Urban India's retirement index rises to 49; women lead with 50: Max Life

Urban India’s retirement index has increased from 47 to 49 due to positive movement in the financial and health indices, according to the fourth edition of the India Retirement Index Study (IRIS) by Max Life Insurance. Urban Indian working women lead with a retirement index score of 50 across all metrics, one point ahead of men.

The retirement index comprises three indices with the following weights: financial index (31 per cent), health index (61 per cent), and emotional index (8 per cent).

The study also identifies regional opportunities in retirement planning across India: the East zone leads in overall preparedness, the West zone shows financial and health advancements but needs more focus on emotional well-being, and the North and South zones are progressing in health preparedness.

The India Retirement Index Study (IRIS), conducted in collaboration with Kantar, highlights shifting perspectives among urban Indians regarding retirement planning.

The latest IRIS 4.0 results indicate a growing trend towards early retirement planning, with 44 per cent of Indians believing retirement planning should begin before the age of 35, up from 38 per cent in the previous IRIS 3.0 study. Among those over 50, 93 per cent regret not starting their retirement planning sooner.

Encouragingly, 63 per cent of respondents have already begun their retirement investments, alleviating concerns about meeting essential and luxury needs and securing their children’s futures. Notably, 68 per cent of urban Indian working women have started investing for retirement, a 7 percentage point increase over last year.

According to IRIS 4.0, a significant 97 per cent of urban Indians recognise life insurance as a viable financial product, with 67 per cent already investing in it for retirement. Additionally, 37 per cent have invested in health insurance.

There is a gap in awareness about the retirement corpus needed to sustain their current lifestyle; 31 per cent of urban Indians lack this knowledge. Only 27 per cent expect their savings to last between five to ten years, while 30 per cent worry about exhausting their funds within five years.

“Preparing for retirement is a critical priority for the future of Indians, especially as life expectancy rises with advancements in healthcare, emphasising 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, one in three Indians still feel underprepared,” says Prashant Tripathy, chief executive officer (CEO) and managing director, Max Life Insurance.

In IRIS 4.0, metropolitan areas lead retirement planning with an overall index score of 50, supported by favourable indices in finance (51), health (49), and emotional well-being (60). A significant 42 per cent of residents in metropolitan regions participate in regular physical activities, enhancing their confidence about maintaining fitness and health in retirement.

Both Tier-I and Tier-II cities have also shown advancements. Tier-I cities have reached an overall index score of 49, with notable improvements in the financial (54) and health (45) indices.

Meanwhile, Tier-II cities have raised their financial index from 50 to 53, resulting in an overall index increase to 47. However, their emotional index remains unchanged at 60, highlighting the need for greater emphasis on emotional health.

The National Pension System (NPS) is increasingly recognised as a reliable investment option, with over 90 per cent of survey participants viewing it as a “safe and dependable” product. Awareness has notably increased, particularly in Tier-II cities, where 78 per cent of individuals are informed about NPS, resulting in a commendable 25 per cent ownership rate.

The East and South regions demonstrate strong awareness levels at 74 per cent and 72 per cent, respectively, while ownership is highest in the East and West zones at 26 per cent and 22 per cent.

Major contributors to NPS awareness include television commercials (62 per cent), news articles (39 per cent), and recommendations from colleagues, family, and friends (37 per cent). The primary motivations for adopting NPS are its attractive returns (57 per cent), provision of lifelong income (40 per cent), and favourable tax-saving opportunities (36 per cent). However, despite this optimistic perspective, challenges such as the need for guidance and incomplete understanding of the product continue to hinder wider adoption.