One of the key hurdles to retirement planning, Vishal Kapoor said, was simple procrastination.
“It just seems to be plain, simple, boring inertia. That is the biggest reason we have not as yet started planning for our retirement,” he said.
While financial constraints and lack of knowledge do play a role, the overwhelming majority simply put off making a decision. “I didn’t feel like doing it today, I think I’ll do it tomorrow,” he said.
Kapoor also addressed concerns about financial independence in retirement.
Read more: https://www.outlookmoney.com/retirement/forty-after-forty
#OutlookMoney40after40
“It just seems to be plain, simple, boring inertia. That is the biggest reason we have not as yet started planning for our retirement,” he said.
While financial constraints and lack of knowledge do play a role, the overwhelming majority simply put off making a decision. “I didn’t feel like doing it today, I think I’ll do it tomorrow,” he said.
Kapoor also addressed concerns about financial independence in retirement.
Read more: https://www.outlookmoney.com/retirement/forty-after-forty
#OutlookMoney40after40
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LearningTranscript
00:00Good afternoon, everyone.
00:07I hope I'm audible at the back.
00:10Can you raise your hand if I'm audible?
00:12Okay, super.
00:13Thank you so much.
00:14Okay, so I think over the next 20 minutes or so, we will share some of the more recent
00:20findings about how people think about their retirement.
00:25But since we have the benefit of all of you here, I thought maybe I'll start off and ask
00:30you, how many of us feel excited about our retirement ahead?
00:38Raise your hands.
00:41Okay.
00:42Just maybe I'm guessing about 15-20% of us.
00:46How many of us feel concerned or worried about not having enough for our retirement?
00:51Raise your hands.
00:54Okay, so I think the majority of us are still a bit concerned about how we will have enough
01:03so that we can have what we think is a comfortable retirement corpus to take us through those
01:09golden years.
01:10And we want to make sure that these are truly the golden years for our life, right?
01:16So some of the earlier research that was present in the market was a bit worrisome, as you
01:21can see from some of the data.
01:24People felt that they're not really prepared.
01:26So 90% of Indians were actually regretting not having started earlier.
01:32Most of them were past their 50s, so it is already too late for them to have started.
01:37A third of us believed that our savings will get exhausted in just five years of our retirement.
01:43So again, the same theme of not having a good enough corpus building up.
01:48And 24% of one on four actually don't even know where to start.
01:54Maybe coming here is a good start, but what happens next?
01:57What happens after that?
02:00So we decided to ask a few more questions.
02:02We knew there's a concern, but we said, okay, let's dig deeper and figure out what the current
02:07Indian is doing.
02:09And we came across a whole host of questions and a lot of more details will be available
02:15through a more detailed report.
02:18But to start with, we said, when do people start thinking about their retirement?
02:22How do they plan?
02:24What do they do?
02:25Which products do they choose?
02:26Who do they actually seek advice from?
02:28So these are some of the areas that we covered.
02:32As a research, we went out to metro as well as tier one cities.
02:38We covered about 2000 respondents.
02:41And you'll see that the mix was largely equal between, in terms of gender, age was between
02:4625 and 45 equally split, SCC A and B, which is an occupation education fix.
02:54Occupation wise, it was salaried business owners and self-employed professionals, equally
02:59split between north, south, east and west of India.
03:02And like I said, between metro and tier one cities, it was an equal split as well.
03:06So it's a broad understanding of urban affluent India in some sense.
03:12So what are the findings telling us?
03:14And I think the first finding that I'd like to share is, what do people look forward to
03:19when they retire?
03:21So what are they aspiring for?
03:22Why do they, what are they seeking when they retire?
03:26And I think the research suggests something we already know, which is that in our working
03:31life, maybe we don't get enough time, you know, time with our family to pursue our hobbies,
03:37to look at things that are actually meaningful for us.
03:41And that comes out as the first or the most important reason for what you're looking for
03:46in your retirement.
03:47So more time with family, better, better health and lifestyle, pursue hobbies.
03:53And the second part is actually, I need to, because I don't have a job and I don't have
03:58enough money.
03:59So those are the two themes I would take away from why people are looking for retirement.
04:03What are they looking for from, from their retirement years?
04:07Moving on.
04:08So that's just a prelude to what we found.
04:12Now, when do you want to start or have you already started?
04:16And that's something which is very interesting from previous research to now.
04:20And you know, that at least from a person in the financial services space, I feel very
04:25happy about, because three out of four individuals told us that they have actually started thinking
04:33about their retirement, which is great news as far as we are concerned.
04:37So there is a lot more awareness about the need for retirement planning to start on the
04:42journey.
04:43So at least three out of four are thinking actively about it.
04:46And again, when we split that data to see what's happening, actually, it's good to see
04:50that women more than men are more conscious about their need for retirement planning.
04:56Tier one residents, not the metros, are actually more conscious about the need for retirement.
05:02And again, business owners more than salaried.
05:05So think about some of these themes.
05:08The business owners who don't have the benefit of an employer deducting an NPS, you know,
05:15contribution or a PPF contribution is clearly the one which is more concerned.
05:19The smaller towns or the tier one towns, I can't call it smaller, more concerned, and
05:24women more than men.
05:25So good news in some sense, but unfortunately, when you look at when do you actually start,
05:33that's not very good.
05:35Because almost 50% of our respondents actually either have not started or they're starting
05:41quite late.
05:42So again, similar theme comes across where most of us think we want to start planning
05:48for our retirement, but we are either doing it very late or have just not been able to
05:52get started on that.
05:54So these are again, some thoughts that we leave behind with you and maybe we can discuss
05:58later what do we do about it.
06:02Now when we look at what really holds you back, why haven't you started?
06:08Why are we saying that, you know, you know it's important but you're just not getting
06:13down to doing it.
06:15Actually it just seems that it's plain, simple, boring inertia that is the biggest reason
06:21we have not as yet started planning for our retirement.
06:26So it's not because there are financial constraints which is there, but it's only 13%.
06:31It's not because I don't know about my future income, it's also there but it's 12%.
06:35But the biggest reason is just I didn't feel like doing it today, I think I'll do it tomorrow.
06:42So this is certainly something we feel which is overcomable.
06:46This is something we can really attack more, more, more, more actively.
06:52Lack of knowledge also comes across as one of the themes.
06:55So yes, I don't know where to start, I don't have enough money, I don't have visibility
07:00on how much I can save for my retirement, there are also points, but the bulk of it
07:04still is strikingly that I just don't want to do it today, I'll do it tomorrow.
07:09And that's something we can really attack in a sense.
07:14Now when it comes to how will you manage your retirement expenses, how, you know, do you
07:21feel confident, do you feel that you will be able to go through your golden years with
07:26ease?
07:27That's again interesting because in the current generation, and keep in mind we're talking
07:31to twenty-five to forty-five year olds, so twenty-five to forty-five year olds, almost
07:38half of us still feel that it'll be not our own savings for retirements but something
07:46else that'll get us through the retirement years.
07:49So eighteen percent of us feel that it'll be my family's wealth that'll help me through
07:54my retirement years.
07:56Seventeen percent actually think they will need to keep working because they don't have
08:00enough.
08:01And thirteen percent still feel they will need to be dependent on their children.
08:06So in to… in aggregate, half of us feel that actually our own savings are still not
08:13going to be enough, I will need to augment it with some of these sources.
08:17So that's again some more work we all need to do.
08:21How do we become completely self-reliant through these golden years?
08:26When we look at what do you look for when you choose a retirement product, and no surprises
08:34there, returns is what we look for.
08:37But if we look at what are the other factors beyond returns.
08:40So again actually beyond returns, tax benefit seems to be one of the biggest features.
08:47And clearly I think globally we've seen that tax advantages, some amount of support from
08:54the government in giving you an attraction to save towards retirement seems to have worked.
09:01And clearly something that we're all looking forward to as well, that if there's a tax
09:04benefit then it sort of encourages me to put more money towards retirement.
09:09Risk level and liquidity, these are the other features that I look for in my retirement
09:13product.
09:14So that's again very, very encouraging because it's not just about chasing high returns,
09:19it's about managing risk and managing liquidity.
09:22Again something that I think over the last decade we've seen a growing awareness of.
09:29So that's again very, very encouraging to see that risk and liquidity is equally important
09:33or slightly lower in terms, but it still pops up as a large area of what you should look
09:39for in a retirement product.
09:42Moving on.
09:43So which instruments, which financial products do we use today to build our retirement corpus?
09:52And there we think that or where we, what the respondents told us that traditional products
09:57like fixed deposits and insurance are still quite high, but mutual funds and equities
10:04catching up very quickly.
10:06So you'll see that the gap is actually reduced quite a bit.
10:10So while deposits and insurance pension schemes specifically are still quite popular, equity
10:16mutual funds, stocks becoming very attractive, EPF, NPS and some amount of REITs, real estates
10:23and real estate holdings are also becoming attractive as part of your retirement corpus.
10:29So that's where India seems to be today in terms of what they choose for their retirement
10:34corpus planning.
10:37Being a mutual fund, we are naturally interested in figuring what would you like from us?
10:41What would you like in a mutual fund?
10:43And therefore we ask the question of what is it in your mutual fund that you're looking
10:48for that makes it attractive when you've actually given us a large chunk of your retirement
10:52corpus?
10:53Clearly, apart from returns, what was interesting to see is just the flexibility and features
11:00like the systematic withdrawal plan.
11:03Now systematic withdrawal plan for many of you who may not be in the know is the reverse
11:08of an SIP.
11:09SIP is a systematic investment plan.
11:11So it helps you build the corpus.
11:13So that's when you're earning, you keep putting away money regularly and hopefully many of
11:18you, I hope all of you actually have an SIP going in a mutual fund because it helps you
11:24build that corpus, right?
11:26SWP does the reverse, which is it helps you use that corpus because here you're withdrawing
11:31on a regular basis, the amount that you like.
11:34And that's a great feature that I think this survey showed is highly valued by retirees.
11:40So it's the second most important reason.
11:44Flexibility to access retirement funds, the fact that a mutual fund is liquid, you can
11:48just withdraw any amount you want, any time you want.
11:51So it's not locked away.
11:53You realize that your cash flows will keep changing, your needs will keep changing even
11:57in retirement years.
11:59That's something that people like in a mutual fund.
12:02Tax benefits as well as diversification.
12:04So liquidity, tax, these are some of the features that come up as an attractive reason why people
12:09use mutual funds for their retirement corpus.
12:14What about any differences in the gender choice of retirement?
12:19And there we saw that women tend to be more conscious because they are planning the retirement
12:27more actively.
12:29They're also a bit more cautious.
12:30So more preference for traditional products, not into new products like equity mutual funds
12:36by them.
12:37So conscious yet cautious and that's again good to know and this is a journey so we look
12:43forward to future results as well on this survey.
12:47Where do you get your advice?
12:49So you've decided you want to build a corpus, you want to build a retirement pool.
12:54Who do you go to?
12:55Where do you get your advice?
12:56And this is interesting because for the longest time, surveys told us that most of us prefer
13:03our friends, maybe someone in the family that we have, you know, generally we… all of
13:09us have a mama, chacha, tau who is the go-to person for everything finance and we go to
13:13that person and say, kya karna chahiye and they tell us, this is what you should do.
13:18Interestingly what our research showed was that actually there's a strong move towards
13:22what I would see as experts now, whether it is the financial advisor, the distributor,
13:28the bank employee, even the media because a lot of online research, lot of tools available
13:36online seems to be the top three areas where people want their… want the information
13:43from so advisors, banks, online sources and after that it's friends, family and other…
13:49other family members.
13:51So there's a… seems to be a shift towards seeking out for more expert advice than in
13:56the past.
13:57So that's the other area that we… that we looked at.
14:01So in summary and this is just like I said, it's a summary report in any case but from
14:07what we've covered so far, what are the themes that seem to be coming up and what can we
14:12do about it in a sense?
14:15So the first theme I would call out is that many of us want to, we want to start our retirement
14:21planning but we really don't know how.
14:25That seems to be one trend that is coming out.
14:29The second is that even when we start, too many of us start too late and that as many
14:36of you will know just gives us a far lesser chance of reaching a certain corpus that was
14:44very attainable had we started earlier.
14:47So it's just the timing, being late by five, ten years and the big difference that can
14:52make in a retirement corpus.
14:54So starting late still seems to be a challenge for most of us.
14:59And the third was that we are still investing quite conservatively.
15:06Why are we saying conservatively?
15:08Because keep in mind, even in your retirement years, because life expectancy is going up
15:15quite rapidly, most of us or many of us traditionally used to think that now that we've hit a retirement
15:22age, maybe sixty, sixty-two, I need to keep all my money very close to me because I really
15:28don't have a long runway ahead.
15:31Think again because that long runway is getting longer and longer, more years for you to both
15:36enjoy but also fund and plan for.
15:41And therefore, a bit more of growth-oriented assets may be required so that you don't run
15:47out of this corpus, which is one of the concerns that we saw very early, most of us feeling
15:52that we won't have enough, our savings will only last for part of the time, then we will
15:58have to be dependent on family or children and some other sources or even go back to
16:03work because we don't have enough.
16:06So being a bit more balanced with our investment themes, investment strategies could actually
16:13be a way to overcome this.
16:15So therefore, just to recap, I think if you don't know how, get expert help.
16:23Sometimes I get asked, but how, how do I get expert help?
16:27Actually most of our industry is now making it very simple.
16:30You know, everyone has access to online and therefore it's very easy to get information
16:35on who to go to.
16:36So for example, in our industry, in the mutual fund industry, our association, Amphi, has
16:42a website and for your city, for your pin code, it'll list out all the certified distributors
16:48with their phone numbers, so you know, choose, you know, these are all certified individuals
16:52or companies, you can just choose, if not your bank already.
16:54So there are enough ways for you to get the expert.
16:58You just have to reach out and don't procrastinate, we saw that.
17:01I'll not do it today, I'll do it tomorrow and that's one of the largest reasons why
17:04we don't end up doing it.
17:07Starting late, what do we do about it?
17:10I think each of us should make a pledge today that I'm not going to waste… wait till tomorrow,
17:14let's do it today.
17:16If you haven't started, this is a beautiful forum for you to actually start.
17:20So if you've made the effort, come here.
17:23Let not this opportunity pass, start today.
17:27That would be a really, really heartfelt plea that don't delay this plan.
17:34And third, which is investing conservatively, do add a bit more equities to your portfolio.
17:40Generally, what we see is that retirement portfolios tend to be very conservative.
17:44While it'll be safe, the challenge with that is post-tax and it'll be very difficult
17:50for you to beat inflation, which means over long periods of time, it doesn't get enough
17:54growth.
17:56So adding a bit more equity through equity mutual funds as an example is a good way to
18:00make sure that you're getting growth along with the safety that you need in a retirement
18:05corpus.
18:06So these would be some of our suggestions.
18:09As a parting thought, I think I will leave this behind, which is retirement can be wonderful,
18:15is wonderful, but we need two essential things.
18:20First, we should have enough to live on and we should have someone to live for.
18:28So much to live on and much to live for is what we would want our retirement years to
18:34be, those golden years to be.
18:35Thank you very much.