By Staff writer
New survey says high cost of living is holding people back from preparing for life after work
The majority of residents in the UAE are facing the prospect of a shortfall in their retirement savings as major life events and the high cost of living are holding them back from preparing for life after work, according to a new survey.
HSBC's The Future of Retirement 2015 report revealed that for nearly 9 in 10 (87 percent) people in the country, saving for retirement is not a main priority.
As a result, more than half (55 percent) of the working age population said they feel inadequately prepared for life after work as they did not start saving early enough - the highest proportion globally to express this sentiment.
The survey of more than 16,000 people across 15 markets and more than 1,000 in the UAE, assessed retirement trends globally and identified the key issues people have to deal with in their lives after work.
Over two-thirds (71 percent) of pre-retirees in the UAE said they are worried about having enough money to live day-to-day and 68 percent fearing that they will run out of money after they stop working.
Additionally, nearly one in ten working age people (8 percent) in the country believe that they will never be able to fully retire.
According to the survey, paying off debts (34 percent) and saving for children's education (28 percent) are cited as more urgent financial commitments, while only 13 percent of working age people in the UAE believe saving for retirement is their main priority.
These attitudes are mirrored globally with a majority (85 percent) stating that preparing for retirement is not their main concern.
HSBC's research showed that even though people realise the need to start preparing for this phase, certain life events are holding them back from doing so, with over four in five (83 percent) in the UAE expressing this sentiment.
While the country has moved beyond the financial crisis, people are still facing its lingering effects, the survey showed, with 23 percent of pre-retirees describing the global economic downturn and its related effects, such as becoming unemployed (23 percent) and experiencing a significant drop in earnings (18 percent), as having a significant impact on their ability to prepare for retirement.
Gifford Nakajima, head of wealth development, UAE and MENA, HSBC Bank Middle East Limited, said: "While certain events cannot be anticipated, others that are in fact cited more often by working age people as having an impact on their ability to save for retirement, such as buying a home/paying a mortgage (37 percent), paying for children's education (29 percent), or starting a family (18 percent), can be planned for more proactively. For instance, our research shows us that only 1 percent of parents fund their children's education through specific education plans.
"If people start saving early enough and develop a sustainable financial plan that they can commit to, they will be able to cope with most of the major life events while preparing for retirement, but our research shows that planning for this stage of life is increasingly being postponed."
Worldwide, two in five (38 percent) retirees said that you need to start planning by the age of 30 at the latest to maintain your standard of living in retirement, compared to only 20 percent in the UAE.
Nakajima added: "Pre-retirees who are not saving may regret not starting sooner, as globally, almost two thirds of retirees who failed to save enough did not realise this until it was too late."For all the latest banking and finance news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.