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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
When it comes to aspirations regarding retirement, most respondents want to spend more time with friends and family (58%), a result that is similar in findings across the globe. UAE residents tend to have a much bigger appetite for entrepreneurial activity in later years, as the second biggest aspiration for people in the UAE during retirement is to start a business, with more than half (51%) expressing the desire, compared to just 7% in the UK.
UAE residents also rely heavily on cash savings in their retirement rather than diversified savings, with 57% expecting cash savings to be their most important source of income at that stage in their life. This trend towards cash also leaves the retirement pot vulnerable, as almost one third of respondents (28%) admit to dipping into their retirement cash savings when needed and 36% admit to taking from their general savings. More people would prefer to sell their valuables (24%) rather than compromise their lifestyle by moving into a smaller house (18%).
The findings are described by experts at HSBC as a “time bomb” which will leave millions of people facing a drastically reduced standard of living in later life, a sentiment that is reaffirmed by the fact that UAE respondents on average expect their retirement to last 15 years, while their savings for retirement will only last them nine years on average.
Gifford Nakajima, Regional Head of Wealth Development, HSBC Bank Middle East Limited, said: “People must realise that just a year or two without saving can have a significant impact on their future income in retirement. Having a financial plan and just saving something, however small to start with, earlier can make a big difference to retirement income in the long run. With life expectancy increasing, people need to be aware how long their money will have to last, so that they can take steps to avoid any shortfall. Developing a financial plan with a professional adviser can help ensure that all retirement needs are identified, gaps avoided, and eventualities covered.
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. Even in parts of the world that haven’t been through a recession, global economic uncertainty is taking its toll and no one can take a comfortable retirement for granted.”
While the findings do not bode well for the future, there were encouraging results for respondents that have taken the initiative to get professional financial advice. Men who use professional advice typically have about 50% more in retirement savings than those who have not used such advice, while men that undertake either formal or informal planning in general have typically about twice the retirement savings of those who have not planned at all.
Disappointingly though, 93% of respondents do not plan their savings with an advisor, with almost half (44%) claiming to use their own approximations or thoughts to make savings, compared with less than a fifth of people in the UK (18%) who would do the same.
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