Selecting the right plan to retire happily

I've been living in Dubai for over 20 years, and have now reached the stage where I can see myself retiring over the next few years and hope to pursue hobbies like sailing and being a full time grand father.

However, the recent increase in living costs and the fall of the dollar is giving me second thoughts. How can I be sure that my resources will support me for a comfortable retirement, and where should I be investing?

It is important to realise that you are not alone in your concerns. There are so many people in your age-bracket - typically over 50s - that are concerned about the future that the financial experts have coined a phrase for them. You are now officially a FRED - "Facing Retirement Earnings Doubts."

For many people, their concerns stem from the rising cost of living. With increases in basic food prices and rent becoming the key economic issues of the day, many people are understandably worried about their costs eating into savings and pension plans.

Equally, since you mention children and grandchildren, it is the case that young people are typically more dependent on their parents than ever before. Children are living at home for longer, and often take their first steps as a married person from the family home. As rent and house prices rise, more children ask more of their parent's financial resources, creating increased dependency - and greater worry for the FREDs.

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.

There are a number of ways you can do this. Firstly, you could extend the length of time you continue working. That way, your income will be extended, and you can invest a greater proportion into a pension or investment plan.

Even if the thought of continuing full-time work doesn't appeal, you could consider moving to more of a part-time or consultancy position before retiring fully.

Organisations in the region are very talent hungry at the moment, and someone who has worked in Dubai for 20 years presumably has a great deal of experience to offer.

If you are looking for real peace of mind, you could ask your financial advisor about index-linked annuities.

These investments produce a guaranteed return for the rest of the holder's life, and - because they are index-linked - they keep pace with the rising cost of living. (Not all pension plans are linked to annuities).

However, annuities do require a significant investment, often taking the majority of a pension fund to cover. Make sure that you also shop around to ensure that your pension plan is as competitive as it can be.

One of the interesting challenges for pension-providers is that - in difficult economic times - people often reduce their payments so that they can cover everyday costs.

This is forcing pension companies to offer more competitive packages than before and there is significant differentiation between different plans.

Picking the right package will ensure a stronger return on your current investment, without necessarily requiring you to invest more.

- Nigel Watson is the Sales & Marketing Director at Nexus, one of the region's leading financial advisors.

The opinions expressed here are the writer's and does not necessarily represent the views of Gulf News. If you have any questions you would like us to answer, please mail us at advice@gulfnews.com. Also, you can find more advice at www.nexusadvice.com