Retirement in India vs the US: How parents balance financial security, caregiving, and inheritance

While volunteering at an assisted living facility, I heard many stories about parenting, old-age income security, bequests and assets. In the United States, assisted living is the last choice—seniors hate making it. Culturally, they like their independence and privacy too much to live along with others, and to take help for their everyday chores. It is not unusual to see 80-year olds still mowing their lawns, driving their cars, and cooking meals while living in their home by themselves. They move into assisted living only when these tasks become burdensome, especially after an injury or fall.

Life expectancy is higher in developed economies, giving seniors enough time to plan their work, retirement and geriatric care. The lack of an official retirement age means many choose to work for as long as they can. As long as one is willing to work, and someone is willing to pay them, seniors can choose to be employed. It is not uncommon to see them as forest rangers that recount interesting stories, library assistants that organise weekly events, or as practicing doctors that guide young interns at their clinics. They like the income to flow as long as possible, while keeping the flexibility to travel, meet friends and live a quiet private life.

Building up and passing on assets

What about the assets? Most seniors would own the house they have lived in, having paid the mortgage through long years of employment.


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The dominant financial asset for a middle class working American would be the retirement savings in their 401K account or Roth individual retirement account (IRA). The portfolio of assets expands to properties, farm lands, financial assets, art and collectibles, and international investments as one moves up the hierarchy of prosperity. The wealthy tend to set up a trust that holds their assets, with all the details about how these assets will be held and managed and how the benefits will go to their heirs and other named beneficiaries. Even the upper-middle class with more than one property tends to hold these in a trust, to smoothen the process of bequest. Wills and probates are seen as cumbersome and costly, and trusts also fire wall assets from the possibility of multiple marriages and divorces among both generations.

The broad understanding is that adults must take responsibility for their finances. Parents live independently with their assets and income while adult children are expected to manage their own finances. It is, however, quite common to see adult children take on caregiving responsibilities for their aging parents, especially when they fall ill or are otherwise indisposed. It is also not uncommon for parents to fund college education wherever possible.

There is also a growing trend of adult children returning to live with their parents— termed as the ‘boomerang generation’—who depend on their parents well into adulthood. Parents tend to protect their assets for their own use in retirement, and choose to not spend it disproportionately on their children’s edu cation or marriage. If savings are channeled for these uses, the money available for a long retirement would be limited and compromised. This is the broad middle class family situation.

Wider range of caregiver options

Contrast this with the lives of Indians in their homeland or Indian-origin Americans in the US. In India, the idea of the old-age home has been turned on its head to create senior living facilities in which parents enrol from a young age of late 50s. There is a virtual boom in facili ties that offer food, accommodation with daily maintenance, recreation, social interaction, and medical care. In an environment where labour is inexpensive, caregiving has been ef ficiently outsourced. Even those who choose to live in their own homes are able to hire help of every kind to support their activities. Depending on hired help is preferred over man aging alone. It is common for parents to spend willingly on the education of their children— many choose private education from kinder garten to post-graduation. Weddings in India have only turned more and more lavish and opulent over the years, across income levels.

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While retirement at 60 years is common, not everyone has chosen a second profession. A large chunk of the current senior population was employed during the dominance of PSU and government employment in the 1970s and thus, now draw a defined benefit pension.

Confidence on their savings and investments is high among these seniors, who also began investing in financial assets in the IPO boom of the ’70s. The current generation of retirees is also financially supported by their adult children as needed. There is a clear understanding that the assets accumulated by parents will be bequeathed by these children, for many of whom it is a major wealth transfer. It is easy to hold assets jointly with children, or to periodi cally gift and transfer wealth to them. Wills are growing in appeal, but trusts are not popular except among very high net-worth families.

How the American Indian differs

The American Indian’s position does not necessarily draw from the best of both above. Their Indian parents and extended family still depend on them for remittances, annual visits, support during illness and such. They spend on their children’s education willingly and save aggressively to put them through good colleges. They also spend a good amount of their savings on lavish family ceremonies, including marriages.

A good portion of the American Indian population is richer than the median, having post-graduate educational qualifications and having risen through hard work into higher paying jobs. Their cultural orientation for saving keeps their assets larger than average, be it real estate and financial instruments.

However, their old-age security hangs between the two cultural dichotomies they live in. They would like to not depend on their children and live in their own homes taking care of themselves in their old age. It is not always clear within the household if this arrangement will come under strain when one of the couple falls ill and needs caregiving, or if one passes leaving the other behind.

They may lack clarity on how caregiving will happen at that time—will they pass on their lived burdens as caregivers to their children? Will they depend on them just as their parents did? Will they manage on their own in a country where labour is not cheap as it is in India? Will they return to India in their old age to live in one of the modern retire ment enclaves? Will they spend their assets on themselves or feel obliged to leave it for their children?

We are on the cusp of the largest inter generational wealth transfer and challenges of geriatric care of the generation of Indians that came to the US from the 1980s. Will their retirement look American? Or Indian? If it is a combination of the two, at this time it is un known how favourable it is likely to be for the seniors who may have imbibed both cultures but emerged as the sandwiched giving and caretaking generation.

The Author is Chairperson,Centre For Investment Education And Learning