After living the life of a salaried employee for a long time, there comes a time where you bid farewell to the workforce. Retirement is something everyone will reach, but the quality of these golden years depends significantly on your retirement planning.
If you’re living and working in Dubai, it’s important to start implementing a well-defined retirement plan in UAE early. It’s because when you start saving early for your retirement, you have a better chance to build a significant amount of money to help you live the 2nd innings of your life in a more fulfilling way.
What do you want to do after retirement?
- Take up a social cause
- Start a business
- Go back to your hometown and relax
- Spend time with your family
Whatever your plans and desires post retirement, leading financial advisors Dubai offers point that retirement these days is way different from our previous generation. It’s no more just sitting back and living on your monthly pension, but living the luxuries of a retired man. In short, its retiring from work, but not from life.
It’s important to plan for your retirement now, because post-retirement, you’ll no longer receive regular salary or any other fixed source of regular income. Also remember that due to inflation, mere savings in your bank account isn’t enough to sustain your daily expenses and live comfortably.
The 5-Step Retirement Planning Process
Any personal financial advisor Dubai works with will stress on the importance of having a financial backup to be comfortable and remain independent after retirement. The leading steps to save and invest for your future typically include:
Know when to start your retirement planning
While its never too late to start your retirement planning, starting in your 20s is ideal to live a rich and fulfilling life. That’s because the earlier you plan, the more time you give your money to grow into a significant corpus. Every dollar or penny you save today will be of value later.
Never delay your retirement planning or you’ll have to compromise your goals, and in worst cases, you’ll be forced to depend financially on your children. Understand that retirement isn’t a distant reality, and will catch up faster than you imagine.
As you’re in your early 20s or 30s, the biggest advantage you have is time. Make use of this limited resource to build your retirement corpus, live stress-free, and experience life to its fullest.
Evaluate your retirement spending needs
Have realistic expectations of your retirement spending needs and habits to define a size of your retirement portfolio. It’ important not to make a vague assumption of your retirement expenses, since there can be unforeseen circumstances to encounter.
Remember, the cost of living is ever-increasing, and lifespan is also increasing. Hence, you need more income for a longer period of time that calls for saving and investing accordingly.
Review your income sources and assets
Whether you’re looking for a pension plan UAE offers employees or other source of fixed income, it’s important to determine your income sources to fund your retirement. Plan well in advance and consider your current sources of income and assets, and their value when you retire. It typically includes your pension pots, investment portfolios, personal savings, and others.
Cut down on unnecessary expenses
If there’s one golden rule of building wealth for your retirement, it’s reducing unnecessary expenses. Start early and take a thoughtful approach of what you really need, and cut down avoidable expenses that cost you dear later. These can be impulsive shopping, dining out, weekend entertainment, and other similar activities that eat a significant portion of your earnings.
Plan and create an ideal portfolio
A personal financial advisor UAE offers residents and ex-pats will consider your current age and the risk that you can bear to take to define a standard allocation to every resource class. It is vital to have a diversified investment portfolio across all the asset classes.
Assets like equities can offer you superior inflation-adjusted returns compared to what fixed pay instrument can give security. Gold can be a store of significant worth and be a major insurance vehicle in your portfolio.
Calculate your genuine returns, and in case you see a quick rally in any of the asset class alongwith the deviation in your resource allocation, you can rebalance by receiving the rewards from that particular asset class and move it to other classes.
Remember, each resource class may not be suitable for you. Simultaneously, avoid being overly exposed to a single resource class. As retirement planning is a comprehensive activity, hiring the services of a professional financial planner can go a long way in shaping your portfolio to suit your needs.
Conduct a risk profiling activity where the resource allocation can be set and the portfolio can be organized in a way to help you accomplish your retirement corpus.