For quite some time now, India has been described as the youngest nation in the world, with over half the population under the age of 25 years and nearly two-thirds below 35 years. However, the country’s elderly population is also growing at a rapid pace, with the number of such people growing by 27 million between 2001 and 2011, according to the latest government data. In fact, nearly 148 million individuals are expected to be over the age of 60 by 2031.
India’s ageing is being driven by a falling fertility rate and growing life expectancy. In fact, the life expectancy at birth has increased from a little over 63 years between 2001-05 to almost 68 years between 2009-15. With rising life expectancy, the number of years spent in retirement has increased dramatically and so has the expenditure made on health care and medical needs.
Figure: Population change across various age demographics in India (credit: thewire.in)
The post-60 trends
A recent report by Ernst and Young estimated that Indians save less than half of their optimum post-retirement coverage, largely due to lack of awareness, planning and financial resources. With Finserv Markets, you can easily estimate how much you need to save every month to build a sizeable post-retirement corpus with some of the top-rated ULIP funds in the industry.
Insufficient insurance penetration
Not more than 1 in 10 private-sector retirees in India has pension and health cover, according to a report by IndiaSpend, a non-profit open data research publication. In fact, “at least 988 million Indians—more than the population of Europe and 75% of all Indians—are not covered by any form of life insurance…” the report said. At the end of 2017, India stood at the 41st rank in terms of insurance premium as a percentage of the GDP, with life insurance premiums at only 2.8% of the GDP.
One of the key reasons due to which insurance takes a back seat in our country is that most of us are focussed on wealth creation. However, with ULIPs from Finserv Markets, you can get both life insurance cover as well as market-linked returns on your investment.
Most Indians do not start creating financial and physical assets until after the age of 35, according to the Household Finance Committee report, which leaves little room for riskier investments when planning for retirement. However, we should start planning for retirement early in life to make the most of the power of compounding.
With ULIPs you can calibrate your investment according to your risk appetite so that you can generate substantial wealth even if you are running a little behind on your retirement planning.
An increasingly key variable for making retirement work financially, is deciding to work for longer. The percentage of people who continue to work past the age of 65 has been increasing over the past few years, globally as well as in India. According to estimates, by 2024, over 26% of the elderly will be in the active workforce.
However, if working for longer is a required part of your retirement strategy, you need to consider whether it is actually an option. Can you be sure that technology will not destroy your job? Do you have the skills to continue to succeed or will your position become increasingly irrelevant? A lot of retraining and re-skilling may be required to support a longer career. However, you can avoid this with a few simple steps online by getting a customised retirement plan from Finserv Markets.
Greater longevity is a great gift to all of us, but to fully exploit it we need to structure things differently and more prudently. We are entering the pensionless generation and, therefore, we need to address specific savings behaviour which promotes savings for working life exigencies and for retirement. ULIPs at Finserv Markets are one such an investment tool which can provide for both the aforementioned needs.
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