Retirement fears have grasped UAE residents
When the financial crisis first hit, people expected the storm would pass, but today’s findings reveal much darker clouds on the horizon for those who fail to plan ahead.
February 20, 2013 10:23 by kippreport
UAE residents are dangerously unprepared for their retirement, with 89% unable to describe their current savings ‘more than adequate’ for the future and more than half admitting that they fear financial hardship during their retirement, according to the results of HSBC’s annual global Future of Retirement Study.
The Future of Retirement: A New Reality, a survey of 15,000 consumers in 15 markets and more than one thousand people in the UAE, revealed that nearly half (46%) of residents are still being held back from saving due to their inability to deal with the day to day costs of living in the country. Other reasons cited range from the lack of pension schemes for non-Emiratis to a lack of understanding of savings and investments.
Many also attribute their lack of savings to the fact that retirement is ‘too far away to worry about’ – a perception that explains why the UAE is the joint highest globally in putting off saving for retirement, with people beginning to save at an average age of thirty. This is in stark contrast with countries such asUKand US, where people begin saving in their mid-twenties. Worryingly, UAE residents also believe that they can put off their savings as late as the age of 37 and still expect to maintain the same standard of living they currently enjoy.
People in the UAE are also being severely impacted by ‘life events’, the term used to describe moments in each person’s life where a significant amount of money needs to be spent or is no longer available as income. On a global level, the ‘life events’ that have impacted people the most are uncontrollable factors such as the recession and losing their job, whereas in the UAE it is buying a home (43%) and paying for children’s education (34%), both factors that can be controlled through careful planning. Unfortunately, two thirds of people impacted at some point in their life say they are still suffering from it to this day.
Rick Crossman, Head of Retail Banking & Wealth Management, United Arab Emirates, HSBC Bank Middle East Limited, said: “It is natural to prioritise immediate needs and wants above longer term financial health, but these ‘savings gaps’ that occur due to a lack of financial preparation, can equate to serious holes in people’s retirement savings in the long run, once interest and investment growth are taken into account.”
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