Canara HSBC Oriental Bank of Commerce Life Insurance Company Limited, a joint venture between two of India’s largest public sector banks, Canara Bank and Oriental Bank of Commerce, and HSBC Insurance (Asia Pacific) Holdings Limited, released HSBC study ‘Future of Retirement: Why Family Matters’ in India.
The study reveals people’s outlook on retirement and the differences in the way people from different households plan for it. It highlights the gender gap between how men and women plan and how that gap might be influenced by differences in working patterns and the onset of children.
Key findings of the report:
. Parents in India are more likely than those without children to see retirement as a time of financial hardship.
. 32% of the parents do not have any life insurance.
. More than half the people aged 30-39 do not have any short-term savings.
. Only 30% of Indians in the age group 50-59 undertake tax planning. This is the time when the value of assets is generally the highest.
. Retirement planning in couples is more likely to be fully undertaken by men.
. Tax planning and inheritance planning remain low priorities.
. 83% of the Indian respondents were keen to pass their wealth to their children when they die, yet 85% of the parents never made a will.
John Holden, CEO, Canara HSBC Oriental Bank of Commerce Life Insurance Company said, “Many financial needs are driven by key life events – including getting married and having children – and as the family is central to these life events, it is an important consideration in building a picture of an individual’s long-term financial needs. What emerges from the study however is that people both globally and in India are putting their families at risk by failing to make a proper financial plan in accordance with their needs. At the same time, people who have financial plans in place, have evident gaps with large numbers of younger families without life insurance in place, while many still overlook the need to build retirement savings especially women across all age groups who continue to lag behind their male peers and women are left exposed to financial hardship in later life.”
“Regarding consumer attitudes to financial risk, it is evident that investment risks are not understood well and gender differences exist that may again disadvantage women. Many people still prefer to apply a do-it-yourself approach to financial planning. Whilst this is positive that people are taking greater personal responsibility for their finances, people shouldn’t see this as a substitute for getting expert financial advice on how to make their money work as hard as possible,” he added.
The report also suggests how families can improve their future financial well-being:
1. Share your financial decision-making: Financial planning decisions like retirement and protection needs should be shared and discussed with your partner to ensure that both of you are well prepared.
2. Understand the importance of the life events and stages: Having children, saving for college fees, dealing with death or divorce etc are the various events that one should consider while reviewing or starting a financial plan.
3. Review your financial plan with a professional: Many people still prefer to do their own financial planning, with 43% not having approached a professional. It is important to get a professional to review your plan for any gaps or omissions.
4. Take a balanced approach to managing investment risk: Balance the need to protect your investments in the short- and medium-term with the need to generate an adequate retirement income in the long-term.
