Review investment options regularly

I've been living in Dubai for ten years and set up a pension plan five years ago. How often do I need to review my pension plan? Given the changes in currency values and the current economic climate, I am concerned whether my current plan might not be the best savings scheme available.

It is important to realise that you are not alone in your concerns. There are so many people who have long-term pension plans that are concerned about the future and are re-evaluating their existing schemes.

Your first step is to speak with a financial adviser who can help you make an informed decision based on their up-to-date knowledge of global economic trends and industry forecasts and review if your pension funding is in line with your current requirements.

For many people, their concerns stem from the rising cost of living. With the changes in the global financial market, people are understandably worried about their costs eating into savings and pension plans.

A regular comprehensive review of your pension plan every two years is almost as important as owning a retirement plan. Remember what you set aside for your retirement is one of the most important long-term financial decisions you are making and like any 'investment' it needs to be closely monitored.

The best way to reassure yourself is to take practical steps to safeguarding your existing resources and to maximise your future income. Typically, most people face a 'savings gap' between the resources they feel they will need to be comfortable, and their likely income when they retire. Closing that gap is the best way to gain greater peace of mind.

Given that you set up your pension plan five years ago, you may find that your initial retirement goals have changed since - your wants and expected standard of living may have risen. Additionally, if you have faced any health problems, you may have to take the medical support needed into consideration. Will your current savings plan give you the financial support that you now anticipate during your retirement?

Another key factor to consider is that your income may have increased substantially since you designed your initial pension plan - this means you could start setting aside a larger amount of your savings or increase your investment portfolio. Additionally, if you are now married and have children, you would need to set up a college fund, family health insurance and a comprehensive life insurance scheme.

Keeping in mind that your spending habits may have changed, you need to recognise what financial support you need to maintain your current standard of living and support your spending needs. Some people prefer enjoying a higher standard of living after they retire - if that is how you feel, then you need to calculate the amount it would cost you regularly to support the lifestyle you wish to enjoy.

If you are looking to diversify or increase your investments, it is important that you seek expert advice to see if the companies you have already invested in are performing well and that you have sufficient capital to fall back on should the investment not yield the returns you anticipate. The nearer you get to retirement, the more likely you would want to steer your investments to a lower level of risk.

Your pension plan should be reviewed regularly to ensure it is constantly in line with what you require when you retire - your children's needs will definitely increase and all your investments may not offer you the returns you have anticipated. Any amendments you make to your plan needs to be carefully understood to ensure you benefit in the long run and your goals are met - it is advisable to run the changes and numbers by an expert financial adviser to be sure you have the best plans to met your long term aspirations.

- The writer is the sales & marketing director at Nexus. Views expressed are the author's own and do not necessarily reflect those of Gulf News.

If you have questions, please e-mail: advice@gulfnews.com.