Indians, Chinese not saving for post-retirement comfort

Indian and Chinese employees are at risk of not saving enough for a comfortable life after retirement as they often put their money in short-term instruments that may not provide a long-term hedge to inflation, a global professional services firm said Monday.

"There are clear risks in translating these savings into a comfortable standard of living in retirement, as they are often kept in illiquid and short-term instruments that may not provide a long-term hedge to inflation," Towers Watson said.

The Towers Watson's Savings Attitudes Survey (India and China) found that approximately 90 percent 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.

Workers in both countries are facing challenges accompanying increased life expectancies and post-retirement days, while given high rates of savings, it is hard to envisage a retirement crisis, the report said.

The survey, however, found "clear risks in translating these savings into a comfortable standard of living in retirement."

The most popular form of investment in India is purchasing gold or silver, with 41 percent people considering buying jewellery a form of saving.

In China, the most popular savings means 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," said Towers Watson India Benefits Director Anuradha Sriram.

Rising living costs emerged as the single largest risk factor to live comfortably post-retirement across age groups in India.

Housing and expenses on children's education and marriage are the top two motivating factors to save for Indians above 35.

The survey also found a strong correlation between health status and financial decisions in India as opposed to China, whereby those in better health save significantly more.