Are you prepared for retirement?

Planning for retirement is easy to postpone, especially when your retirement seems far off in the future and if, for now, you have more important things to worry about.

However, the truth is that retirement will creep up on you before you know it and the sooner you start preparing for it, the better placed you’ll be to make the most of it.

A comfortable retirement is something most people dream of. It’s a time to sit back, relax and enjoy life after the hard work and long hours you’ve put into your career and/or raising a family. Whether you plan to own a house on the beach or to take a trip around the world when you retire, the only thing that can hold you back is not having the funds to make your dreams a reality.

In collaboration with YouGov, we set out to discover the retirement plans and expectations of expats in the UAE*. We surveyed expats across the emirates and, based on our research, there is a shocking disconnect between savings goals and savings habits.

The survey found that more than one third (34%) of expats would like to retire by the time they are 55, and about 75% want to retire by the time they are 65. However, less than half are actually saving to fund their retirement.

To help people understand the importance of robust, long-term retirement planning we have put together a list of key things to consider when planning for life when you finish working. Ultimately, it boils down to five things:

Adnan Lateef, Interim General Manager, Middle East and Africa

1. Starting early

Like any sort of planning, the earlier you start the better! The most important thing you can do is to start saving for your retirement as soon as possible. The earlier you start, the more time your investments have to grow, and the less it will cost you overall.

Another benefit of saving regularly is that you benefit from ‘dollar cost averaging’. This means that the peaks and troughs of market performance are smoothed out over time, and you are less likely to be impacted by significant market fluctuations.

2. You’ll live longer than you think

Something you need to consider is the fact that people are living longer. This means you will have more retirement years to fund and will need a larger investment portfolio to sustain yourself when you finish working, and you are no longer receiving a salary.

People need to accept that, unless they make arrangements to start funding their retirement early on in their career, they may need to work into their seventies, or even eighties, to save enough for a comfortable retirement.

3. Don’t count on your end of service gratuity

Our survey showed that 29% of respondents think their end of service gratuity (EOSG) will be sufficient to sustain them in retirement. People may not therefore be aware that EOSG is capped at a maximum of two years’ pay and that is unlikely to be anywhere near enough to fund a comfortable retirement.

4. Think about inflation

Money sitting in a bank account will lose value over time due to inflation. Always ensure that your savings are held in a balanced and diversified range of investments, so they can continue to grow at a rate that beats inflation.

If you’re just starting out, you should consider saving regularly in a savings plan which offers access to a range of investment funds that can be used to build a balanced and diversified portfolio over time.

5. Take personal responsibility

Our survey showed that less than half of the respondents will qualify for a state pension in their home country when they retire. As there is currently no formal retirement scheme for expats in the UAE, the responsibility for funding your retirement is yours and yours alone. Overall, our research clearly shows that most people are not aware of the need to plan for their retirement, or they are not saving enough, or saving for long enough.

To be successful you will need to be disciplined when it comes to saving, but it’s better to make sacrifices while you’re working, instead of reaching retirement with too little money and too few options.

You should speak with a qualified financial adviser to discuss your options, and to put in a place a robust retirement strategy. While it may be some years away, when you are enjoying a comfortable and financially secure retirement, you will be pleased you took action sooner rather than later.

References:
*Research undertaken by YouGov between 28 January and 4 February 2019 – total number of UAE expatriate respondents: 874
Steve Weston - CEO FPI

Steve Weston – CEO FPI

Message from the CEO – October 2019

Planning for the future

At Friends Provident International (FPI), our business is all about planning for the future. Our customers might be planning for their family’s future, be that for school, university, getting onto the property ladder or for their own retirement.

Find out more

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