Introduction: Retirement Dreams vs. Reality
Saving Enough for Retirement : When you picture your retirement, what do you see? Peaceful days without financial worries? Time to travel or spend with grandchildren? For many Indians, this dream might be harder to achieve than expected — simply because they aren’t saving enough.
A recent report by Grant Thornton Bharat, based on a national pension survey conducted between August and September 2024, revealed a sobering truth: most Indians are underprepared for retirement. While some saving habits exist through schemes like EPF and NPS, there’s widespread dissatisfaction and knowledge gaps that could derail long-term financial security.
Let’s break down what the report uncovered and what you can do to stay ahead.
The Big Picture: Low Contributions and High Gaps
Despite the growing awareness of retirement planning, the actual contributions toward retirement products in India remain alarmingly low. According to the survey:
- Many working individuals are saving inconsistently or not at all.
- There’s a significant gap between expected retirement income and actual savings.
- Younger earners often delay starting their retirement fund, focusing on short-term goals like buying a car or paying off loans.
Real-life Example:
Take Rakesh, a 32-year-old software engineer from Bengaluru. He contributes to the EPF through his employer but has no other retirement investments. When asked about his pension goals, he said, “I’ll probably start looking into it after I’m 40.” That delay could cost him lakhs in missed returns.
NPS: A Popular But Controversial Choice
The National Pension System (NPS) is one of the most accessible retirement tools available, yet it’s not without its critics. The survey noted:
- Widespread dissatisfaction with NPS returns, especially when compared to expectations.
- Users want more transparency and flexibility in how their money is managed.
- Many feel the returns don’t match the risk or time invested.
Suggested Reforms:
- Improve the investment return structure or introduce better-performing fund options.
- Enhance customer service and user experience for account holders.
- Provide clearer communication on fund performance and withdrawal rules.
EPF: Trusted but Not Enough
The Employees’ Provident Fund (EPF) remains a trusted staple for salaried professionals. It offers safety and government backing, but it may fall short of covering future expenses like rising healthcare costs and inflation.
Pro Tip:
If EPF is your only retirement plan, you should consider complementing it with a mutual fund SIP or pension plan to create a more diversified portfolio.
What People Really Want: Guaranteed Income & Simplicity
When it comes to retirement, most people care more about stability than high returns. The report revealed a rising demand for guaranteed income products like:
- Annuities – provide regular income after retirement.
- Government-backed schemes – perceived as safe and reliable.
- Simple pension calculators – that demystify future income projections.
The Awareness Gap: Financial Literacy is Still Missing
Perhaps the most alarming insight? A large portion of the population is unaware of:
- How their pensions are calculated.
- What schemes like Atal Pension Yojana or PM Vaya Vandana Yojana offer.
- How much they actually need to retire comfortably.
This lack of knowledge leads to poor planning and underinvestment.
A Simple Fix:
Employers, financial institutions, and government bodies must collaborate to:
- Run awareness drives in regional languages.
- Offer free financial planning workshops.
- Use mobile apps and SMS alerts to educate rural and semi-urban populations.
Younger Workers Want Flexibility — and That’s Okay
Interestingly, younger respondents in the survey (ages 25–35) showed a strong preference for high-risk, high-reward strategies like equity funds or crypto. While this might seem reckless, it also highlights a shift in financial behavior.
Balanced Approach:
Encourage younger investors to build a core-safe portfolio (EPF, NPS) while experimenting with a small percentage in aggressive assets — balancing risk and reward over the long term.
3 Fresh Tips for Smart Retirement Planning in India
1. Start with a Clear Retirement Goal
Instead of saving blindly, calculate how much monthly income you’ll need post-retirement. Use online calculators to set a realistic number.
2. Diversify Your Retirement Sources
Relying on just EPF or NPS isn’t enough. Add mutual funds, gold bonds, or a pension plan into your retirement mix.
3. Review and Adjust Every Year
Life changes. Salaries increase. Expenses shift. Set a reminder to review your retirement strategy at least once a year to stay on track.
Conclusion: It’s Time to Get Proactive About Retirement
Retirement shouldn’t be a financial struggle — but it will be if you ignore it. The recent pension survey by Grant Thornton Bharat is a wake-up call for every Indian worker. Whether you’re 25 or 55, the time to plan is now.
Start small if needed, but start today. Your future self will thank you.
Points To Be Remember
- Most Indians aren’t saving enough for retirement.
- EPF and NPS are widely used but come with limitations.
- There’s a growing need for financial literacy and transparent pension products.
- Guaranteed income and simplicity matter more than high returns.
- Younger workers prefer risky investments but need balanced planning.
