jul 2018/4188


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