A growing number of urban Indians believe that retirement planning should start early. 44% of Indians consider the right age to start planning for retirement to be before 35 years, a new survey said.

93% of the respondents above 50 years of age regret delaying retirement planning.

Max Life Insurance Company recently launched the 4th edition of its retirement survey IRIS 4.0, India Retirement Index Study (IRIS), conducted in partnership with Kantar, the marketing data and analytics company.

The IRIS 4.0 reveals that urban India’s retirement preparedness has increased from 47 points in IRIS 3.0 to 49 points in IRIS 4.0, driven by greater awareness and proactive steps in both health and financial planning. Urban Indian working women scored 50 on the retirement index, 1 point higher than men. The latest edition introduces two new segments – Double Income No Kids (DINKs) and Gig workers.

The India Retirement Index Study assesses urban India’s preparedness to live a healthy, peaceful, and financially secure retired life.

DINKs align closely with the overall Indian population, with an index score of 49 points, indicating strong health and financial preparedness. In contrast, Gig workers score only 46 points, reflecting lower readiness across the cohort.

For the 4th edition of the digital study, 2,077 respondents between the ages of 25 and 65 were surveyed across 28 cities in India, comprising 29% men and 71% women. The index is composed of three sub-indices measuring health, financial, and emotional readiness for retirement, on a scale of 0 to 100.

Encouragingly, 63% of respondents have already begun investing for retirement, leading to reduced concerns about meeting both basic and luxury needs, as well as securing their children’s futures.

A notable 68% of urban Indian working women have begun investing for retirement, a 7-point increase from last year.

The study also highlighted regional opportunities in retirement planning across India, with the East zone leading in overall preparedness, the West zone showing financial and health progress but needing emotional focus, and the North and South zones improving in health preparedness index.

As per IRIS 4.0, 97% urban Indians are aware of life insurance as a suitable financial product, with 67% already invested in life insurance as the ideal financial product for retirement, and 37% have invested in health insurance.

However, 31% urban Indians are not aware about the retirement corpus needed to sustain their current lifestyle, with only 27% urban Indians expecting their savings to last between 5 to 10 years, and 30% worry about exhausting funds within just 5 years.

Key Findings From The India Retirement Index Study 4.0

Metros Lead in Retirement Preparedness, Awareness Grows Across Indian Cities

In IRIS 4.0, Metros have taken the lead in retirement planning, with an overall index score of 50. This is driven by positive indices of Finance (51), Health (49), and Emotional (60). Notably, 42% of Metro residents engage in regular physical activities, contributing to their confidence in being fit and healthy during retirement. Tier I and Tier II cities have also made progress.

Tier I cities have an overall index score of 49, with improvements in Financial (54) and Health (45) indexes. Tier II cities have increased their financial index from 50 to 53 that has helped increase the overall index to 47. However, their emotional index remains at 60, indicating a need for further focus on emotional well-being.

Regional Differences highlight the need for comprehensive retirement planning across India

The IRIS 4.0 study’s zonal insights reveals varying regional preparedness, emphasizing the need for comprehensive retirement planning across India. The Eastern zone continues to lead in retirement planning with 54 points, excelling across all sub-indices where the region’s Finance Index stands at 57, Health Index at 51, and Emotional Index at 62, demonstrating a well-rounded approach to retirement preparedness.

The West zone has made significant strides, particularly in finance and health. The region’s Finance and Health Index has increased by 3 points each to 53, and 46 points respectively. However, the Emotional Index remains at 57, indicating a need for further focus on emotional well-being. The North zone has shown substantial improvement in health preparedness, with the Health Index increasing by 5 points to 45, while the South zone has seen slight increase in Health Index rising to 45.

Urban Indian Working Women Lead the Charge in Retirement Preparedness

A deep dive into the retirement readiness of urban Indian working women reveals a remarkable shift: they are now better than men by 1-point in overall retirement preparedness, boasting a retirement index of 50. Financially, urban Indian working women are keeping pace with men, with 66% being confident that their current investments will ensure a financially secure retirement life. Health wise, 48% urban Indian Working Women feel confident that they will be fit and healthy in their retirement years.

DINKs Show Stronger Retirement Readiness Compared to Gig Workers

Insights into retirement preparedness reveal stark differences between DINKs (Dual Income, No Kids) and Gig workers. DINKs align closely with the overall Indian population, boasting an IRIS index score of 49, indicating strong health and financial preparedness. In contrast, Gig workers score only 46, reflecting lower readiness across the board. Their financial index lags 4 points behind the national average (48 vs. 52), and health readiness is also lower at 44 compared to 46 overall.

Gig workers feel less secure, with 76% being highly worried about providing for family’s basic needs during retirement – this is 70% for the overall urban Indian respondents. Similarly, 77% Gig workers are worried about providing for luxury expenses in retirement – this is again 70% for the overall urban Indian respondents. Securing their children’s future is a major worry with 75% Gig workers expressing worry about it.

7 in 10 Urban Indians Embrace Retirement Optimism Amidst Growing Concerns

Urban India exudes optimism about retirement, with over 70% linking it to positive experiences like a stress-free life, quality family time, and greater independence. However, 27% express concerns about challenges such as declining health, boredom, and loneliness. While 55% of the respondents stay in Nuclear families, 93% plan to stay with their children post-retirement.

Additionally, 55% feel confident in the support of family and friends, yet a striking 82% are worried about how changing environmental factors may impact their retirement lifestyle.

Reliance on Family Wealth Hinders Proactive Retirement Planning Amidst Growing Need for Financial Guidance

A significant reliance on family wealth and children as safety nets is hindering proactive retirement planning for many urban Indians, with 42% depending on family wealth and 41% looking to their children for financial support in retirement.

Moreover, the data underscores an urgent need for trusted financial advisors, as 31% of urban Indians report feeling a lack of guidance on their retirement journey. This gap in support highlights the necessity for accessible, expert advice to empower individuals to make informed decisions about their financial futures.

Urban Indians Shift Towards Wellness, Envisioning a Healthier Retirement

Urban Indians are increasingly prioritizing wellness over mere prevention, with 83% envisioning a healthy retirement. Confidence in achieving fitness during their golden years has surged to 47%, up from 38% in the above cohort of respondents. This proactive approach to health is further highlighted by the rise in health insurance purchases, now at 50%, compared to 44% previously. This trend emphasizes the growing importance of wellness in ensuring a healthier and more fulfilling retirement.

National Pension System Gains Traction as 9 in 10 Users Trust Its Safety and Reliability

The National Pension System (NPS) is gaining traction as a trusted investment choice, with over 90% of respondents considering it as a ‘safe and reliable’ product. Awareness has surged, especially in Tier II cities (78%), where NPS ownership now stands at an impressive 25%. Both the East and South zones show robust awareness (74% and 72%, respectively), with East and West zones leading in ownership (26% and 22%, respectively) as well.

Top sources of NPS awareness include TV Commercials (62%), News Articles (39%), and Colleagues/Family/Friends (37%).

On the other hand, the key factors driving NPS adoption include attractive returns (57%), lifelong income (40%), and better tax-saving options (36%). Despite this positive outlook, challenges such as handholding and lack of complete product understanding still limit broader adoption.