Are UAE Expats Saving Enough For Retirement? | ExpatWoman.com
 

Are UAE Expats Saving Enough For Retirement?

Study highlights UAE expats not saving enough for retirement.

Posted on

5 June 2013

Last updated on 14 May 2018
Are UAE Expats Saving Enough For Retirement?
Consumers in the UAE are bracing for a bleak retirement even as the economy shows signs of improvement and individual incomes are higher than in the previous years.

New data show that a significant number of residents are realising that they have no sufficient savings to retire comfortably. Financial experts attributed the lack of confidence to poor savings culture and absence of proper pension system in the country. Dropping property values and tightening lending rules are also making people realise that they won’t have enough assets to fall back on by the time they stop working.

The 2012 Global Workforce Study by Towers Watson, which surveyed 1,001 employees from large to midsize companies in the country, found that only 37 percent of respondents are confident of having enough financial resources to last 15 years into retirement.


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Over half of the respondents are worried about their “future financial state”, while a similar proportion (53 per cent) agree that retirement security has become a higher priority for them over the last three years.

“The global financial crisis has had a significant economic impact on many individuals, undermining their financial security both now and into retirement,” the study said.

More than half of employees (51 percent), however, said they are willing to set aside a bigger portion of their income each month to ensure they are financially prepared for retirement.

Many people are, however, beginning to accept “the reality that in most cases they have not built up sufficient assets” that will help them sustain their living standards in retirement.

“Before the financial crisis, many people relied on the equity they had built up in their property assets or they intended to acquire property assets as a way to fund their retirement. Post-crisis, there has been a large fall in property values and it has become harder to buy property as bank lending has tightened,” Wilson stated. “This has served to highlight a problem that had long existed but had been under-appreciated – that people have not and do not save enough for their future,” he added. While poor savings culture and lack of proper pension system can be partly blamed, the main underlying problem is that many people don’t yet fully grasp that the circumstances surrounding them have changed and they must be “more proactive with their retirement planning than the previous generation.”

“In the last few decades, retirees have had their retirement incomes underpinned by a healthy property market, a relatively healthy government pension system and the prospect of inheriting some assets from parents, therefore a token amount of private saving for retirement was sufficient,” said Wilson. “The world is very different now. Property markets are depressed and tighter credit conditions ensure another property boom is unlikely, the vast majority of government pension schemes are stretched to breaking point due to an ageing population and improved mortality rates mean assets that might have been passed to the next generation are whittled away through long-term care and increased medical costs.”

If you are concerned about retirements planning and would like further information, contact Her Finance.

 
 

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