Are you an expatriate in UAE? If yes, it is essential for you to figure out your financial plans after retirement. Having a good financial retirement plan eliminates stress and allows you to accomplish these goals. With a strong retirement fund, your money will free you up, rather than hinder you. Continue reading to know more…

retirement planning

  • How is retirement planning related to financial independence?

The first picture that comes to your mind when you think about retirement is that of you sitting on a couch doing absolutely nothing, isn’t it? We know, for a person who is used to working 8-10 hours a day, or sometimes more, the thought of sitting at home, doing nothing, is unthinkable. But, if money was no object, would you still be at work, or would you be doing an activity that you loved?. The only problem here is that currently, money is still an object. The minute you stop working, you will stop earning. So, the fundamental question that needs to be answered here is not ‘When do you plan to retire?’, it is ‘Which activities would you do instead of work, and what will be the lifestyle cost attached to them when you do decide to quit working?’. Whatever your age might be when you decide to retire, you do have to prepare for it. The earlier you prepare for it, the sooner you will have your choice of quitting work and doing the activity that you love to do. Therefore, when you think of planning for your retirement, focus on financial independence.


  • How is it different from UAE Nationals for Expats in UAE?

Most of the time, expatriates are tax residents in the UAE, which means they do not pay taxes in their home country (except Americans, of course). Well, that is the point of living in abroad, isn’t it? However, the downside is, when you don’t pay taxes, you are not eligible for any social service or retirement benefits in your home country, assuming your country even has these benefits in place at all. Even if they do have these benefits in place today, the situation and rules could change by the time you plan to retire.


  • When is the right time to start planning for retirement?

Depending on your current age, you might have less than 20 years left, before you reach age 60. That’s equal to 240 salaries or less that you can put to work towards your financial independence. You’ll put yourself in the best situation if you start planning for retirement early on. Accumulating the funds you need for a comfortable retirement may take decades, depending on your income, and you’ll want as large of a nest egg as possible when you are no longer bringing in a salary. By starting to invest in your retirement early on in your career, your funds will accumulate and grow over time, leaving you with a substantial enough fund to fulfill your retirement dreams. Therefore, start saving and investing your money for your financial independence today itself.

  • How much money do you need to save?

Although the exact amount can differ based on your financial status as well as requirements, we have come up with an approximate amount that can serve as a basis. If you want a monthly income of USD 5,000 (i.e. USD 60,000 annually), you will need to save up to USD 1,200,000, to be able to withdraw USD 5,000 per month at a rate of 5% p.a., out of your 1.2 million dollars.

No matter how much you want to keep working for your entire life, it is no excuse to not save for retirement. Having that money handy prepares you in case you retire earlier than anticipated. It is important to realize that you may indeed experience financial hardships in the future. People are often optimistic about their financial future, living with the faith that things will be better in the years to come, but it’s not something you can bank on. Now that you realize the importance of retirement planning, start developing your retirement plan today itself.