Despite this, financial uncertainty continues to affect a large segment of the population. The study also shows that 31% of respondents are unsure about how much they will need to maintain their lifestyle post-retirement. This lack of clarity is a significant risk, especially as life expectancy increases.
Majority Fear Running Out of Savings Too Soon
A notable finding of the study is that 57% of urban Indians believe their retirement corpus will be depleted within 10 years. Even more concerning, 30% fear their savings will last only five years or less. Another 27% estimate their savings will last between 5 to 10 years, highlighting the vulnerability of many in maintaining financial stability throughout retirement.
Prashant Tripathy, CEO and Managing Director of Max Life Insurance, emphasized the urgency of this issue “As life expectancy rises with advancements in healthcare, emphasizing the need for long-term financial planning. The IRIS 4.0 study reveals that although Urban India’s retirement index has improved with positive gains in the Financial and Health indices, 1 in 3 Indians still feel underprepared.”
Regional Disparities in Retirement Readiness
The study revealed significant regional variations in retirement preparedness. The East zone led with a preparedness index score of 54, higher than other regions, excelling across financial, health, and emotional readiness sub-indices. The West zone showed improvements in financial and health indices, while the North and South zones experienced slight gains in health preparedness.
Life Insurance: A Pillar of Retirement Planning
Life insurance continues to be a favoured option for retirement savings among urban Indians, with 97% aware of it and 67% already invested. Health insurance is also gaining traction, with 37% of respondents covered, reflecting increased awareness of the role healthcare plays in retirement planning.
“Today, more urban Indians recognize the importance of starting retirement planning early, with a growing preference for life insurance as a savings tool—2 in 3 are investing in these products for retirement. Notably, urban Indian working women are taking the lead in investments, actively securing their financial futures. These trends highlight a positive shift towards proactive retirement planning and financial independence among urban Indians,” says Tripathy of Max Life Insurance.
The National Pension System (NPS) has emerged as a trusted investment option, with over 90% of respondents viewing it as safe. However, despite high awareness, only 17% have invested in NPS. “One of the main reasons for this hesitation in adopting NPS is that many people find it complicated. Around 53% of respondents said they need someone to help them through the process,” says Mr. Ranbheer Singh Dhariwal, CEO, Max Life Pension Fund Management
Gig Workers Face Greater Retirement Worries
This year’s study included new demographic segments such as gig workers and DINKs (Double Income No Kids). Gig workers lagged behind with an index score of 46, indicating significant gaps in their financial preparedness. Key concerns include meeting basic needs (76%) and affording luxury expenses (77%) during retirement. Additionally, 75% expressed anxiety about securing their children’s future, highlighting the precarious financial situation of gig workers.
Women Taking Charge of Retirement
A bright spot in the study is the increasing participation of urban Indian women in retirement planning. Women scored 50 on the retirement index, outperforming men by one point. The study revealed that 68% of working women have begun investing for retirement, a 7-point increase from last year. Encouragingly, 66% of women feel confident that their current investments will provide financial security in retirement.
As financial literacy and proactive planning grow among women, the study indicates a promising shift towards greater financial independence and well-being.
Indians’ Delusion About Retirement
The IRIS 4.0 study has uncovered a striking disconnect between expectations and reality in urban India’s retirement planning. An overwhelming 67% of respondents expect to live with their children during retirement, but only 55% of them currently live with their parents, highlighting a significant gap in understanding the changing dynamics of family structures. This reliance on children for support in old age could leave many unprepared if their expectations are not met, potentially leading to financial strain.
The study also revealed a similar delusion regarding health. While 83% of respondents believe they will remain healthy in retirement, only 16.72% engage in regular physical activity, and just 38% undergo yearly health checkups. This mismatch between health optimism and actual behavior reflects a critical area where individuals are failing to take proactive steps. Without addressing this gap, urban Indians risk facing serious health complications that could further strain their retirement finances.