At the Outlook Money 40After40 Retirement Expo, speakers and experts highlighted on the importance of retirement planning and the need to start early and save diligently to build a solid innings that can take you to a winning score to comfortably help you sail through your retirement years. Here are the excerpts from the first day of the event
The two-day Outlook Money 40After40 Retirement Expo opened in Mumbai on January 23, 2024. This unique event, a first-of-its kind, dwelled on the ever important topic of retirement planning – but rather than being just a platform for information, it was oriented towards celebrating the exciting phase of retirement that one looks forward to after the grind of working years.
The event started with the lighting of the ceremonial lamp by the dignitaries, including among others, by Outlook Group CEO Indranil Roy, Nidhi Sinha, Editor of Outlook Money, V. Vaidyanathan, MD and CEO of IDFC FIRST Bank, Bharat Shah, Executive Director, ASK Asset & Wealth Management Group, K.S. Rao, Head of Investor Education and Distribution Development at Aditya Birla Sun Life AMC, Swarup Mohanty, Vice Chairman and CEO of Mirae Asset Invest Managers (INDIA) and Ritesh Kumar, MD and CEO of HDFC Ergo General insurance.
In his welcome address, Indranil Roy stressed on the importance of retirement planning, especially for a country like India, which has such a large young population.
“According to the United Nations Population Fund’s India Ageing Report 2023, population above 60 years will double from 10.5 per cent or 14.9 crore (as of July 1, 2022) to 20.8 per cent or 34.7 crore by 2050. According to the WHO report, between 2015 and 2050, the proportion of the world’s population over 60 years will nearly double from 12 per cent to 22 per cent. On average, people invest 17 per cent of their total income. Within that, 21 per cent is invested for retirement. This is even lower among those aged above 40,” he said, adding that since the pandemic, the percentage of respondents who do not have a retirement plan has dropped from 51 per cent reported in the 2020 survey to 33 per cent in the 2023 survey.”
In her address, Nidhi Sinha emphasised on the importance of starting early and planning smartly towards creating a corpus for retirement, something which Outlook Money has consistently conveyed to its readers.
“You should start investing for retirement as early as possible to make your investment journey smoother. If you haven’t started already, it’s never too late. There are strategies to overcome the challenges of starting to plan for retirement at any stage. But if you are around 40 already, know that the clock is ticking, and you need to start now,” she said.
She added that retirement planning is not just about preparing for your finances, but it also involves careful decisions on other aspects.
“With the nuclear family culture taking over India, you may have to explore senior living options. A very important conversation is also about wellness and health. Sound planning around health in the early years can ensure that you lead an active and healthy life post-retirement. And that may also provide you with the option of reinventing yourself, to follow your dreams that you may have been unable to pursue during working years,” she added.
V. Vaidyanathan, MD & CEO of IDFC FIRST Bank, likened the concept of retirement planning to a well-crafted innings aimed at building a solid score in a 50-overs One Day International (ODI) cricket match.
He said that just like in cricket, where batsmen who accumulate runs only in the later overs often falter, many individuals also make the mistake of overlooking retirement planning until the later stages of their career, which often leading to potential financial calamities.
He also stressed on the importance of accumulating enough resources to last one’s retirement years.
“The real risk lies in outliving one’s resources, a situation many face as the number of senior citizens is expected to double by 2050. The cessation of regular income post-retirement makes it imperative to manage expenses meticulously, with even minor charges becoming significant,” he said.
Deepak Mohanty, Chairman, Pension Fund Regulatory and Development Authority (PFRDA), asserted on the importance of having a pension account in one’s savings portfolio. It’s as important as having a balanced meal, he said.
“Why should you have a pension as part of your savings portfolio? Because it is like an Indian Thali, you need a little bit of everything. It should have a healthy mix of savings, equities, mutual funds, pension accounts, etc., to make it a wholesome meal. Pension should be on the menu of the saving portfolio,” Mohanty said.
He said, in India, less than a quarter of people think of retirement savings. Also, financial literacy is relatively low, at around a quarter. “Even people with good degrees lack financial knowledge. Globally, the average is around one-third,” he said.
Madan Sabnavis, Chief Economist, Bank of Baroda, spoke of the importance of the quality of economic growth rather than the speed of its progression.
He said it was important to reduce the number of people below the poverty line, emphasising the role of government social welfare subsidies. He said India’s per capita income, currently standing at a modest $2400 per head (approx. Rs 178,000), which highlights a critical need for equitable distribution of economic benefits, as nations with lower economic rankings boast significantly higher per capita incomes.
Bharat Shah, Executive Director, Ask Asset & Wealth Management Group, emphasised on the importance of building wealth as a sacred duty and not just a task. He said India is at the cusp of a great economic expansion and people must take benefit of the immense opportunities at hand to holistically build their wealth.
“We are at a cusp of the greatest economic expansion this country has ever witnessed, not just compared to her own history; it will be so compared to any comparable, relevant example anywhere in the world in the coming period. Therefore, the rate of economic expansion will be one of the most defining features of what we will witness,” said Shah.
He also highlighted on the importance of reforms, adding that when they are deep and interconnected, “the outcome is not merely an arithmetic total but a geometric multiplication.”
“You build an ecosystem. We are at the cusp of somewhere around that, where the ecosystem geometrically creates a force multiplier,” he said.
Ananth Narayan Gopalkrishnan, whole-time member of the Securities and Exchange Board of India (Sebi), spoke of the pitfalls and mistakes that people are prone to make in personal finance and retirement planning, narrating a personal anecdote of the troubles he faced in personal finance.
He spoke of the fundamental mistakes he had committed by failing to understand the importance of income, expenses, and savings early.
He said it is important to envision the financial future, considering inflation, investment returns, and one-off expenditures, such as education and healthcare, adding that one should not postpone retirement planning until retirement beckons. He also said that one should not shy away from taking professional help if it so requires.
“Financial planning demands a close examination of one’s financial landscape, extending beyond the present. While many of us know our current expenditures, the exercise of forecasting for the next five, 10, or even 50 years is often neglected. I have come to believe that the term retirement planning might be misleading. Let’s reframe it as financial planning, a concept applicable to everyone, regardless of age,” he said.
“Plans will inevitably evolve, but having a framework allows you to adapt and understand the shifting dynamics of your financial journey. So, as we embark on this odyssey, let’s embrace the mantra of financial planning and navigate the complexities with foresight and resilience,” he added.
Tara Singh Vachani of Antara Senior Living emphasised the importance of providing seniors with a sense of relevance in her conversation with CB Ramkumar, Vice Chairman and Board Member for the Global Sustainable Tourism Council on The Senior Social Network.
“One thing seniors want is the sense of relevance. We studied what people want to feel as they get older. Is it to be cared for? Is it safety or security? Is it mental or intellectual stimulation? Is it spiritual stimulation? We found that they want the feeling of relevance. And therefore serve that feeling of relevance. One of the important steps is to let them choose how they want to age and what they want to have. They want to have that luxury,” Vachani said.
Authors Devdutt Pattnaik and Neelesh Mishra also regaled the audience with snippets from mythology and a storytelling session on the need to be courageous to take decisions.