Abu Dhabi: Proactive planning prior to retiring requires a sufficient period of time, preparation and foresight, and should ideally start from the beginning of an insured individual’s career path.
The advice was shared today by the General Pension and Social Security Authority (GPSSA) as part of the ‘Get Ready - Proactive Financial Planning’ campaign, which offers members of the public guidance on how to plan their finances in order to enjoy a secure and stable retirement and lifestyle.
The GPSSA’s financial planning campaign runs from April 3 to July 30 and will offer a series of tips, advice and guidance on how to prepare for pre-retirement and post-retirement stages.
In order to ensure security and ongoing sustainability for insured individuals and their families, financial planning should begin the moment a person joins an entity, since savings and income are highly dependent on one’s line of work and insurance coverage received as per the UAE Pension Law, which determines the type of benefits an insured individual receives upon retirement.
The reasons behind the need to proactively plan early in preparation for the post-retirement period includes changes in obligations, priorities and source of income during an insured’s age span; in addition to lifestyle challenges, number of children and family requirements (which vary from one person to the other), as well as increased responsibilities over time. All factors that require an insured individual to undergo financial preparations from an early stage and to save for the longest duration possible.
Additionally, the GPSSA explained that insured individuals who spend less than 20 years in employment service and retire early under the perception of wanting to enjoy their lives, free from obligations, face huge challenges such as a decrease in the retirement salary since their pension amounts to 70 per cent of the average salary of the contribution account, which may evidently result in disrupting the individuals plans.
The concept of saving from an early stage not only impacts the overall financial behaviour of a society which consequently brings out positive patters for the economy, it also supports an entire family’s financial returns on the short and long term, enhances their ability to make sound decisions and encourages future investment.
Lack of planning results in risky behaviour such as reverting to loans and the accumulation of debts due to high interest rates charged by banks, all factors that impact a family socially and psychologically, and can be avoided if savings are handled appropriately and wisely.