The covid-19 pandemic has depleted the savings of many Indians. An annual report, titled Bankbazaar Savings Quotient, shows that the pandemic has resulted in shrinking of savings, compelling many Indians to reorder their priorities.
This year’s survey was conducted among 650 working professionals aged between 22 and 45, across five Indian cities. Of those surveyed, 70% reported saving more due to unexpected expenses. Here are some of the other key takeaways from the report.
“Over the last year, the combined impact of the recession, the pandemic and the lockdown has meant that people have less money in hand. This reflected in the reduced wallet share for savings,” said Adhil Shetty, chief executive officer, Bankbazaar.
The survey showed that average savings were 32% of income levels, down from last year’s average of 38%. The steepest drop was recorded for those between the ages of 28 and 45 years. Those between the ages of 22 and 27 were relatively better off, their wallet share of savings having dropped by 5.3% to 34.7%.
Shetty added that interest income has become a smaller factor for people.
Shift in priorities
The one positive outcome of uncertainty is that it has driven home the significance of financial planning and security. “This is evidenced by the importance given to both retirement and inheritance planning,” said Shetty.
Expectedly, emergency savings have become the biggest reason for saving for 70% of the people compared with 32% last year.
While increasing the standard of living is still important to people, with 60% saying it was the reason they were saving more, long-term savings for retirement and securing inheritance have gained higher importance.
Delay in retirement
Falling interest rates and spiking inflation are raising concerns about retirement planning. The report showed that close to 25% of the respondents are planning to accumulate ₹2 crore and above compared with 20% last year.
The need for a larger corpus might mean staying in the workforce for a longer period. “For those between the ages of 35 and 45, the retirement age went up from 57.4 years to 58 years, indicating that they are less sure about the amount they can put aside as well as the likely returns,” said Shetty.
The pandemic has helped people to focus on securing their financial future by allocating more money to long-term investments