How digital innovations can help you plan better for retirement

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With over half a billion active internet users, the demand for digital services in India is ever growing. Digital technologies are transforming every aspect of our lives, including how we manage our finances. In fact, India exceeds the global average in the adoption of fintech services, with technology-driven financial planning services expected to see the highest increase in demand. Retirement planning is an essential component of any financial strategy, especially in a country like ours where the pension coverage is woefully low – only 9-10% of the population estimated to have some kind of pension benefits.

However, digital advancements can help bridge this gap with automation, better decision-making and personalisation. And some of the leading insurance providers were quick to jump on the digital bandwagon, which has resulted in improved accessibility, flexibility and affordability of retirement planning services for our young and increasingly aspirational millennials, particularly in smaller cities and villages.

There are a number of online planning tools that can help us understand our retirement funding needs and track progress towards our life goals. As we live longer and spend more time in retirement, the challenge is to get the best out of those years. So how can we use technology to demystify retirement investing and simplify the process, making savings much easier?

FUTURE PLANNING

  • There are a number of online planning tools that can help us understand our retirement funding needs and track progress towards our life goals
  • A recent survey found that retirement related life goals are becoming a priority, especially for Indian millennials

Digital tools and calculators

Any income replacement plan, whether for our retirement goal or for taking care of our family’s life goals, is incomplete if it does not factor in the long-term cost of living, potential healthcare costs and provision for unexpected events. With online assessment and comparison tools, and artificial intelligence-backed advisory services, you can make sure that you are well covered for a long and comfortable retirement.

In a recent survey by a leading multinational banking and financial services firm 55% of the respondents believed that using technology will help give future retirees a better standard of living as more-sophisticated data analysis allows a new level of personalization specific to your needs. By taking into account your financial condition and information about your life goals, insurers can provide better plans while simplifying the options to improve your decision-making.

Innovative products

In a recent survey to understand the life goals of India, it was found that retirement related life goals are becoming a priority, especially for Indian millennials. 42% millennials consider it as their life goal. In such a situation, it becomes necessary for millennials to balance savings and investments in a way that spread their risks, maximises investment and protect their funding for retirement goals. New age investment products, which offer online onboarding and portfolio management, such as Unit Linked Insurance Plans (ULIPs) can help individuals secure their retirement income, in addition to providing market-linked returns on their investments.

ULIPs have an inbuilt life insurance component and provide several ways to spread your investments between high-risk stocks and low-risk bonds based on your unique requirements and risk appetite. You can take advantage of easy-to-use personal finance sites available online to better understand how different products work and how can they help you reach your desired life goals.

Automated savings

With all of the responsibilities and distractions of day-to-day life, it can be difficult to remember to add money to our retirement plan on a regular basis. That is why it makes sense to automate our retirement savings. Individuals can schedule all their retirement transactions on self-servicing online customer portals or mobile apps so that they are automatically deducted from their paycheck or bank account. This way one no longer has to worry about skipping payments towards their retirement corpus. The auto payments will lead to a disciplined savings habit and your retirement deposits will be just another bill. Additionally, one can use mobile apps to track their investments and manage their finances.

The reality is that all of us want to be well-prepared for retirement. The retirement paradigm has also shifted from defined benefit pension-style plans to Do-It-Yourself environment that requires active participation and savings. While this Do-It-Yourself planning is not an easy task, recent technological advancements have the potential to fulfill the need for information, and tools that can help you make wise investment decisions to realise your life goals. While technology alone cannot solve the problem of low retirement coverage in India, it can play a vital role by providing innovative solutions that can enhance participation, increase engagement, boost savings, and bring long-term financial stability.

The writer is chief – operations & customer experience, Bajaj Allianz Life Insurance

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