Indians, Chinese not saving enough for comfortable retirement: Study

NEW DELHI: Indian and Chinese employees are at risk of not saving enough for a comfortable retirement as they often put their money in short-term instruments that may not provide a long-term hedge to inflation, a Towers Watson survey said.

According to the global professional services firm, workers in both countries are facing challenges accompanying increased life expectancies and post-retirement days, and they are at risk of not saving enough for a comfortable retirement. Given high rates of savings, it is hard to envisage a retirement crisis, but there are clear risks in translating them into a comfortable standard of living in retirement, the report said.

According to Towers Watson's Savings Attitudes Survey (India and China), approximately 90 per cent of workers in China and 80 per cent in India expect to retire at the age of 60 or less, with only moderate reductions in their spending power thereafter.

The most popular means of investment in India is purchasing gold or silver, with 41 per cent people considering buying jewellery a form of saving. In China, the most popular savings methods are bank deposits, mutual funds, pension plans, insurance products and equity investments. "Secure retirement benefits, whether mandatory or voluntary, are critical for an employee's future. With benefit costs ever increasing, employers need to facilitate retirement savings and raise awareness among employees by going beyond mere provision," Towers Watson India Benefits Director Anuradha Sriram said.

Sriram added "avenues such as the National Pension System will definitely attract employer attention as a sustainable retirement investment vehicle for employees going forward". The survey further said that in India, across age groups, "rising living cost" emerged as the single largest risk factor to live comfortably post-retirement. Housing and children's expenses (wedding/education) are the top two motivating factors for Indians above 35 to save. Moreover, there is a strong correlation between health status and financial decisions, it said.