Indians are now increasingly taking control of their finances without compromising on their aspirations. They are worried about a lack of alternative income, macro-economic uncertainty, including job stability, and the need to have money as a safety net for emergencies, while also striving for aspiration, including fulfilling family responsibilities, according to the PGIM India Mutual Fund Retirement Readiness Survey 2023
More Indians are now taking control over their finances, without compromising on their aspirations. They are looking at money from two perspectives – one as a ‘safety net’ towards unexpected or expected emergencies, and second, as an enabler to fulfil one’s aspirations, including commitments towards family while simultaneously striving towards attaining self-worth and self-identify, i.e., (seeking social respect and pride).
In the aftermath of the Covid-19 pandemic, more Indians are ‘seeking freedom’ – i.e., executing responsibilities without having to compromise their lifestyle and aspirations’, such as having a bigger house, quality education for children to upgrading lifestyle through fashion, tech, décor choices, vacations, etc, according to the PGIM India Mutual Fund Retirement Readiness Survey 2023.
The survey involved face-to-face interviews with 3,009 Indians aged between 26 and 60 years across 15 cities (nine metros and six tier-I cities). Of these respondents, 19 per cent were in the 26-40 year age-group, and double that number (38 per cent) were in the mid-age group of 41-50 years. The rest 43 per cent were in the 51-60 year category. Men comprised 80 per cent of the respondents and women the balance 20 per cent.
Most of the respondents were salaried (54 per cent), with the rest 46 per cent comprising businessmen and/or self-employed professionals.
One of the major findings of the survey was the negative impact that making and managing money had on one’s ability to fulfil one commitments and responsibilities. If one failed to manage his/her money well due to expertise or inability/delayed adoption to the growing financial digital world – it led to social embarrassment, low self-esteem and/or a sense of lack of control, to the potential of even leading to the build-up of debt and liabilities, the survey said.
Indians were on average allocating 59 per cent of their money to household expenses and 18 per cent towards paying off loans. This was slightly more than the findings of the 2020 survey.
Indians were also eager to improve their skillsets. They were, on average, spending 5 per cent of their income towards skill development or education loans.
The Covid-19 pandemic led to major changes in attitude, behaviour and financial planning among Indians. Almost half (48 per cent) or respondents said they had become more financially conscious, planned and disciplined after the pandemic.
This has also led to a change in outlook with regards to additional and/or alternative income, inflation, generating higher returns from investments and striving for a sense of identity and self-worth towards personal accomplishments.
Additional Income: According to the survey, about 38 per cent of respondents said they worried about a lack of alternate source of income. Of the 36 per cent respondents who said they had alternate income source, 42 per cent said they received extra income from investing in financial assets. The alternate source of income significantly increased their financial preparedness towards exigencies, the survey revealed.
Higher Returns: When income is relatively lower, the focus is on generating more returns and becoming financially secure. With rise in income, other aspects, such as reaching a higher position in the current workplace and developing a passive income source took precedence, the survey found.
About 50 per cent of those surveyed said they wanted to generate higher returns, compared to 46 per cent who said they preferred being financially secure.
Inflation And Economic Slowdown: Inflation and economic slowdown came on the top list of worries related to managing finances. About 56 per cent of those surveyed said they were aware of macro-economic factors, such as inflation, cost of living and slowdown in economic activity. This was double the 2020 survey figures.
Planning For Future: In the aftermath of the Covid-19 pandemic, more Indians were putting emphasis on long-term commitments, such as medical emergencies, family security and retirement planning.
A huge 47 per cent of those surveyed said they have started worrying about external events, such as job stability, medical emergency, inflation, economic slowdown and the like, up by 21 per cent from the 2020 survey.
Surprisingly, 67 per cent of Indian also said they were ready for retirement. Those who had planned for their retirement had started planning at the age of 33 and those who haven’t, intend to do so in their 50s, the survey revealed.
Ajit Menon, CEO, PGIM India Mutual Fund, said: “We saw a visible attitudinal and a behavioural shift overall, where the pandemic seems to have impacted certain significant aspects. The emphasis on ‘self-Identity’, ‘SelfCare” & ‘Self-Worth’ have emerged as more important than ever alongside fulfilling roles and responsibilities towards one’s family.”