Dubai: One of the biggest worries for many people is whether or not they will retire broke or have enough money to dip into when they stop working.
The purpose of having a retirement pot is to ensure people are able to live comfortably when they no longer receive a monthly paycheque.
Financial advisers have stressed time and again that it’s important to plan for retirement and start saving at an early age because it takes several years to build a nest egg that is sufficient enough to pay for one’s needs in later life.
Unfortunately, only a few people are able to follow the advice. A new research conducted by National Bonds show that only 36 per cent of residents in the UAE save for retirement.
Mohammed Qasim Al-Ali, CEO of National Bonds, said people understand that they need to set aside funds for their own future, but they fail to stick to a fixed savings plan because they have other financial obligations to deal with.
"I believe that most people are too involved with managing and meeting their short-term financial commitments. They all know what the priorities are when it comes to ensuring financial security. However, not all of them are able to stick to a fixed savings play or stay immune to the temptation of spending beyond their means," Al-Ali told Gulf News.
Al-Ali said there is a higher level of awareness on the importance of retirement planning, "but the willpower to take a decisive action is still way below the intent."
"Retirement is a major area of concern for expatriates but planning for a good life after retirement is still lacking."
Financial health
National Bonds has been tracking the savings habits of residents in the country through its “financial health check” online tool that helps customers assess their financial status and take corrective action towards achieving their financial goals.
Since its launch in February 2014, the financial health check has attracted responses from more than 1,000 customers in the UAE, enabling National Bonds to establish some interesting trends.
Survey findings indicate that while less than half of the UAE residents set aside funds for their retirement, a number of people are saving their money for other priorities.
Almost a quarter (24 per cent) of the residents are saving for their children’s education, while 28 per cent are saving regularly to buy a home.
Other people have other financial responsibilities to deal with, such as making monthly payments towards their personal loans (44 per cent), home mortgages (18 per cent) and credit card debt (38 per cent).
Professional advice
Another worrying trend is that the majority (81 per cent) of the residents do not seek professional advice when it comes to managing their finances and dealing with money-related problems.
National Bonds’ survey was conducted among UAE residents who are 18 to 55 years old. Among the younger generation (18-25 years old), 82 per cent said they are saving regularly.
Among the older age group (41-55), about half (51 per cent) of them are able to set aside funds for retirement, while a significant number (45 per cent) are still busy paying off their personal loans and 43 per cent are making monthly payments towards credit cards.
In terms of monitoring their expenses, the majority (60 per cent) of those in the 26-40 age group keep track of their spending. Most of the respondents from the same category (73 per cent) said they regularly pay for credit card expenses.
