A recent survey has uncovered a critical paradox in the financial planning of Indian households. While securing a comfortable retirement has emerged as the foremost financial priority for families across the nation, the actual readiness to achieve this goal has seen a significant decline. This worrying trend highlights a growing gap between aspiration and preparedness in long-term financial security.
The Retirement Priority Paradox
According to the findings from the PGIM India Mutual Fund Retirement Readiness Survey 2024, a substantial 73% of Indian households now rank retirement as their number one financial goal. This figure marks a notable increase from previous years, indicating a heightened awareness of the importance of post-work life security. The survey, which gathered insights from 1,500 respondents across 15 cities, presents a comprehensive view of urban India's financial mindset.
However, this increased prioritization has not translated into better preparation. The survey's Retirement Readiness Index (RRI), a measure of how well-prepared individuals are, has shown a concerning drop. It fell to 44 points in 2024 from 49 points in 2023. This five-point decline signals that more people are anxious about retirement but are not taking adequate steps to build a robust corpus.
Key Findings and Demographic Insights
The survey delved deeper into demographic patterns, revealing varied levels of preparedness. The RRI was highest among pre-retirees (aged 50 and above) at 53, suggesting those closest to retirement are most focused on their nest egg. In contrast, young earners (below 30 years) scored the lowest at 39 on the index, pointing to a potential lack of urgency or long-term planning among the youth.
Another critical finding is the heavy reliance on traditional savings instruments. A large majority of respondents, about 79%, stated they depend on fixed deposits, savings accounts, and provident fund contributions as their primary retirement vehicles. This reliance on low-yield, often inflation-eroding assets may be a key factor behind the declining readiness scores.
The research also highlighted a gender gap in financial confidence. The survey found that women exhibited a lower RRI of 43 compared to men at 45. This disparity underscores the need for targeted financial literacy and inclusion initiatives to empower women in their retirement planning journey.
Barriers to Effective Planning and the Way Forward
So, what is holding Indians back from adequately preparing for their golden years? The survey identifies several prominent barriers. Meeting current expenses and managing EMIs were cited as major hurdles that divert funds away from long-term retirement savings. Furthermore, a lack of clear, actionable knowledge about how and where to invest for retirement prevents many from starting their corpus early.
The report emphasizes the crucial role of starting early. It notes that beginning retirement savings even five years earlier can dramatically improve the final corpus due to the power of compounding. Experts stress the importance of moving beyond traditional savings and considering equity-linked and market-linked instruments that have the potential to outpace inflation over the long term.
Ajit Menon, CEO of PGIM India Mutual Fund, commented on the findings, stating that the drop in the readiness index is a wake-up call. He urged individuals to view retirement planning not as an optional goal but as a non-negotiable financial commitment that requires disciplined, long-term investing in appropriate asset classes.
The survey's conclusions are clear: while awareness is rising, actionable steps are lagging. Bridging this gap requires a combined effort from financial institutions to offer simpler products, from educators to improve literacy, and from individuals to prioritize their future self today. The time to act on retirement planning is now, not later.
