UAE locals underestimate their savings requirements for retirement, survey suggests significant planning shortfall
A recent survey conducted by YouGov and commissioned by Zurich International Life Limited has highlighted a concerning trend in UAE retirement planning. The findings suggest that many individuals may be underprepared for their post-retirement years.
The survey revealed that a large majority of respondents believe that a savings target of Dh5 million or less will be enough for a comfortable post-retirement lifestyle. Even more concerning, 42% of respondents believe that Dh2 million or less would meet their needs, highlighting a potential shortfall in their long-term financial planning.
Ashika Tailor, head of Business Development - Employee Benefits at Zurich International Life Limited, explained that this belief could be dangerous. She stressed that relying on end-of-service gratuity alone is not a sustainable strategy for retirement planning. Tailor highlighted the importance of investing in health and long-term care insurance to safeguard against rising medical costs, particularly as life expectancy continues to increase.
To ensure sufficient retirement savings, Tailor recommends a combination of disciplined budgeting, strategic investing, and ongoing planning adjustments. Key strategies include budgeting wisely, investing strategically and diversifying, using tax-free income to invest consistently, leveraging new retirement products like the Golden Pension Plan, engaging professional financial advice, regularly reviewing and rebalancing, and adopting a structured planning approach.
Tailor also emphasized the importance of setting up dedicated education savings plans to avoid sacrificing retirement funds for educational expenses. She called on companies to implement workplace savings schemes to help bridge the gap in retirement planning.
The UAE government has introduced initiatives to support retirement planning, such as the five-year retirement visa for residents aged 55 and above who meet specific financial requirements. The Ministry of Human Resources and Emiratisation (MoHRE) has been encouraging employers to adopt the voluntary alternative end-of-service benefits system.
Despite the concerning findings, the survey found that 75% of respondents are optimistic about their retirement finances. Tailor, however, warned against complacency, emphasizing the importance of proactive and comprehensive financial planning. She also highlighted the challenge of maintaining income over a 20-30 year period as the most significant financial risk in retirement, not running out of money within the first few years.
In summary, UAE residents should combine disciplined saving habits, diversified and tax-efficient investments, use of innovative retirement schemes, professional guidance, and regular review cycles, to build sufficient retirement savings as highlighted by Zurich’s commissioned survey findings and expert financial planning frameworks.
- The government of UAE has introduced retirement visa initiatives for residents aged 55 and above, as a part of their efforts to support retirement planning.
- To safeguard against rising medical costs in retirement, it's essential to invest in health and long-term care insurance, as advised by Ashika Tailor, head of Business Development - Employee Benefits at Zurich International Life Limited.
- Tailor advises that a combination of disciplined budgeting, strategic investing, and ongoing planning adjustments are key to ensuring sufficient retirement savings.
- To avoid sacrificing retirement funds for educational expenses, it's important to set up dedicated education savings plans, according to Tailor's recommendations.
- Companies could bridge the gap in retirement planning by implementing workplace savings schemes, as suggested by Tailor in response to the worrying retirement preparedness trends observed in the survey.
