Save early for a comfortable retirement
59 per cent of respondents in the UAE are either fully or partly relying on their gratuity for retirement.
A growing number of professionals across the UAE have voiced their desire to retire in the UAE, with many stating that they intend to rely on their gratuity payments; however, experts have advised professionals to start saving early to set aside the funds necessary for a comfortable retirement.
New research from Old Mutual International and Quilter Cheviot showed that the UAE's popularity as a retirement destination is on the rise as 18 per cent of respondents said that they would retire in the UAE in 2018, compared to 15 per cent in 2017. The results of the research also showed that at 62 per cent, the majority of respondents still stated that they want to retire in their home country.
The research also revealed that 59 per cent of respondents in the UAE are either fully or partly relying on their gratuity for retirement. The primary use for the gratuity will be investing in a business or the stock market. While this may have been a financially sound decision in the past, many finance experts have noted that the rising cost of living, increasing lifespans among the population, and other factors have meant that residents are expected to work for longer and can no longer rely solely on their gratuity for their retirement plans.
HSBC's The Future of Retirement Survey showed that 63 per cent of working age people said that they will continue working to some extent in retirement. This is supported Old Mutual International and Quilter Cheviot's research which showed that eight out of 10 people living in the UAE plan to continue working in retirement, either for social or financial reasons, with all of them also saying that they expect to be self-employed.
In 2017, it was reported that 43 per cent of respondents expected to retire between the ages of 50-55, however the results of the 2018 survey show that this has now dropped to 35 per cent with many more people believing they were likely to have to retire later in their life.
"Gone are the days of someone receiving a gold watch on the day they retire and then solely relying on their pension for the rest of their life. Instead, as our research shows people may choose to work part-time or even in a self-employed capacity. These new practices mean that creating a financial plan, which takes into account someone's unique circumstances, is more crucial than ever," said Paul Evans, head of region, Middle East & Africa, Old Mutual International.
Similarly, Suhail Masri, VP of Employer Solutions at Bayt.com, said that planning for retirement is a wise and strategic decision that professionals are encouraged to take from the start of their career, despite the fact that the UAE has always ranked highly in the region for its end of service benefits, where 76 per cent of respondents receive end of service gratuity, seven per cent receive pension on retirement, and six per cent receive other forms of end of service benefits.
"With the ever increasing cost of living across the Mena region, the frequent career changes, and other factors that impact working professionals financially, saving from a young age is a choice that can only be associated with positive outcomes," he said. - firstname.lastname@example.org
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