A recent survey has shed light on a concerning trend in retirement planning among UAE residents, revealing that many are significantly underestimating the amount needed to sustain a comfortable post-retirement lifestyle.
The study, conducted by YouGov and commissioned by Zurich International Life Limited, found that while 75% of respondents are optimistic about their retirement finances, a large majority believe that a savings target of Dh5 million or less will be enough.
The survey, which included a cross-section of residents, revealed that 60% of respondents felt Dh5 million would be sufficient to retire comfortably in the UAE. Even more concerning, 42% believed that Dh2 million or less would meet their needs, highlighting a potential shortfall in their long-term financial planning.
Ashika Tailor, head of Business Development – Employee Benefits at Zurich International Life Limited, explained that this belief could be dangerous.
“Retirement is about sustaining a lifestyle for decades, not just hitting a specific financial milestone,”
she said.
“For instance, if you had Dh2 million set aside for a 25-year retirement, you would only have around Dh6,600 a month to live on, assuming no investment returns. Given the rising costs of healthcare, rent, and inflation, this might not stretch as far as expected.”
The survey's findings underscore a key issue: many individuals are not fully considering the long-term impact of rising expenses, particularly as life expectancy continues to increase. Tailor pointed out that the most significant financial risk in retirement isn't running out of money within the first few years, but rather the challenge of maintaining income over a 20-30 year period.
“Expenses like rent and healthcare will increase over time, and without active investments or passive income streams, retirees may outlive their savings,”
she added.
The UAE government has introduced measures to encourage retirement planning, such as a five-year retirement visa for residents aged 55 and above who meet specific financial requirements. However, Tailor stressed that relying on end-of-service gratuity alone is not a sustainable strategy.
“While gratuity provides a helpful financial cushion, it is not enough to fund a secure retirement,”
she said.
“Employees must diversify their savings and investments to ensure they have a consistent income stream.”
Tailor called on companies to implement workplace savings schemes to help bridge the gap. The Ministry of Human Resources and Emiratisation (MoHRE) has also been encouraging employers to adopt the voluntary alternative end-of-service benefits system, which invests gratuity funds into leading investment options to grow employees' savings.
In addition to workplace savings plans, Tailor recommends that individuals diversify their income streams through long-term savings and investments in areas such as stocks, gold, real estate, and commodities. She also highlighted the importance of setting up dedicated education savings plans to avoid sacrificing retirement funds for educational expenses and investing in health and long-term care insurance to safeguard against rising medical costs.
Ultimately, Tailor emphasized the importance of proactive and comprehensive financial planning.
“A secure retirement doesn’t happen by accident—it requires careful planning, smart investments, and a solid strategy to ensure financial security in later years.”
News Source: Khaleej Times
