Smartest investment and life plans in UAE

Here's How You Can Plan For Your Retirement in UAE

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  | Published: 18 October 2021

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Smartest investment and life plans in UAE

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The thought that pops in most people’s minds when hearing the word ‘retirement’ is a perfect holiday by the sunny beach, having a blast with their loved ones and pursuing the things they love. However, if you are one of the many people who have this thought, it is time to face the reality of working towards this dream. It is a fact that you retire from work and not life.

The real cost of retirement is a lot more than what you imagine while giving up work. Factors like inflation, dependents, less earning power and higher medical costs need to be considered. This is also if life does not make you face any unfortunate situation such as a loss of job, injury, illness or untimely death.

In today’s world with the increasing cost of living, the volatility in the job environment, lifestyle conditions and limited or no savings, retirement is like a faraway dream for the working population in UAE.

This thread details a few things that can help you in living your life after retirement without any stress.

Start As Soon As You Can

It is never too late to start saving. Ideally, one should aim at saving about 20 to 30% of the monthly salary. If you put your math to use, even if you manage to saved AED 1,000 every month for the average working life span i.e., 40 years, at an interest rate, you would have saved a good enough amount. Even if you manage to save some amount over a shorter span, it can go a long way during your retirement.

Consider Your Savings as an Expense

Just as your rent payment, utility bill payment, grocery purchases, or any kind of loan, your savings should be considered as a fixed recurring monthly expense. To invest in the habit of savings requires proper disciple and long-term thinking. It is important to make savings a habit.

If you are someone who tends to give excuses to yourself and get away with the amount you need to invest in your savings, it is a good idea to open a retirement fund or an account dedicated for your retirement and ensure that the amount you need to set aside is debited from your monthly income towards your retirement.

Do Not Lay All Your Eggs in One Basket

It is important to diversify your investment in UAE in order to ensure that you do not place all your eggs in one basket, especially if you talk about retirement assets. You should ensure spreading your investments across gold, savings, property, retirement fund, and time deposits. If you place all of your savings in one type of investment in UAE, you tend to increase the risk and limit your returns on what you invest. With age, certain aspects of financial planning such as asset allocation tend to increase in importance. This happens because your risk tolerance tends to decrease as the time horizon to recoup the losses you may incur decreases. Your age, medical history, risk appetite, current lifestyle and planned lifestyle play a major role in asset allocation.

Consider Taking Help

Many people make the mistake of planning for retirement by themselves without complete knowledge or having health insurance, investment plans, or savings plans. This can be inefficient and very difficult to manage. It is a good idea to get help and do proper research before opting for any area to invest in.

Adapt and Adjust

If there is a change in your lifestyle, income or financial responsibilities, it is a good idea to review your financial portfolio and adjust it according to the current situation. For instance, the number of your dependents may have changed, or you may have paid off your entire loan, in any such scenarios you will have to adjust your investment in UAE on a regular basis. Your portfolio requires reassess every now and then as you cross milestones in your life.

Consider Making a Life Budget

It is essential to work within a proper budget. The savings you put towards your retirement should be considered as a recurring expense in order to calculate the correct amount of disposable income both currently and after retirement. As you approach your retirement age, you should rebalance your portfolio for investment in UAE.

It is good to do a rough estimate of the living expenses for the next 30-40 years before consulting an expert. Your calculation should take into consideration your average expenses for a month, inflation, rental costs and increase in rent, medical costs,    taxes and any milestones you may have planned.

You Never Retire Alone

The expenses of any dependents you may have also need to be considered when you are retiring. When you make an investment in UAE in the form of a protection solution you should achieve peace of mind when it comes to the financial security of you and your family. You should consider investing in financial products that offer a payout to your dependents in case of any unforeseen event such as disability, serious illness or injury, or death. If you invest in a proper plan early, your family is provided with the desired financial shield in the future.

By starting timely planning for retirement, you can provide yourself with the opportunity to receive the retirement you dream of. With proper retirement planning, you can make the money work for you as a reward for working for money for your entire life.