Future of Aging in India (Part 3)

Happy elderly people dancing

Goal – Happy Longevity

 “Very Purpose of our Life is to seek happiness” – Dalai Lama

“Purpose of Life is the life of purpose” – Robin Sharma

Deduction: Happiness = Life of Purpose

 In the first part of this article, we discussed how aging in India is likely to be different than in the developed world. Then we commenced a discussion on how to achieve a common goal for every Indian of a long, healthy, and happy life during golden years in an affordable manner.

The second part dealt the goal of Healthy Longevity. Now this last and concluding part deals with the goal of Happy Longevity focusing on some of the issues other than health.

Happiness is very individual emotion and depends significantly on the individual traits of the person. But for the purpose of this article, we will focus on systemic or external aspects which need to be addressed to provide conducive environment to improve happiness among seniors.

Role of Government:

As discussed in Part 1, Indian Governments due to various economic constraints, is not likely to offer free healthcare and old age pension to above poverty line populations. However, as time passes seniors will form a significant part of overall population and will become significant vote bank.

The governments have been doing its bit by introducing seniors’ friendly legislations which does not have significant funding liabilities. Some of the examples are

  1.  National Policy for Older Persons Year 1999
  2.  “The maintenance and welfare of parents and senior citizens act, 2007”.
  3. Higher interest rates on Fixed deposits and other Savings products.

 We will see increasing amount of such legislations as there will be increasing pressure on governments to pass seniors friendly legislations. Some of the examples of what can be considered:

A.   Home Safety Regulations for seniors: Just like we have regulations for sit belts in private cars, similarly, there will be regulations for safety of elders in private homes (i.e like installing grab handles or anti slip mats).

B.    Mandatory support railings on walkways and steps in all public buildings.

C.   Improved protection, investigation, and compensation for cyber fraud where senior citizens are affected

D.   Specific compartments or reserved places for sitting for senior citizens.

E.    Priority of hearing and disposal of cases in courts and in ombudsman for senior citizens.

 Senior Citizen Interest Groups:

We will see emergence of several interest groups of senior citizens on national and regional levels who can become voice of senior citizens for policy advocacy. In addition, they can engage in many different activities benefiting its members and generating income for the association. AARP (American Association of Retired Persons) is one such body which is highly successful and has over 38 million members.

Such organised interest groups, if run professionally and with integrity, has potential to make huge impact on the lives of seniors.

 Financial Wellness:

Financial wellness works at many levels in improving quality of life. It allows person to buy materialistic comforts at the same time it improves mental health due to absence of or reduced stress and in turn improves physical health also. Let us analyse the issues which seniors are likely to face.

Senior citizens have no room for error since they do not generally receive income flows and have very less chance of making it up should they have capital erosion.

Development of advisory ecosystem for distribution phase:

Most of the financial planning ecosystem has been focussing on the accumulation phase of retirement planning as it made commercial sense. India has large share of population with working age, also wealth managers and assets managers can have automated growth as the assets swell during accumulation phase.

In majority of cases where the corpus is relatively smaller and likely to be reducing as time goes, will not be viable client for many independent financial advisors. In such situation they are likely to fall prey to product pushers who pushes products for higher commission irrespective of suitability or outcome.

Even in NPS, which is specially designed by the government, you have many product options while in accumulation phase but only annuities in distribution phase just demonstrates how underserved this need is.

Myths about safety: 

Fixed Deposits are very popular among Senior Citizens as it offers safety and predictability. Historically FDs especially some company FDs have offered interest in teens. The interest income was less sensitive to change in interest rates then compared to today where FD interest rates are in 6-8 % zone. For example, if interest rates are reduced by 2% from 15%, the interest income will go down by 13% while the same reduction of 2% when one has FD at 8% results in reduction of 25% of income.

In the scenario like today where one is witnessing higher volatility in inflation and interest rates the perceived safe product FD is exposed to risks like (a) Reduction of interest rate in future and hence reduction in income (b) Increased inflation without change in income level will reduce quality of life (c) Pursuit of higher yield may result in undertaking higher credit risk without much diversification with potential to loose entire principal.

Survivor’s Setback:

Women on an average live longer by male by around 3 years. Add to that couple of years age difference with husband so o an average wives outlive their husbands by 5 years. It has other implications but for financial wellness it has serious implications. In India generally in middle and lower middle-class women are not aware about investments. This absence of knowledge about finance and investments often results in unnecessary clampdown on even necessary expenses and over dependence on children or other relatives who may take advantage of dependency.

Dependent’s Drawdown:

In India in many cases the seniors stay with their family. there is a chance that the dependents (fully or partially) may request the seniors to part with their nest egg for either purchase of real estate or invest in business or any other such investments. Even though they may have genuine intentions but it may reduce income flow for the seniors and start affecting them mentally.

So sometime income generating investments with a lock in are also better protection against such requests.

Freedom from online financial frauds:

As most of the financial transaction move online the propensity of cyber fraud also increases multi-fold. Loosing life savings due to cyber fraud sends shivers down to one’s spine. Seniors are more susceptible to such frauds. One can try and offer education but it is not going to solve the problem. Instead, one need to establish very simple protocols to reduce risk of frauds. Like use one account for spending which is linked to UPI and has active debit card which are used spending. This will limit the fraud amount only to the extent of balance in that account. Investment related account can be separate.

Looking forward:

The probable solution for financial wellness for seniors shall have three components

1.    Specialized Assessment Engine

2.    Financial Plan Generated with 90% technology and 10% human intervention

3.    Implemented solutions for simple DIY execution.

These Solutions shall be accompanied by relevant, contextual, and very simple de jargonised educational content which shall be also available in regional languages.

 Stretching of working lives for seniors:

Increasing percentage of seniors and increasing dependency ratios are likely to result as drag on economic growth. Japan has demonstrated the effect of aging on the economy.

Keeping seniors as part of the workforce without affecting employment opportunities for younger persons have many advantages.

A small section of seniors may look forward to retirement to pursue their hobbies and live life especially when they have financial security. However, a large part may still prefer to remain gainfully employed. In absence of private or government pension, generating income, will be necessary for many seniors. In addition to income, it also provides intellectual stimulation, social interaction, purpose, and fulfilment. All this affects positively on physical health as well.

We have observed that many professionals like doctors, CAs, Lawyers and businessman remain active till very late. The main problem is with people who have been salaried employees either in public or private sector. Also, many qualified homemakers who have mothballed their careers for parenting would also like to get gainfully employed during later stage once the children are independent.

Finding employment for seniors in the organised sector will remain a tough challenge but digital connectivity coupled with emergence of Gig economy may provide some interesting solutions.

Ideally any profession which has following two characteristics can be pursued by seniors after appropriate re skilling.

A.   It can be offered online

B.    Life experience provides significant strategic advantage

Some of the examples of such professions are mental health counselling, financial planning, legal advice, diet and nutrition counselling, content writing, health coaching, teaching and many more.

The seniors can afford to offer such services at reduced cost which can expand the market bring in new customers including other seniors which have never availed of such services.

What we will require to make this happen is tailored reskilling programs as well as platforms to source customers.

 Ease of Living for Seniors:

As time goes by and number of seniors increase, there will be various initiatives to improve ease of living of seniors. Initially it will start in silos like senior care homes and as percentage of seniors increase, it will start becoming all pervasive. Few of the changes which we one would like to see are:

A.   Automobile designs will have ease of entering and exiting.

B.    More footpaths to be cleared of encroachments for safer walkways.

C.   Increased number of parks and public places for seniors

D.   Higher security for areas where seniors are living

E.    Battery operated small cars or three-wheelers with low speed for mobility.

F.    Senior friendly tour operators

G.   Restaurants with choices for lighter and healthy food and retro themes for music and decor.

H.   Community kitchens (Sanjha Chula) for seniors aging in place.

Your valuable thoughts, suggestions and ideas for achieving goal of “Long, healthy, and happy life during golden years for every Indian.”  will be very helpful. I will be grateful if you can provide the same as comments to these articles.