In this series:
Financial adviser Jessica Cook says by starting early rather than delaying your savings for a few more years, you can considerably reduce the amount you will need to save every month to reach your retirement goal.
Research by the UK insurance company Legal & General reveals that to achieve an annual pension income of £10,000 by the age of 65, if you start saving at the age of 25, you would need to save £105 (Dh600) each month. Leave it until you’re 35, and you’ll have to find £195 (Dh1,110) a month; until 45, £405 (Dh2,300) a month; and wait until you are 55, £1,100 (Dh6260) a month.
“What you have in your retirement pot when you do come to retire will ultimately depend on how much you have saved and how long you have saved for,” says Ms Cook. “Let’s say you are 40 years of age and you plan to retire at age 65. The stark reality is you only have 300 paydays to accumulate enough wealth.
“Millions face an impoverished old age because they are putting away a fraction of what they need for a comfortable retirement.”
Financial expert Chris Ferguson has listed some financial milestones to aim for.
“Buy your first property as early as possible, but at the latest, by 40,” he says. “Invest or save on a regular basis. Regular savings should have started at the latest by age 30.
“Get rid of revolving credit card balances by that age. Debt above the rate of personal loan needs to have gone by this age and the road to investing and saving should have started.”
About this series:
A study into the saving habits of Emiratis and expatriates found a quarter of all employed residents do not save any of their monthly wage. And 69 per cent have not started planning for retirement. The survey found that only 6 per cent of respondents do not have any financial worries. The majority of people’s wages are spent on rent, followed by groceries and household items leaving some residents dependent on multiple credit cards and longing for financial security. Financial experts advise residents to resist overspending to avoid a struggle when faced with unexpected expenses.