The issue of financial insecurity in old age has been a major concern in India. It affects people from all walks of life, whether they are retired from a regular job, unemployed or have irregular income if they haven’t prepared themselves for retirement.

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Although many depend on government ration and money, ranging from Rs 1,000 to Rs 4,000 monthly, subject to the state, this help is mainly symbolic rather than proper support. For instance, Haryana provides around Rs 3,000 monthly, Delhi provides Rs 2,000-2,500 to seniors and super seniors, and Andhra Pradesh gives up to Rs 4,000 to each beneficiary as an old-age pension, which is grossly insufficient if they don’t have family support or another income source.

Gaurav Goel, a SEBI-registered financial advisor, says, “It is tough for daily wage earners to rely solely on these schemes. The monthly annuity is insufficient to meet their requirements. Moreover, inflation eats away a significant part of this earning.”

Adds Siddharth Alok, associate vice president of investments at Multi Ark Wealth-Epsilon Money, an investment advisory firm: “Just giving them money won’t solve the problem; India needs to promote skilled labour, although schemes like free ration, electricity, etc. might help.

“In the last 10 years, average inflation in India has been 5-6 per cent annually. However, we need to understand that India is a developing economy with a fiscal deficit and a population problem. India’s poverty rate is also high.”

Even the reach of the government-backed formal pension schemes, such as the National Pension System (NPS), the Old Pension Scheme (OPS), the Unified Pension Scheme (UPS), Atal Pension Yojana (APY), Varishtha Pension Bima Yojana (VPBY), etc., not to mention private players offering retirement plans, has been limited. Sadly, even combined, these plans are yet to reach most of India’s poor and needy.

So, what can be done to change this status quo?  

Regular Savings

Goel suggests investing in suitable assets in whatever amount they can during employment to generate alternative income after retirement. He recommends a proper retirement plan, with life and health insurance coverage, an emergency fund, etc., to make life easier in old age.

Those with regular incomes, including salaried employees, can invest in a systematic investment plan (SIP) to create wealth, even with a small amount. After retirement, they can opt for a systematic withdrawal plan (SWP) as part of a bucket strategy where investments are allocated based on short, medium and long-term needs.

Financial Literacy

Alok emphasises on financial literacy. An early start to investing, he says, will encourage people to be financially disciplined and, more importantly, acquire good financial habits, which will enable them to achieve bigger goals. According to him, retirement planning should be a priority for everyone. Alok believes that government support in financial literacy campaigns and workshops will help people improve their financial skills to make better decisions.

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Goel says financial lessons should be part of the school curriculum. He also suggests that the government should launch more awareness campaigns regarding savings, investment schemes, etc., and post offices and banks should educate citizens in their neighbourhoods, especially in the rural areas about the benefits of financial knowledge and how to apply it in decisions. This action will boost access to schemes to secure financial security and freedom in old age.

Goel says the government’s decision to allow access to the PM Ayushman Bharat Yojana to all senior citizens is another critical step to minimising the financial burden in old age.