Yesterday (6 Jan 2024), I attended an investment awareness conclave at Mumbai – 11 Strangest Secrets of Wealth Creation. The conclave was India’s largest investor awareness program and was addressed by CEOs of India’s leading Fund houses. This was arranged by Network FP India’s leading online knowledge platform for financial advisors.
Each CEO provided a summary of their experiences gained over several decades in a 20-minute presentation. Needless to say, this was a masterclass of the highest order.
All the topics were interesting, but the last one made a strong impression. Aji Menon, CEO of PGIM India Mutual Fund, spoke. His presentation offered a unique perspective on retirement and building a retirement fund. Menon mentioned that nowadays, retirement is seen negatively, and people hesitate to save for it.
This made me think about this aspect and pen this article.
People used to see retirement as a happy time to relax. But now, many feel it's not so great. Even though people know it's important to save for retirement, it's hard for them. They struggle to put money aside for a future that feels far away. This article looks at why people find it tough to save for retirement and what's going on in their minds when it comes to planning for this important phase of life.
1. Immediate Gratification vs. Future Security:
Many people don't save for retirement because they prefer enjoying things now instead of thinking about the future. Our world encourages quick pleasure and buying things, making it hard for people to resist spending on immediate wants instead of saving for later. The future benefits of saving for retirement usually can't beat the instant joy of spending money on what we want now.
2. Negative Perception of Retirement:
Nowadays, people see retirement as a tough time, not a time to relax. Worries about getting old, both physically and mentally, and concerns about having enough money make retirement seem not so great. Feeling bad about connecting money with a not-so-good time in life makes it hard for people to get excited about saving for retirement.
3. Lack of Financial Literacy:
One big reason people don't save for retirement is that many don't know much about money. Complex financial stuff and investing can be confusing, making people feel overwhelmed and want to avoid it. Without good financial education, it's hard for people to figure out how to plan for retirement, leaving them feeling unprepared and not motivated.
4. Short-Term Financial Pressures:
People today deal with a lot of immediate money concerns like student loans, mortgages, and raising a family. Because they have limited money, it's hard for them to set some aside for a future that feels far away and unsure. They have to focus on urgent money needs, leaving little space for planning for the long-term, like saving for retirement.
5. Fear of Economic Uncertainty:
The world economy is often shaky and uncertain. People, scared by economic problems in the past, worry a lot about not knowing what will happen. This fear can stop them from taking action to save for retirement. They also don't trust banks and markets much, which makes them even more hesitant about making long-term money plans.
6. Overreliance on Social Security:
Some people might think that government support will be enough for retirement. They may not realize they need to save money themselves. Relying too much on outside help can make them feel falsely secure, and they might not take charge of their own financial future.
7. Psychological Distance from Retirement:
Many young people find the idea of retirement far away and hard to connect with. Because it seems so distant, they struggle to feel a connection with their future selves. This makes it tough for them to feel the need to save for something that feels so far off and unclear, leading to putting it off and not doing anything about it.
8. Cultural and Social Influences:
Cultural and social rules strongly influence how people act. In some places, there might be a common belief that talking about money or retirement is not a good idea. When people don't openly discuss money plans, it can create a group feeling of not wanting to do anything, stopping individuals from getting the information they need and taking action to secure their retirement.
People often hesitate to save for retirement because of a mix of psychological, social, and economic reasons. To overcome these barriers, we need to do a few things: teach better about money, change how society sees retirement, and encourage a mindset that values long-term security more than quick pleasures. By working on these issues, we can change the way people think about retirement, making it a positive pursuit for financial well-being.
The information presented in this article is for general informational purposes only. While every effort has been made to ensure the accuracy and completeness of the content, it should not be considered as a substitute for professional consultation.
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