We all want to live to a ripe old age, but how many of us are healthy enough to actually get there? This is the topic discussed in this week's Money section in The National. A more burning issue perhaps is the fact that so many are failing to save enough for their future. Here, money coach Caroline Domanska offers her insights into the attitudes UAE residents have towards saving for retirement:
What age do people in the UAE generally tend to kick-start their retirement funds?
I think it comes at milestone birthdays. Often when people turn 30 they will get something started. At 40 they will think ‘we haven’t done enough’ and do a bit more. By 50 the focus is on, and if it’s affordable, people can be saving significant proportions of their income. Of course, the way saving works is that it’s better to do more earlier, but it’s not always possible and our mindset doesn’t always work that way. Typically in the UAE it will be something that comes onto the radar for expats as one of the things to sort out once they have been in country for a year or so.
Do you think it’s easier for expats to put cotton wool in their ears and not think about retirement savings?
I think expats can easily put it off for the first year or two while they settle in to the country. There are other, more exciting things to spend money on. Depending on where you are from, you are probably used to retirement saving being something your employer deducts from your salary without you having to think about it, whereas here you have to realise that you have a choice, and it is your responsibility. This makes some people very galvanised to contemplate what they could do to retire early, now that they are free from the obligations of an employer pension. For others it would have been better to have something organised by the employer, as they may never get around to it.
At what age do you think people should start saving for their retirement?
In some countries you can start from birth, and calculation-wise this is ideal, because you will have to put the least amount of money away versus the return you get, as the money will have been invested and working for you for the longest time. It’s never too soon. Why wait and end up having to find more from your own pocket?
What percentage of your earnings should you be putting aside for a pension?
With a typical company scheme in other countries, you may be putting in 5 per cent and your employer matching that. So 10 per cent is a good rule of thumb. However, it depends on your age, when you want to retire, and how much you want, so you should get a tailored projection for you.
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