Complex Made Simple

Want to retire at 60 or earlier? Here’s how to go about it

In the UAE, working people expect to retire, on average, at 58, compared to the global average of 61. UAE Millennials, on the other hand, want to retire by age 56 itself, reveals HSBC’s latest The Future of Retirement – Shifting Sands report.

But, alarmingly, UAE residents have trouble saving money due to the high cost of living, coupled with Dubai’s extravagant lifestyle, according to a survey conducted towards the end of 2017 by National Bonds, a leading UAE investment company.

Also, nearly seven out of ten people here were unsure of how to achieve their goals, short- or long- term, to ensure they retired in comfort.

Hotel Tech 2018: All you need to know about tech tools that deliver value

Why so worried?

With medical advances expanding average lifespans, the obvious and most common concern for most people is outliving their money after retirement. Only four in ten respondents in The Future of Retirement report believe they will be financially comfortable after retirement, while 44 percent believe things change so much that their retirement plan will no longer be applicable by the time they retire.

How much should one save? Figures vary. Some finance portals believe saving up to 30 or 40 percent of one’s income is necessary, while National Bonds notes that some experts advise saving even 70 percent of one’s income for use after retirement.

However, shockingly, the number of UAE residents who actually manage to save anything is very small.

Watch 7 tech trends of tomorrow today: Change life

Saving grace?

HSBC’s The Future of Retirement report reveals that 41 percent of Millennials have not yet started saving for retirement, compared to 35 percent of Generation X and 29 percent of Baby Boomers. Meanwhile, 67 percent of Millennials are worried about running out of money, while a little more than 70 percent of them are willing to cut current expenses to save for the future.

Another survey into understanding current saving habits, conducted by UAE services marketplace ServiceMarket in partnership with HSBC, reveals that 23 percent of respondents save nothing from their salaries, while 32 percent save less than ten percent.

Bitcoin loses $62bn overnight: One company figured a way never to lose again

What will make you save?

Half of the respondents want a higher pay scale to start saving, while 35 percent believe lower accommodation costs will help them save more and better interest rates are what 21 percent said would help them save more.

Meanwhile, 34 percent of respondents say they would welcome better savings options and 18 percent are in favour of automated savings programmes.

Of the residents who are managing to save, these are the top five preferred means:

1-Savings account – 64 percent

2-Investment in property – 26 percent

3-Fixed deposits – 20 percent

4-At home (e.g., in a safe) – 18 percent

5-Investment in gold – 17 percent

Read: How many billions is the Middle East contributing to Formula 1 Grand Prix?

Top tips to retire at 60

ServiceMarket and HSBC offer the following tips for people who wish to make a proper retirement savings plan:

-Plan: Develop a realistic savings plan after considering your main expenses. Start at the beginning of each month, put the amount aside and stick to the plan.

-Cut down on expenses: Ways to achieve this are by switching to cheaper brands where possible and eating at home rather than ordering in or dining out, for example.

-Coupons and discounts: Consider using coupons and discounts to save money where possible.

-Save that bonus: Rather than spending on fancy items that you can do without, put the money into a savings account or instrument.

-Diversify how you save and create a pension plan or fund: Speak to a financial consultant or your bank to create a savings portfolio to invest in funds like equities, bonds and specialist investments.

This article was  contributed by Karthik Subramanian