Too many UAE workers still not saving for retirement; only 24% set aside for old age: HSBC study
Overwhelming majority anticipate their own children to support them financially
Highlights
- People come to the UAE to make money, but apparently, for many of them, the income earned is good enough to pay for the present needs
- Nearly eight in ten are not setting aside any funds that they could dip into when it's time to say goodbye to their career
- The overwhelming majority expect their own children to provide them some kind of financial support when they get older
Dubai: A significant number of consumers living in the the UAE are facing the risk of running out of money when they retire from work, with nearly eight in ten of them still not saving for their later life.
According to a study released by HSBC on Thursday, 76 per cent of working age people in the UAE do not put anything aside for their retirement.
While this puts most people at risk of ending up broke in their 70s or 80s, or when they get much older, the majority are actually hopeful they will still live comfortably when they stop working, with many of them expecting some kind of financial support from their own children during the last 30 years or so of their life.
Only a quarter (24) per cent have taken the steps to build up a nest egg for old age, while nearly half (43 per cent) believe it’s better to spend what they earn on enjoying life in the present.
These findings were based on the bank’s survey of 1,115 expatriates and Emirati nationals in the UAE and highlight the lack of financial awareness on the importance of saving money that people could use when they are no longer able to work.
“It is clear that for many, the reality of the here and now is taking precedence over preparing for life after work,” said Marwan Hadi, HSBC head of retail banking and wealth management.
“This lack of saving is likely linked to poor knowledge of how much money is needed in retirement, as well as many prioritizing their immediate financial situation over planning for their older years,” HSBC in a statement.
There are a lot of reasons why people are unable to prioritize saving, not just for old age but for emergency situations or short-term goals. Some people don’t know how to effectively manage their finances, while many others are simply not earning enough to take care of all their financial obligations. So, in many cases, retirement planning takes a back seat.
According to Mohammed Qaim Al Ali of National Bonds Corporation, some people don’t have the “tools or know-how” to save money. “While it is not surprising to see that residents in the UAE are not saving as much as they believe they should, it is interesting to see the disconnect between the intent to save and the numbers of people saving year on year,” Al Ali said in an earlier interview.
While most people are not guaranteed to have enough money to spend during retirement, the majority (62 per cent) aspire to live comfortably when they get old.
But who’s going to pay for their expenses when they run out of funds? According to HSBC’s survey, four in five people (83 per cent) in UAE anticipate their children will support them at some point in their retirement.
However, evidence from current retirees suggests that only a few of them are actually getting financial aid from their family.
“Getting older brings uncertainty for many but most people feel hopeful about their retirement. They look forward to spending time with friends and family, pursuing hobbies and getting fit. However, evidence from current retirees suggests that only 20% are actually receiving any financial support from their children,” said Hadi.