Retirement planning in india.

The Golden Opportunity of Golden Years

by

Neeraj Chauhan, CFPcm

13/07/2014 Neeraj Chauhan, CFP

By providing financial protection against the major 19th century risk of dying too soon, life insurance industry became the biggest financial industry of the century

Now

Providing financial protection against the new risk of not dying too soon enough may well become the next century’s major and most profitable financial industry

Peter Drucker

13/07/2014 Neeraj Chauhan, CFP

Most Populous countries 2013

Country Population (in Millions)

China 1,357

India 1,277

United States 316

Indonesia 249

Brazil 196

Pakistan 191

Nigeria 174

Bangladesh 157

Russia 143

Neeraj Chauhan, CFP 13/07/2014

Most Populous countries 2050

Country Population (in Millions)

India 1,652

China 1,314

Nigeria 440

United States 400

Indonesia 366

Pakistan 363

Brazil 227

Bangladesh 202

Congo, Dem. Rep. 182

Neeraj Chauhan, CFP 13/07/2014

Emerging retirement income market

Neeraj Chauhan, CFP 13/07/2014

Neeraj Chauhan, CFP 13/07/2014

Neeraj Chauhan, CFP 13/07/2014

By mid-century, this 60+ age group is expected to reach 19% encompass 323 million people, a number greater than the total U.S. population in 2012.

Neeraj Chauhan, CFP 13/07/2014

Challenges

Neeraj Chauhan, CFP 13/07/2014

Increasing Life Expectancy

57 59 60 62 63 64 66 68 69 75

0

10

20

30

40

50

60

70

80

Age

Age

Neeraj Chauhan, CFP 13/07/2014

Significant health problem

Neeraj Chauhan, CFP 13/07/2014

Almost one-half (47 percent) of older Indians have at least one

chronic disease such as asthma, angina, arthritis, depression,

hypertension or diabetes

Neeraj Chauhan, CFP 13/07/2014

Fewer than 10 percent of Indians have health insurance from private

or public sources, and about 72 percent of health care spending is

paid out-of-pocket

Neeraj Chauhan, CFP 13/07/2014

Can’t forecast size of their retirement bucket

Neeraj Chauhan, CFP 13/07/2014

Too much life, not enough money as Less

than 11 percent of older Indians have a pension of

any sort

Neeraj Chauhan, CFP 13/07/2014

Shift in formal retirement savings plan from defined

benefit to defined contribution

Neeraj Chauhan, CFP 13/07/2014

Savings are frequently invested in low interest

bearing Instruments.

Neeraj Chauhan, CFP 13/07/2014

Accumulated capital usually end up being

diverted to necessities other than retirement.

Neeraj Chauhan, CFP 13/07/2014

Many Indians are heavily reliant on investments in property and are hence very exposed to illiquidity & movements in property values.

Neeraj Chauhan, CFP 13/07/2014

Emotional bias

Fear

Aggressiveness

Regret

Susceptibility

Inertia

Neeraj Chauhan, CFP 13/07/2014

Nuclear family Structure and inability of families to support

elderly

Neeraj Chauhan, CFP 13/07/2014

Low financial literacy

Neeraj Chauhan, CFP 13/07/2014

Silver lining

Neeraj Chauhan, CFP 13/07/2014

High Savings ratio

Neeraj Chauhan, CFP 13/07/2014

Growing Economy

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Expectations

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Education

Decision Support

Advice/ Marketing info

Healer

Trusted Counselor

Neeraj Chauhan, CFP 13/07/2014

Delivery

Neeraj Chauhan, CFP 13/07/2014

Retirement planning is smartly shifting purchasing power from period of high earnings (the working years) to those of low earnings (Retirement).

Neeraj Chauhan, CFP 13/07/2014

Get real about Goals

Income

Outgo 13/07/2014 Neeraj Chauhan, CFP

Right combination of retirement income tools for both

retirement accumulation

&

retirement distribution.

Neeraj Chauhan, CFP 13/07/2014

Appropriate

Asset allocation,

diversification ,

rebalancing.

Neeraj Chauhan, CFP 13/07/2014

Adequate Risk

management

•Red Zones

•Health

•Expect the Unexpected

Neeraj Chauhan, CFP 13/07/2014

Fiduciary behavior

Neeraj Chauhan, CFP 13/07/2014

A plan that alleviate their fear, allowing them to retire with confidence and leisure.

Neeraj Chauhan, CFP 13/07/2014

Give an attitude of abundance over scarcity with focus on life time income and spending.

Neeraj Chauhan, CFP 13/07/2014

Shift focus and spotlight from

Investment portfolio to human capital with life

cycle approach. Neeraj Chauhan, CFP 13/07/2014

People care more about their lifetime standard of living than about their wealth and this requires a shift from return management to risk management.

Neeraj Chauhan, CFP 13/07/2014

In the End

It’s all about Arranging lifetime consumption in the safest way possible given finite lifetime income over building largest possible portfolio constrained by risk tolerance.

Neeraj Chauhan, CFP 13/07/2014