Dubai: The majority of residents in the UAE are facing the prospect of a shortfall in their retirement savings as major life events and the high cost of living are holding them back from preparing for life after work, according to a recent HSBC study.
HSBC’s ‘The Future of Retirement 2015’ report reveals that for nearly 9 in 10 (87 per cent) people in the country, saving for retirement is not a main priority. As a result of which, more than half (55 per cent) of the working age population feels inadequately prepared for life after work.
This year’s research shows that over two-thirds (71 per cent) of pre-retirees in the UAE worry about having enough money to live day-to-day and 68 per cent fear that they will run out of money after they stop working. Additionally, nearly one in ten working age people (8 per cent) in the country believe that they will never be able to fully retire.
As people in the UAE are juggling a number of priorities, it is evident that preparing for retirement is not amongst their most pressing concerns.
“Alarmingly, we see that in addition to rising costs and life events, a lack of understanding about how much to save is also hindering people’s ability to prepare for retirement, with one in five (20 per cent) citing this as a barrier to their plans,” said Khalid Elgibaly, Head of Retail Banking and Wealth Management, UAE and MENA, HSBC Bank Middle East Limited.
While the UAE has moved beyond the financial crisis, people are still facing its lingering effects. 23 per cent of pre-retirees described the global economic downturn and its related effects, such as becoming unemployed (23 per cent) and experiencing a significant drop in earnings (18 per cent), as having a significant impact on their ability to prepare for retirement.
HSBC officials said some amount of planning can address some the events that are holding back people from saving for retirement. “While certain events cannot be anticipated, others that are in fact cited more often by working age people as having an impact on their ability to save for retirement, such as buying a home/paying a mortgage paying for children’s education, or starting a family, can be planned for more proactively, Gifford Nakajima, Head of Wealth Development, UAE and Mena, HSBC Bank Middle East Limited, said
Worldwide, about 38 per cent retirees say that you need to start planning by the age of 30 at the latest to maintain your standard of living in retirement. In the UAE about the same number say that one can wait until you are age 41 or older.
“Worryingly, almost half of pre-retirees are either not currently saving or do not intend to start saving for retirement. Even among those closer to retirement — aged 45 and over — more than a third are following this trend,” said Nakajima.
