Proactive planning prior to retirement requires a sufficient period of time, preparation, and foresight, and should ideally start from the beginning of an insured individual’s career path, according to the General Pension and Social Security Authority (GPSSA).
This advice was detailed by the GPSSA as part of the Get Ready - Proactive Financial Planning campaign, which offers members of the public guidance on how to plan their finances in order to enjoy a secure and stable retirement and lifestyle.
The GPSSA’s financial planning campaign runs from 3rd April to 30th July, 2023 and will offer a series of tips, advice, and guidance on how to prepare for pre-retirement and post-retirement stages.
In order to ensure security and ongoing sustainability for insured individuals and their families, financial planning should begin the moment a person joins an entity, since savings and income are highly dependent on one’s line of work and insurance coverage received as per the UAE Pension Law, which determines the type of benefits an insured individual receives upon retirement.
The reasons behind the need to proactively plan early in preparation for the post-retirement period include changes in obligations, priorities, and source of income during an insured person's age span; in addition to lifestyle challenges, number of children and family requirements (which vary from one person to the other), as well as increased responsibilities over time. All factors require an insured individual to make financial preparations from an early stage and to save for the longest duration possible.
Additionally, the GPSSA explained that insured individuals who spend less than 20 years in employment service and retire early under the perception of wanting to enjoy their lives, free from obligations, face huge challenges such as a decrease in the retirement salary since their pension amounts to 70 percent of the average salary of the contribution account, which may evidently result in disrupting the individuals' plan.
The concept of saving from an early stage not only impacts the overall financial behavior of a society which consequently brings out positive patterns for the economy, but it also supports an entire family’s financial returns to the short and long term, enhances their ability to make sound decisions and encourages future investment.
Lack of planning results in risky behavior such as reverting to loans and the accumulation of debts due to high-interest rates charged by banks, all factors that impact a family socially and psychologically, and can be avoided if savings are handled appropriately and wisely.
News Source: Emirates News Agency