A whopping 95 per cent of respondents “adhere” to their retirement plan, while 54 per cent follow it precisely, and 41 per cent miss out on a few aspects occasionally, according to the PGIM India Mutual Fund Retirement Readiness Survey 2023.  

Sixty-seven per cent have a retirement plan in place, while 63 per cent believe they have a comprehensive one. Regardless of a retirement plan, fixed deposits (FD) are the most preferred investment vehicles among the respondents.

FDs bagged the top place in the survey, followed by annuities or insurance policies, gold, post office saving schemes, mutual funds, National Pension System (NPS), and Public Provident Funds (PPF) when asked about their preferences. 

Also, more Indians know retirement schemes like NPS, where investments have grown from 5 per cent in 2020 to 15 per cent in 2023. Similarly, PPF investments rose from 3 per cent in 2020 to 13 per cent in 2023.   

Those who have a financial plan in place also prefer investing in mutual funds compared to those who don’t have a retirement plan. The study shows that people with no retirement plan invest in gold and post office schemes. 

So, which factors affect peoples’ retirement planning decisions? Let us explore. 

Job Insecurity And Unexpected Health Expenses

According to the survey, more people worry over unexpected events like job loss or health issues. Around 77 per cent of the respondents in the metro cities, 83 per cent of self-employed people, and 78 per cent of those who earn less than Rs 50,000 worry about unexpected things while planning for their retirement.

The fear of income loss and unexpected medical expenses has pushed people to plan for retirement in the post-pandemic world. People’s concerns in 2023 have increased by 21 per cent from the 2020 survey. Illness, hospitalisation costs, and sudden loss of family members motivated them to do financial planning.

Macro-Economic Factors

Now, people pay more attention to inflation and other economic conditions. Slowdown, a lack of alternate income sources, and fear of losing income are key concerns prompting people to do financial planning. For 56 per cent of the respondents, inflation is the main worry, followed by health expenses and economic slowdown, at 52 per cent and 50 per cent, respectively. Other worries include no family support. The lack of an alternate income source is also a significant concern at 38 per cent, up from only 8 per cent in 2020. 

Cultural Shift

As per the report, around 48 per cent of people expect little or no financial support from family members in the future, a key trigger behind retirement planning. The number of people who do not want to be dependent on their children or other family members post-retirement rose from 26 per cent in 2020 to 43 per cent in 2023, suggesting that parents are not only worried about their

financial well-being but also for their near and dear ones, and they want to save to support them financially.  

The pandemic has also changed the views regarding joint families, especially related to financial security. Nuclear families now consider themselves more financially secure. The report finds a significant decline in the number of people who feel financially secure in a joint family. This percentage has reduced from 89 per cent in 2020 to 70 per cent in 2023. Furthermore, the percentage of those who feel financially secure in nuclear families has risen from 64 per cent in the previous survey to 74 per cent in the 2023 survey.

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