India is a young country with elaborate socio-cultural intricacies and an ageing population. A large section of the senior population in India is still dependent on the joint family set up for their senior care and post-retirement needs, with financial planning for retirement taking a back seat. An increase in the number of seniors in India will reduce the percentage of India’s human resource capital and its ability to drive economic growth and supply low-cost labour to the rest of the world. This is attributed to a combination of an ageing population, decreasing population growth rate, and reducing fertility rates.

As the demography undergoes changes of such massive proportions, we need to figure out ways to supplement the impending deficit. Seniors can help elevate the economy by being active participants in both the income generation and income expenditure side of the market.

Increased retirement age

Seniors are fast evolving from the sacrifice-all population to a demographic that has the aspiration and the financial means to fulfil their wants, right from travel to investments to self-care. This radical shift brings with it a need for a steady income.

The elderly population is willing and looking for opportunities to work well into their silver years and become more financially independent. According to Antara’s State of Seniors Survey 2020, over 60 per cent of seniors said they wanted to work beyond retirement age. This highlights the need for raising the retirement age in India as longevity, expanded social benefits, increased homeownership, and elder-friendly housing became more ubiquitous.

Second-life careers

In developed economies such as the US, Canada, and many European countries, a major share of the retirement income comes from social security while in emerging markets like India, people rely on their personal savings as a primary source.

Second career options can help support seniors in their 60s and 70s by providing them alternate employment options. The elderly who are healthy and willing to work conventionally find employment opportunities in academics and consulting/advisory roles with government or private companies. Such practices while keeping senior citizens meaningfully engaged, will also help them lead fuller lives and help achieve a healthy work-life balance. This necessitates robust policy support to implement programs that encourage and simplify the process for seniors to opt for post-retirement employment.

Financial planning & income security for seniors

Income security in later years stems from multiple sources such as pensions, insurances (medical and life), investments. This provides an opportunity for India to create a universal pension program for its 1.3 billion people. Our pension system currently ranks 32 out of the 37 countries covered in the Global Pension System Ranking.

Additionally, the Antara State of Seniors Survey 2020 revealed low insurance penetration among seniors. This highlights the inadequacy and underscores the critical need to streamline retirement planning schemes and strengthen the pension programs in the country.

There is a pressing need to promote and facilitate fiscal planning in the early years and supplement it with senior-friendly tax structures and integrated insurance products. Such measures can help provide multiple income options to seniors to help them embrace a lifestyle of their choice.

Since India lacks a dedicated social security framework, income generated from savings is the go-to for most elders. A regulatory mechanism will set a viable base rate for the interest accrued on senior citizen deposits and ensure market dips don’t affect retirement income and senior-specific saving plans.

As the senior population grows in size, India will need to look at them both as an important consumer segment as well as an essential part of its ambitious growth plan. The government of India has already taken steps in this direction with the introduction of the Draft National Policy for Senior Citizens 2020. The Draft NPSC seeks to create a strong silver economy that caters to the new and evolving needs of seniors in the country. An understanding of their needs, preferences, and lifestyles will be critical in unlocking the economic potential of this segment.

The author is MD and CEO at Antara

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