How do you picture your retirement?

Lounging by the beach, spending time hillside, or at a place and city of choice would be possible if you plan well for your twilight years. The UAE government’s initiative could help

By Suneeti Ahuja-Kohli

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Published: Tue 19 Sep 2023, 8:28 AM

Simone, 69, didn’t really pay much thought to stashing away for retirement while she was working in Dubai for most of her earning life. She came to the UAE right after she tied the knot. Her husband had been working in the Gulf for about five years.

“We had two lovely boys in six years, and I spent time working as an administrator and taking care of my house. I liked to save, and I did most of the months, but it wasn’t goal-oriented. Stashing cash away meant being able to splurge on birthdays, anniversaries, or when I eyed something pretty,” she told me over phone.

The idea of retirement for her was to live with her kids and their growing families and take care of the grandchildren. “That’s how life usually is back home in India. We have joint setups and the elderly are taken care of while they lend support in child care to the younger couples. I fancied that, but we decided to move back to our hometown in India a few years after my husband and I retired.” Reason: Their savings didn’t add up to the expected cost of living in Dubai, and they didn’t want their kids to get sandwiched taking care of the elderly and their growing families.

“The decision was hard, considering Dubai was more than a second home to me. It was my first really. I have spent a majority of my life there than I have in the place where I was born and raised.”

More savings for her twilight years could have steered her life’s path to a different course, she confessed. “We have adjusted well here. But if I had a choice, I would have preferred time in the UAE on a retirement visa.”

Longevity, rising cost of living, medical inflation, and lack of a nest egg for sunset years are pushing a lot of people to work longer than they expected, while shattering the myth of hanging up their boots and spending twilight years relaxing.

In the last 50 years, life expectancy has increased by 11 years globally on average. If in 1971, people on an average lived until the age of 55.9 globally, in 2021, this figure rose to 71 years. During the same time period, life expectancy in the UAE has increased from 61.2 years to 78.7 years, notes data from the UN World Population Prospects.

Needless to say, planning ahead for sunset years will ensure the quality of your life you aspire and deserve.

How much to invest per month?

Prashant Sharma, Vice President, Life and Policy Servicing, Continental Insurance Brokers, puts things in perspective. “Inflation is a silent killer, and we have to prepare for it. Say you are 40 years old, and want to retire in 20 years (at age 60). You expect to live till 90, and, based on your present lifestyle, you require $60,000 per annum for retirement. Assuming an inflation rate of 3 per cent per annum, the inflation-adjusted amount of $60,000 in 20 years would be $108,367 per annum. To generate a regular cash flow of $108,367 per annum until 90 years of age, you will require a retirement corpus of $2,187,756 at age 60. To accumulate that retirement corpus with a supposed 7 per cent return per annum during your accumulation years, you need to invest $4,175 every month. In other words, you need to plan meticulously and fast. Failing to plan is planning to fail.”

In general, Sharma suggests taking an aggressive approach to create wealth in the early years and shift to a conservative strategy to preserve wealth in later years. “Don’t let short-term stock market conditions dictate your asset allocation strategy; follow a disciplined cost-averaging. Also, refrain from investing in an instrument you don’t quite understand and pay attention to the advice of financial consultants.”

If you are in your 20s: Budget your expenses by investing before spending. “Even though it may seem like retirement is a very distant goal, starting early can give you the benefit of compounding and dealing with volatility that comes with asset classes like equity,” advises Vishal Dhawan, CEO, Plan Ahead Wealth Advisors. “Mutual funds/unit trusts or ETFs may be preferred, due to the lower cost and professional management access that they can provide,” he adds.

If you are in your 30s and 40s: It is important to first evaluate how much you need as a retirement corpus, and then estimate the possible savings needed per month/per annum to achieve those objectives. “Stick to the target and look at it annually to ensure you are on track. Avoid leverage or over allocating to other goals, as retirement may come sooner than planned, and thus having an adequate retirement nest is crucial,” notes Dhawan.

For the back of an envelope calculation, you could follow the Rule of 110. “Subtract your age from 110 to determine the percentage of aggressive assets in your portfolio (for example, at 30 years of age, aggressive assets can constitute 80 per cent of the portfolio). It was ‘Rule of 100’ previously when life expectancies were lower on average,” explains Sharma.

If you are in your 50s and 60s: “Time may not be on their side, so avoid going for risk investments just to make up for lost time, if you do not have understanding of the underlying asset and how cycles in the asset class work. It’ll be a good idea to reskill and network so that you can extend your career, if necessary. Also, keep expenses tightly under control,” stresses Dhawan.

“The more conservative individuals, particularly those nearing retirement, can invest in government bonds, treasury bills, mutual funds, and ETFs, as they are typically low-risk investments. Global yields have risen to the highest level in years after central banks around the world embarked on a monetary policy tightening spree to combat inflationary pressures. This presents an attractive opportunity for investors to lock-in high yields by investing in reliable treasury bills and treasury bonds,” adds Vijay Valecha, Chief Investment Officer, Century Financial.

Additionally, long-dated treasury bonds offer good price appreciation potential, decent coupons, and are very liquid. “Individuals with a long-term investment horizon, higher risk appetite, and who are seeking better returns can build a sophisticated portfolio encompassing a mix of undervalued stocks, investment grade corporate bonds, thematic ETFs, and index funds. These decisions should be made after careful analysis and due diligence by investors,” says Valecha.

Where should you invest: UAE, home country, or else where?

It is ideal for expatriates to diversify their investments across geographies. “Both consumer inflation and lifestyle inflation needs to be factored in. You should ideally invest in different asset classes depending on the investment horizon. Ideally invest in pure investment instruments for greater flexibility and lower costs, rather than using a combination of insurance and investments to save towards retirement goals. Asset classes like equity can work well over longer time frames to meaningfully beat inflation,” advises Dhawan.

Proposed end of service scheme by the UAE government

The authorities in the UAE are focusing on ensuring that employers or gratuity providers deliver good outcomes for people in retirement. Processes are being streamlined to eventually have a full-fledged pension framework in the country for citizens and expat-residents alike.

“The end-of-service gratuity scheme is designed to be all-inclusive and diverse and therefore it is suitable for employees with varying backgrounds, risk appetite, and financial goals. It is especially useful for employees who intend to live in the UAE in the long run – be it for retirement, purchasing property, or launching their own business. Such individuals are incentivised to build their portfolio locally to supplement their income after retirement or to build the necessary capital to undertake new projects in this region. Even individuals who do not intend to retire in the UAE but plan to work here for a few years can benefit from this scheme because gratuity payment is guaranteed upon quitting their job and is not taxable. This creates a sense of financial security and can be particularly attractive for those falling in the high-income bracket. It also creates a safety net for unforeseen events like job loss and medical expenses,” notes Valecha.

Even though participation in such schemes is optional, they present a valuable opportunity for employees to instil the financial discipline and awareness required to save for retirement.

Making money is one thing. Keeping hold of it so it lasts your lifetime and allows you to do things, have experiences and take care of medical expenses, if needed, is quite another. A little thought and some effort in seeking professional help for saving and investment can help a great deal.

Suneeti Ahuja-Kohli is an independent journalist based in Dubai. She can be reached at

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