Survey finds many UAE residents failing to save for retirement

Financial experts say UAE residents should be more money savvy as survey finds most are not saving enough for the future.

Expatriates send funds to their home countries at a UAE Exchange in Abu Dhabi. Christopher Pike / The National

In this series:

■ 75 per cent fail to save enough for retirement

■ Survey finds 94 per cent of UAE residents have financial worries

■ Rent is UAE residents' biggest expense, survey finds

■ Some UAE residents own eight credit cards, survey finds

■ Experts say people must resist urge to splurge

■ UAE residents long for financial security

■ Start saving from early age

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ABU DHABI // Many residents are falling short when it comes to saving for the future.

A study into the saving habits of Emiratis and expatriates found a quarter of all employed residents do not save a single dirham of their monthly wage.

And 69 per cent polled have not started planning for retirement.

The survey has prompted financial advisers to warn of the importance of putting away money every month.

“This is extremely worrying,” says Jessica Cook, private client adviser at AES International Global Wealth Management in Dubai.

“The earlier you start saving for retirement, the easier it will be to afford, given the number of financial obligations that tend to be incurred at the later period in your life.

“It is all too easy to put off retirement planning, especially in our younger years, but the simple reality is the longer you put it off the more you will have to save over a far shorter period.

“We are living longer and an active retirement costs money.”

The survey commissioned by The National and conducted by YouGov, an international research organisation, polled 1,104 people across the UAE on attitudes towards money, spending, saving and job security.

While a quarter do not save any thing, a further 50 per cent save less than 20 per cent of their monthly salary.

This is roughly reflective of all nationalities, although westerners are marginally more likely to save.

Financial adviser Tim Denton says that for many expatriates, luxuries become the norm rather than saving.

“Many people came to the UAE to make a difference to their financial future, but then forget that as they get used to a standard of living that is far in excess of the one that they would have in their home country,” Mr Denton says.

“When I ask would you employ a maid, buy a brand new luxury car and eat regularly at five-star hotels at home, the answer is no, and yet they do this in the UAE and fail to make the savings for the future.”

Failing to save for retirement leaves people dependent on the state in their home country or on other family members to survive, he says.

“An early start to such plans makes it much easier, but the key is to do something,” Mr Denton says.

“A good adviser can conduct a pension shortfall analysis for you to work out how much you need to save to afford the standard of living that you want when you are retired.”

Almost two out of 10 of those who have yet to start saving for retirement say they will do so before they turn 30. A third will start between the ages of 40 and 49, and a quarter say they will start between 50 and 59.

“Having started saving for retirement by the age of 35, or latest 40, will be a big help when compared to someone who ignores it until their 50s and then has a mountain to climb,” says Mr Denton.

Winnie Delacruz, 32, a Filipina saleswoman in Abu Dhabi, only saves a fraction of her wage.

“My salary is only little,” says Ms Delacruz, who sends half her monthly wage home.

Alaeddine Ghazouani, research manager at YouGov, says: “UAE residents are more focused on coping with their current expenses over saving for their future as they see the cost of living increase.

“It is concerning to see the majority of residents have no plan for their retirement at the time being, as they should be prepared for any sudden event they could face and for later life in general.”

Of those who have started saving for their retirement, 70 per cent did so before the age of 40.

This includes 37 per cent who started before the age of 30.

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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.

Coverage from March 9th:

■ Majority of expats in UAE sending money abroad, survey finds

■ High cost of living forces half of expats to consider leaving UAE

Coverage from March 10th:

■ UAE workforce is largely satisfied in their jobs

■ Emergency cash reserves needed in case of redundancy, says financial advisor

■ Most UAE employees unhappy with frequency of pay rises, survey shows

■ Many UAE workers fearful over losing their jobs

Click on the image below to bring up a graphic on the survey’s findings