Retirement Plans in the UAE

Retirements are similar to long vacations. You have all the time to travel, explore and purse all your long left hobbies. In midst the rush of living our lives to the fullest in our economically productive years, a lot of us often do not plan our retirements. During the phase of the economic productivity of our lives, we develop several habits that affect our overall cost of living in the upcoming phases of our lives. To maintain and continue your current lifestyle it is very important to plan and generate some source of financial security that will act as a support during the years when an individual is economically unproductive. 

A lot of people do not think about their old age and life after retirement. Planning your life after retirement should not be left for the last moment, the earlier you start investing in your life for your later years more comfortable will be your retirement. 

 If you are looking forward to spending your retired life without any hassle you’ll have to invest a part of your earnings during the financially productive years. Analyzing how much money you’ll need after your retirement can be a difficult task. The task can be accomplished by making a budget based on the kind of life you’d choose to live during your twilight years. The budget should allow some luxuries like a holiday annually, dining out once every month, etc. With a proper blueprint in hand, you have a financial goal and something you should look forward to work for. 

A common mistake that a lot of people make is being dependent only on one source of income. Savings alone are not enough to pay for a comfortable retirement, moreover, low-risk investment in Dubai are unpredictable and one cannot rely on them for the twilight years of life. 

What are Retirement Plans?

Retirement plans commonly known as pension plans are a class of insurance products designed to provide financial support once the income stops. Retirement plans allow an investor in Dubai to allocate a portion of their savings to accumulate during financially productive years and provide the investor in Dubai with a steady flow of funds during the retirement years.

Apart from the steady flow of income during your twilight years, pension plans provide extensive health coverage which is ideal to spend your retired life without worrying.

Features of Retirement Plans

Several retirement plans are available in the market, however, while choosing your plan always look for the following features- 

An annuity is the distinctive feature of retirement plans and usually comes in two types i.e. Immediate annuity, deferred annuity. As the name suggests immediate annuity begins immediately. The insurance provider pays the immediate annuity right after they receive their first lump-sum premium. These plans work on a single premium this means that the insurance provider breaks down the single premium into several smaller units which are later used to build a corpus for the investor in Dubai whereas in case of deferred annuity the returns received after a few years from the start of the plan. 

Sum Assured

The sum assured is the amount of coverage that one receives during the tenure of the plan. In case of any unfortunate event i.e. demise of the investor in Dubai, the nominees of the policyholder will be entitled to receive a death benefit. 

Vesting Age

The vesting age may be defined as the age when the investor in Dubai starts receiving returns from the plan. The vesting age of different retirement plans varies from provider to provider. The minimum vesting age for most of the retirement plans is 40 to 50 years. The maximum vesting age for some providers is 70 years. 

Accumulation Period

Accumulation period refers to the period during which the policyholder pays the premium for the plan. The majority of retirement plans come with separate accumulation and payout periods that help in building a corpus for the future.  

Advantages of Retirement Plans

There are numerous advantages of retirement plans, some of them are mentioned below-

Retirement plans help to accumulate savings for the future. The pension plans in UAE offer a guaranteed and steady flow of income in the post-retirement years. Apart from providing a steady flow of income, these plans provide life coverage in case of any unfortunate event. Investing your earnings in retirement plans diversifies your financial portfolio and mitigates risks of financial instability. 

In a Nutshell

Before you decide to invest your money anywhere, you should get advice from financial experts to make sure you’re making the right decision of choosing the plan that fulfills all your financial needs after you retire from work.

As the old saying goes ‘take care of your money now, and it will take care of you later’.