It's an age-old personal finance debate: When is the best time to start saving for your golden years to sustain your lifestyle during retirement?
While there is no exact age to begin preparing for retirement, financial experts say the earlier you start saving the better.
“The simple answer to what is the right age one needs to start saving for retirement is … as soon as one can,” says Rupert Connor, partner at Abacus Financial Consultants.
“Ideally, this would be when an individual is in their 20s and first starts working and has earnings from employment.
“This is because the sooner one can, the more time the money has to grow [because there is a cost to delaying] – each year’s gains can generate their own gains the next year – a powerful wealth-building phenomenon known as compounding.”
However, an August report by the Milken Institute, an economic think tank, found that young adults need to start saving regularly by age 25 to have a least $1 million to retire on.
This is to leverage the effect of compounding returns. The Milken Institute calculated that a weekly $100 investment in the stock market, earning a 7 per cent annual rate of return, will over time compound into savings that top $1.1 million by the age of 65.
Twenty-five is also the age Fidelity Investments and other financial service companies often use when offering guidelines on how much money a person should aspire to save for retirement.
If savers waited to start putting away $100 a week until they turned 35, they’d have slightly more than $300,000 by age 65, according to the report.
If investors can only save $50 a week, or $200 a month, over the same period, they would still have more than $550,000 by age 65.
Similarly, if investors save $100 a month over that same time, they would save more than $250,000 by age 65, according to the report.
The need for financial preparedness during retirement is more acute today as people are living longer.
Across the Organisation for Economic Co-operation and Development countries, people aged 65 can expect to live for another 19.7 years, on average.
In addition, at least 25 per cent of people in the US lack any retirement savings, and roughly half have no access to employer-sponsored retirement plans, according to a 2021 report by Yahoo Finance.
Retirement savings is also the biggest financial challenge faced by employees in Gulf Co-operation Council countries, according to a survey by global advisory company Willis Towers Watson in January.
The UAE recently introduced an optional savings retirement plan that allows employees in the UAE’s private and free zone sectors to invest their end-of-service benefits to build long-term wealth.
End-of-service gratuities are lump-sum payments that all employed residents are entitled to after completing at least one year of service with a company.
The scheme will involve the formation of savings and investment funds that will be overseen by the Securities and Commodities Authority in collaboration with the Ministry of Human Resources and Emiratisation.
“Pension or retirement planning is a critical piece to the retirement puzzle,” Mr Connor says.
“From understanding pension entitlements with one’s company to managing private pensions, navigating taxation, addressing currency risks, and sustaining a pension throughout retirement, there are various factors to consider when it comes to securing one’s financial future as an expat – one of them being to commence contributing to a pension structure from an early age.”
Here, personal finance experts offer their insights on the optimal age to start saving for retirement.
Top 10 global cities for retirement – in pictures
When to start retirement saving
Saving for retirement, like any other long-term goal, is essential. The earlier you start, the better and the key is to be consistent in saving towards the goal, according to Rasheda Khatun Khan, a wealth and wellness expert, founder of Design Your Life and the author of Millionaire Mindset – 6 Steps To A Wealthy Life.
“As soon as you start earning an income, start putting money away for that point in time when you no longer rely on an employer for income but on your own portfolio,” she says.
“You’ll probably never retire unless you have to because of ill health or you’re too old. However, you do want to reach a point where your life is not dependent on your employer salary.”
Time in the market is one of the most important factors for how much you will have in your “retirement pot” due to compound interest working in your favour, says Alison Soltani, founder of Leap Savvy Savers.
“For example, investing just $200 a month at 7 per cent annual interest rate gives you about $60,000 over 15 years, but over 35 years, you can expect a return of $333,000 without any changes to your monthly contribution,” she says.
“The older you get, you may have to contribute more monthly to reach your goal. That being said, starting today is always better than putting it off until tomorrow.”
The “golden years” should be a time of relaxation and fulfilment, and proper retirement planning can make that vision a reality, so starting early in life can only be a good thing, Mr Connor says.
How much to save?
How much you will need to accumulate for retirement depends on how much income you want on a monthly basis during your twilight years.
“Let’s put it this way, $1 million will give you about $50,000 per year, that’s $4,166 per month, is that enough?” Ms Khan says.
As soon as you start earning an income, start putting money away for that point in time when you no longer rely on an employer for income but on your own portfolio
Rasheda Khatun Khan,
wealth and wellness expert
“So if you’re looking at accumulating millions, then you better get started now.”
Many people have no idea how much they need to have saved for retirement, according to a survey of 10,000 adults in the US last year by the non-profit Transamerica Centre for Retirement Studies, in collaboration with the Transamerica Institute.
Workers polled estimated they will need $500,000 by the time they retire to feel financially secure.
Financial needs vary by generation, with Baby Boomers estimating they will need $750,000, Generation X and millennials estimating $500,000, and Generation Z estimating $250,000, the survey found.
Strategies to save for retirement
The first thing to do is get your financial house in order. Ensure you create a budget and know what your income and outgoings are, pay off high-interest debt and save three to six months of expenses in an emergency fund, Ms Soltani says.
“This creates a solid financial foundation from which you can build,” she adds.
There are three ways of building wealth: investing in the stock market, investing in property or founding or acquiring a successful business, she says.
The most accessible asset class for most people is the stock market.
“You can start with a very small upfront investment. You will need to open a brokerage account and, for most people, a low-cost globally diversified exchange-traded fund is sufficient for purpose,” Ms Soltani explains.
“Assessing your risk tolerance and choosing your asset allocation are also important steps in the process. But once you have it all set up, investing is simple, quick and inexpensive – probably the most effective way to build a nest egg for most people.”
Gone are the days when a retirement plan was this one policy you could access only at 65, Ms Khan notes.
Today, a retirement plan is an investment portfolio. Be sure to diversify between asset classes, be it stocks and shares, real estate, business equity, commodities like gold, silver, cryptocurrencies, and bonds, she suggests.
“The key is to start with one and keep going. Remember to keep your number in mind of how much you need and be sure to keep that portfolio allocated for it,” she says.
Meanwhile, Mr Connor picks asset allocation as the most important building block in generating long-term investment returns.
Asset allocation involves the distribution of capital to various asset classes (such as stocks and bonds) and geographies. It is based on the principle that values of different assets react in different ways to changes in economic and market conditions, he explains.
“A long-term investment outlook is ideal for retirement planning and, thereby, help to avoid the risk of emotional knee-jerk reactions during more volatile markets, like what has been experienced over the past few years,” he says.
“Rather than trying to time the market, it is time in the market [through a diversified asset allocation] which can help to target someone saving for retirement long-term investment performance goals.”
Portfolio rebalancing, which usually takes place each month, is also key to successful asset allocation investing, he says.
Rebalancing is the bringing of investment portfolios back to the target allocation mix. This is necessary because over time, some investment may grow faster than others, Mr Connor adds.
The five pillars of Islam
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Schedule:
Sept 15: Bangladesh v Sri Lanka (Dubai)
Sept 16: Pakistan v Qualifier (Dubai)
Sept 17: Sri Lanka v Afghanistan (Abu Dhabi)
Sept 18: India v Qualifier (Dubai)
Sept 19: India v Pakistan (Dubai)
Sept 20: Bangladesh v Afghanistan (Abu Dhabi) Super Four
Sept 21: Group A Winner v Group B Runner-up (Dubai)
Sept 21: Group B Winner v Group A Runner-up (Abu Dhabi)
Sept 23: Group A Winner v Group A Runner-up (Dubai)
Sept 23: Group B Winner v Group B Runner-up (Abu Dhabi)
Sept 25: Group A Winner v Group B Winner (Dubai)
Sept 26: Group A Runner-up v Group B Runner-up (Abu Dhabi)
Sept 28: Final (Dubai)
Essentials
The flights
Emirates, Etihad and Malaysia Airlines all fly direct from the UAE to Kuala Lumpur and on to Penang from about Dh2,300 return, including taxes.
Where to stay
In Kuala Lumpur, Element is a recently opened, futuristic hotel high up in a Norman Foster-designed skyscraper. Rooms cost from Dh400 per night, including taxes. Hotel Stripes, also in KL, is a great value design hotel, with an infinity rooftop pool. Rooms cost from Dh310, including taxes.
In Penang, Ren i Tang is a boutique b&b in what was once an ancient Chinese Medicine Hall in the centre of Little India. Rooms cost from Dh220, including taxes.
23 Love Lane in Penang is a luxury boutique heritage hotel in a converted mansion, with private tropical gardens. Rooms cost from Dh400, including taxes.
In Langkawi, Temple Tree is a unique architectural villa hotel consisting of antique houses from all across Malaysia. Rooms cost from Dh350, including taxes.
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Saturday's schedule at the Abu Dhabi Grand Prix
GP3 race, 12:30pm
Formula 1 final practice, 2pm
Formula 1 qualifying, 5pm
Formula 2 race, 6:40pm
Performance: Sam Smith
EMERGENCY PHONE NUMBERS
Estijaba – 8001717 – number to call to request coronavirus testing
Ministry of Health and Prevention – 80011111
Dubai Health Authority – 800342 – The number to book a free video or voice consultation with a doctor or connect to a local health centre
Emirates airline – 600555555
Etihad Airways – 600555666
Ambulance – 998
Knowledge and Human Development Authority – 8005432 ext. 4 for Covid-19 queries
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Always use only regulated platforms
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Save all evidence (screenshots, chat logs, transaction IDs)
Report to local authorities
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Courtesy: Crystal Intelligence
Directed by Sam Mendes
Starring Dean-Charles Chapman, George MacKay, Daniel Mays
4.5/5
Picture of Joumblatt and Hariri breaking bread sets Twitter alight
Mr Joumblatt’s pessimism regarding the Lebanese political situation didn’t stop him from enjoying a cheerful dinner on Tuesday with several politicians including Mr Hariri.
Caretaker Culture Minister Ghattas Khoury tweeted a picture of the group sitting around a table at a discrete fish restaurant in Beirut’s upscale Sodeco area.
Mr Joumblatt told The National that the fish served at Kelly’s Fish lounge had been very good.
“They really enjoyed their time”, remembers the restaurant owner. “Mr Hariri was taking selfies with everybody”.
Mr Hariri and Mr Joumblatt often have dinner together to discuss recent political developments.
Mr Joumblatt was a close ally of Mr Hariri’s assassinated father, former prime minister Rafik Hariri. The pair were leading figures in the political grouping against the 15-year Syrian occupation of Lebanon that ended after mass protests in 2005 in the wake of Rafik Hariri’s murder. After the younger Hariri took over his father’s mantle in 2004, the relationship with Mr Joumblatt endured.
However, the pair have not always been so close. In the run-up to the election last year, Messrs Hariri and Joumblatt went months without speaking over an argument regarding the new proportional electoral law to be used for the first time. Mr Joumblatt worried that a proportional system, which Mr Hariri backed, would see the influence of his small sect diminished.
With so much of Lebanese politics agreed in late-night meetings behind closed doors, the media and pundits put significant weight on how regularly, where and with who senior politicians meet.
In the picture, alongside Messrs Khoury and Hariri were Mr Joumbatt and his wife Nora, PSP politician Wael Abou Faour and Egyptian ambassador to Lebanon Nazih el Nagari.
The picture of the dinner led to a flurry of excitement on Twitter that it signified an imminent government formation. “God willing, white smoke will rise soon and Walid Beik [a nickname for Walid Joumblatt] will accept to give up the minister of industry”, one user replied to the tweet. “Blessings to you…We would like you to form a cabinet”, wrote another.
The next few days will be crucial in determining whether these wishes come true.
The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
The specs
- Engine: 3.9-litre twin-turbo V8
- Power: 640hp
- Torque: 760nm
- On sale: 2026
- Price: Not announced yet
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What is Folia?
Prince Khaled bin Alwaleed bin Talal's new plant-based menu will launch at Four Seasons hotels in Dubai this November. A desire to cater to people looking for clean, healthy meals beyond green salad is what inspired Prince Khaled and American celebrity chef Matthew Kenney to create Folia. The word means "from the leaves" in Latin, and the exclusive menu offers fine plant-based cuisine across Four Seasons properties in Los Angeles, Bahrain and, soon, Dubai.
Kenney specialises in vegan cuisine and is the founder of Plant Food Wine and 20 other restaurants worldwide. "I’ve always appreciated Matthew’s work," says the Saudi royal. "He has a singular culinary talent and his approach to plant-based dining is prescient and unrivalled. I was a fan of his long before we established our professional relationship."
Folia first launched at The Four Seasons Hotel Los Angeles at Beverly Hills in July 2018. It is available at the poolside Cabana Restaurant and for in-room dining across the property, as well as in its private event space. The food is vibrant and colourful, full of fresh dishes such as the hearts of palm ceviche with California fruit, vegetables and edible flowers; green hearb tacos filled with roasted squash and king oyster barbacoa; and a savoury coconut cream pie with macadamia crust.
In March 2019, the Folia menu reached Gulf shores, as it was introduced at the Four Seasons Hotel Bahrain Bay, where it is served at the Bay View Lounge. Next, on Tuesday, November 1 – also known as World Vegan Day – it will come to the UAE, to the Four Seasons Resort Dubai at Jumeirah Beach and the Four Seasons DIFC, both properties Prince Khaled has spent "considerable time at and love".
There are also plans to take Folia to several more locations throughout the Middle East and Europe.
While health-conscious diners will be attracted to the concept, Prince Khaled is careful to stress Folia is "not meant for a specific subset of customers. It is meant for everyone who wants a culinary experience without the negative impact that eating out so often comes with."
LA LIGA FIXTURES
Friday (UAE kick-off times)
Levante v Real Mallorca (12am)
Leganes v Barcelona (4pm)
Real Betis v Valencia (7pm)
Granada v Atletico Madrid (9.30pm)
Sunday
Real Madrid v Real Sociedad (12am)
Espanyol v Getafe (3pm)
Osasuna v Athletic Bilbao (5pm)
Eibar v Alaves (7pm)
Villarreal v Celta Vigo (9.30pm)
Monday
Real Valladolid v Sevilla (12am)
Global state-owned investor ranking by size
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THE SPECS
Engine: AMG-enhanced 3.0L inline-6 turbo with EQ Boost and electric auxiliary compressor
Transmission: nine-speed automatic
Power: 429hp
Torque: 520Nm
Price: Dh360,200 (starting)
Specs
Engine: Duel electric motors
Power: 659hp
Torque: 1075Nm
On sale: Available for pre-order now
Price: On request
Labour dispute
The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.
- Abdullah Ishnaneh, Partner, BSA Law
The biog
Siblings: five brothers and one sister
Education: Bachelors in Political Science at the University of Minnesota
Interests: Swimming, tennis and the gym
Favourite place: UAE
Favourite packet food on the trip: pasta primavera
What he did to pass the time during the trip: listen to audio books
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The five pillars of Islam
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
Anghami
Started: December 2011
Co-founders: Elie Habib, Eddy Maroun
Based: Beirut and Dubai
Sector: Entertainment
Size: 85 employees
Stage: Series C
Investors: MEVP, du, Mobily, MBC, Samena Capital