Planning for retirement may feel distant but starting early is crucial for a smooth journey.
When preparing for retirement, it is important to understand your individual needs and goals.
While many people believe they are aware of their spending and saving habits, only a small portion seek professional guidance regarding money management.
Another important element that tends to get missed easily is inflation, which gradually raises the cost of living.
Your retirement savings should account for this increase to ensure your purchasing power remains intact.
Below are five key strategies to plan your retirement.
1. Understand your retirement goals
Visualise your ideal retirement – including your desired location and activities. This will help you start your financial journey. The more vivid this visualisation is, the better prepared you can be.
Creating a solid savings and investment plan is key to achieving financial success.
To start, establish clear retirement goals based on your current and desired lifestyle, as well as additional expenses such as your children's higher education.
Calculate how much you will need to save – aim for 15 per cent to 20 per cent of your income for retirement.
However, making a start is crucial, even if it is only 5 per cent of your income. For example, if you earn Dh5,000 a month, saving Dh750 can help you stay on track.
It is never too late to take the first step towards securing your future. While it is important to consider when you start, it is also necessary to focus on how you start!
You do not need to start with a lot of money – even Dh100 a month can make a difference. Starting early gives your money more time to grow and, therefore, more opportunities.
Residents planning to retire in the UAE should also take advantage of employer-sponsored options to ensure a comfortable post-retirement life.
Strategically allocating your income can have a significant impact on your long-term savings and financial well-being.
Developing a sound savings and investment strategy is one of the cornerstones of financial success.
3. Diversify your investment strategy
Diversify your investments instead of keeping all your money in one place. Just like planting different seeds, spread your investments across stocks, bonds or real estate. If one investment does not perform well, the others may.
The challenge is that only a few people are aware of the resources available at their fingertips. It is important to conduct research, educate yourself and seek assistance from the right people.
This includes preparing yourself with some facts such as how different investments can have a different lead time for liquidity.
Once you know what you are looking for, the process will become much easier.
Following the age-based investment rule is a great approach to balancing risk and returns, with a minimum investment amount typically ranging from anywhere between Dh1,000 to Dh25,000, depending on your income and goals.
Top 10 global cities for retirement – in pictures
Tokyo ranked as the best global city to retire in a new retirement index compiled by Veolar. Ryo Yoshitake/ Unsplash
Wellington, New Zealand, was ranked as the second best global city to retire. Leyvaine Davids/ Unsplash
Singapore ranked third and scored well in the categories of legacy management and quality of public transport. Kirill Petropavlov/ Unsplash
Paris is the fourth best city to retire and scored well in the liveability sub-index, driven by its museums and restaurants. Leonard Cotte/ Unsplash
Vienna ranked fifth globally for offering the best retirement living standards for senior people. Jacek Dylag/ Unsplash
Zurich, in sixth position, ranked high for safety and quality of health care. Henrique Ferreira/ Unsplash
Copenhagen was ranked seventh, driven by its safety, mobility and accessibility to health care. Nick Karvounis/ Unsplash
Amsterdam is the eighth best city to retire globally, Veolar said. Adrien Olichon/ Unsplash
Osaka in Japan placed ninth, earning high scores in the quality and accessibility of health care and health longevity sub-indices. Ramon Kagie/ Unsplash
Lausanne in Switzerland is the 10th best city globally in terms of retirement living standards, the index showed. Mark de Jong/ Unsplash
4. Focus on funding your child's education
If you have children, it is essential to consider education as a critical aspect.
Estimate the costs, open an education account and start saving early. Those early savings can make a significant difference and ensure that you are financially ready when your children reach college.
Investing in a dedicated education fund becomes a strategic move, allowing your financial resources to grow over time and ensuring that your child's educational aspirations are well supported when the need arises.
While prioritising your children's academic future, it is important to focus on securing your own financial stability simultaneously.
5. Plan regular check-ins
Life is full of unexpected changes, and your retirement plan should adapt accordingly.
Regular conversations with a financial expert can help you stay on track, ensuring that your retirement savings align with your goals and adapt to market fluctuations.
Schedule regular reviews of your retirement plan with a qualified financial adviser to evaluate your progress towards your goals and make any necessary adjustments.
Monitoring the performance of your investment portfolio and rebalancing it from time to time is important to maintain diversification and manage risk.
By following these steps consciously, you can create a secure and worry-free road to your retirement.
Taru Singhal is head of retail distribution at Zurich International Life
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Countries offering golden visas
UK Innovator Founder Visa is aimed at those who can demonstrate relevant experience in business and sufficient investment funds to set up and scale up a new business in the UK. It offers permanent residence after three years.
Germany Investing or establishing a business in Germany offers you a residence permit, which eventually leads to citizenship. The investment must meet an economic need and you have to have lived in Germany for five years to become a citizen.
Italy The scheme is designed for foreign investors committed to making a significant contribution to the economy. Requires a minimum investment of €250,000 which can rise to €2 million.
Switzerland Residence Programme offers residence to applicants and their families through economic contributions. The applicant must agree to pay an annual lump sum in tax.
Canada Start-Up Visa Programme allows foreign entrepreneurs the opportunity to create a business in Canada and apply for permanent residence.
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The Melbourne Mercer Global Pension Index
The Melbourne Mercer Global Pension Index
Mazen Abukhater, principal and actuary at global consultancy Mercer, Middle East, says the company’s Melbourne Mercer Global Pension Index - which benchmarks 34 pension schemes across the globe to assess their adequacy, sustainability and integrity - included Saudi Arabia for the first time this year to offer a glimpse into the region.
The index highlighted fundamental issues for all 34 countries, such as a rapid ageing population and a low growth / low interest environment putting pressure on expected returns. It also highlighted the increasing popularity around the world of defined contribution schemes.
“Average life expectancy has been increasing by about three years every 10 years. Someone born in 1947 is expected to live until 85 whereas someone born in 2007 is expected to live to 103,” Mr Abukhater told the Mena Pensions Conference.
“Are our systems equipped to handle these kind of life expectancies in the future? If so many people retire at 60, they are going to be in retirement for 43 years – so we need to adapt our retirement age to our changing life expectancy.”
Saudi Arabia came in the middle of Mercer’s ranking with a score of 58.9. The report said the country's index could be raised by improving the minimum level of support for the poorest aged individuals and increasing the labour force participation rate at older ages as life expectancies rise.
Mr Abukhater said the challenges of an ageing population, increased life expectancy and some individuals relying solely on their government for financial support in their retirement years will put the system under strain.
“To relieve that pressure, governments need to consider whether it is time to switch to a defined contribution scheme so that individuals can supplement their own future with the help of government support,” he said.
How to watch Ireland v Pakistan in UAE
When: The one-off Test starts on Friday, May 11 What time: Each day’s play is scheduled to start at 2pm UAE time. TV: The match will be broadcast on OSN Sports Cricket HD. Subscribers to the channel can also stream the action live on OSN Play.
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
