Shy about retiring
Saving for life after work is a sensible thing to do. So why is half of the UAE population not doing it?
February 20, 2013 1:01 by M. Aldalou
Kipp likes and hates surveys. We like them because they normally fulfill their purpose of providing an informative and reflective image of society. We hate them because they can induce panic – and worse, shame.
When Kipp attended a HSBC conference to discuss the results of their new global survey on retirement, Head of Retail, Rick Crossman, told us that the lack of financial preparation among UAE residents is extremely worrying; 89 percent don’t believe they’re saving enough for the future.
There were 1,000 respondents from the Emirates, with the majority of participants being Asian Expats (56%), Nationals (6%), Western Expats (11%), Arab Expats (24%) and others (3%). Almost half of them were between 25 to 34 years.
“The average age at which people thought they should start saving for retirement in the UAE is among the highest in the world,” Crossman said.
The study’s participants chose 30 as the age to start worrying about retirement, which is a relatively high number when compared to the UK (25), Mexico (24) or even USA (26). The global average seems to be 26, with France being one of the few countries that match the UAE’s perception on this matter.
When asked whether it is ironic that even with salary packages being tax-free in this country, residents are still either not saving or are unable to save, Crossman said that he can only assume the ability to save does exist. “This is just conjecture, but maybe the discipline isn’t,” he said.
The almost inexistent culture of saving in the UAE isn’t unheard of, as even a study by National Bonds in September concluded that 9 out of 10 residents believe they haven’t saved nearly enough for the future. The outcome – as unfortunate as it is – never really surprises Kipp. The part we find shocking is the extremely laid-back approach that residents seem to be taking. Sure, the HSBC study showed that 46 percent believe their day-to-day expenses is the biggest barrier to saving, but a whopping 24 percent said ‘they haven’t given it much thought’.
Kipp shares Crossman’s concern; not only is nobody managing to secure a financial nest egg, but 59 percent say they’ve never even begun. The misconception that earning a salary in a tax-free country should make it relatively easy to save is clearly false, as Kipp knows how miserably expensive day-to-day living can be. On the other hand, we can’t deny that our expectations add to the burden as the average respondent said they would need 126,400 Dirhams a year to feel comfortable.
Are you part of the 59 per cent that have not starting saving for retirement or do you have a secure finance plan in place? Let us know the difficulties you’re facing. One thing’s for sure, it’s given us all a wake-up call here at Kipp HQ.