How to Save for Retirement in UAE

Why Do You Need a Retirement Plan in the UAE?

Living and working in the UAE comes with many perks: tax-free income, high salaries, and world-class infrastructure. But when it comes to how to save for retirement in UAE, many residents, especially expats, don’t have a solid plan in place. 

This means you won’t receive monthly pension payments unless you plan and fund your retirement, so the responsibility falls squarely on your shoulders. UAE nationals, on the other hand, do receive pensions, with employees contributing 5% of their salary and the government or employer contributing up to 15%.

Expats end up relying mostly on —

• End-of-service benefits
• Personal savings and investments
• Home country pension schemes (if applicable)

How to Save for Retirement in UAE? A Step-to-Step Guide

Most of us are wondering, “How much should you have saved for retirement?” Below are some points that you can keep in mind —

Step 1: Visualise Your Retirement Life

Before you do any math, envision your retirement.

• Will you retire in the UAE or go back home?
• Do you plan to buy a home or rent?
• Will you travel or pick up expensive hobbies?
• What are your monthly expenses likely to be?

This vision helps you get clarity on how much to save for retirement, and what your total retirement corpus needs to look like.

Step 2: Estimate Your Retirement Expenses

Use today’s numbers as a base and adjust for inflation. Let’s say you need AED 15,000/month to cover your lifestyle today. If you plan to retire in 20 years and assume a 3% inflation rate, that figure becomes AED 27,000/month. 

Multiply that by 12 months and 25 years (an average retirement length), and you’re looking at the need for over AED 8.1 million just to maintain your lifestyle.

You can also use online retirement calculators to simulate scenarios based on income, savings rate, investment return, and age.

Alternatively, you can aim to save 20x your annual expenses to ensure financial independence.

Step 3: Start Early: Time Is Your Best Friend

Here’s the hard truth: how much you need to retire grows significantly the later you start. But even if you’re in your 30s or 40s, it’s not too late. What matters is getting started now.

Example: Saving AED 2,000/month from age 30 at 8% return = AED 2.3 million by age 60

Wait until age 40? You’ll only have AED 1 million with the same monthly savings

Step 4: Don’t Just Save, Invest

A savings account may feel safe, but it won’t grow your wealth fast enough to beat inflation. Investing your money is key to long-term success.

Here are some retirement planning options in the UAE —

• Savings Accounts offer safety and easy access to your funds, though returns are minimal. Think of this as your short-term or emergency buffer.
• Mutual Funds are pooled investment vehicles managed by professionals. You can choose from equity funds, debt funds, hybrid funds, and more. Mutual funds are ideal for medium- to long-term growth.
• Stocks are better suited for long-term investors who can ride out market ups and downs.
• Bonds are essentially loans you give to companies or the government in return for fixed interest. They are relatively stable and are often used to balance riskier assets in your portfolio.
• Real Estate generates passive income through rentals and capital appreciation. However, it requires a larger initial investment and ongoing management.
• Retirement Plans can be customised based on your age, income, and risk tolerance. Some financial institutions in the UAE offer structured retirement plans with guaranteed benefits and investment options in UAE.

Step 5: Get Help from Experts When Retirement Planning

If retirement planning feels overwhelming, you’re not alone—and you don’t have to figure it all out by yourself.

A professional financial advisor can guide you through economic cycles, asset allocation, and tax-efficient strategies. But make sure to ask about:

• Commissions they may receive
• Fees you’ll pay on your investments

Whether the advice is product-based or truly tailored to your goals

Step 6: Use Your UAE Benefits Wisely

Even if you don’t get a pension in the UAE, you may be eligible for —

• End-of-Service Gratuity – A lump sum payout that can go into your retirement corpus
• Company Savings Plans – Some UAE employers offer voluntary retirement or savings schemes
• Home Country Pension Contributions – Continue contributions where allowed

Step 7: Pay Yourself First

Before spending your salary, allocate a portion to your future. Whether it’s AED 500 or AED 5,000 a month, consistency is key.

Pro tip: A standing instruction to transfer money to your retirement fund right after payday removes the temptation to spend.

Step 8: Healthcare Is Non-Negotiable

Private healthcare in the UAE isn’t cheap and medical costs usually rise with age. Plan ahead by —

• Getting long-term health insurance
• Considering a health savings account (HSA)
• Factoring medical costs into your retirement budget

Step 9: Adapt As You Go

Life changes. Your income grows. Expenses evolve. So should your retirement plan. Review your progress annually. Rebalance your portfolio. Increase your savings rate as your salary increases.

And remember, how much should you have saved for retirement changes with age —

Final Thoughts: Start Small, but Start Now

You don’t need to have it all figured out today. Retirement planning is a journey, and the earlier you begin, the more options you have. Whether you’re 25 or 55, whether you’re building your first emergency fund or planning your legacy, every dirham invested wisely brings you closer to financial freedom.

Even a small step today can make a big difference tomorrow. That’s the real goal of retirement planning. So, how much money do you need to retire? Enough to live your dream life, without compromise.

Start saving today. Start investing wisely. And build a future you’re excited to grow old in.

 

Frequently Asked Questions