Less than 1 per cent of people in the UAE think they will have enough money to enjoy the retirement they would like. You don't have to be one of those people. You can stand out from the crowd. But to stand out from the crowd, you have to do something different from the crowd. Here are our top tips on how to save for the future - and a comfortable retirement.
1. A commitment to change
There are two types of people in the world - those who decide how much they need to save for the future and live on the rest, and those who spend what they earn and have nothing left to save. There is often a psychological tendency to value immediacy over the long haul. We have to fight urge for instant gratification. Make a commitment to be different; write it down, tell your partner or friends. There are no shortcuts to financial security. If you cheat, you are only cheating yourself.
2. Delay costs you dear
For every five years you delay saving for the future you can, as a rule of thumb, halve the amount your savings will be worth when you want to retire. The best advice anyone can give you is to start now. Without a proper financial health check, nobody can tell you exactly how much you need to save as it depends on a number of factors. Do you merely want to survive in retirement or flourish? Do you want to change your car every three years, or every ten years? Does your partner also work and save? Another rule of thumb states that if you're 30, you should save 10 per cent of what you earn. If you're 40, save 20 per cent, and if you're 50, save 30 per cent. The earlier you start, the better off you'll be.
Although it's not exactly wealth creation, many people carry high-interest debt, such as on credit cards, while saving at low interest rates in, for instance, bank accounts. It's important to evaluate what interest you are paying and receiving. Often, it is better financially to clear debt than to make savings.
4. Choose wisely
If you're an expat living in the UAE, you may want to consider saving in a way that allows you to increase or decrease the amount as required, as well retaining the flexibility to continue saving if you move elsewhere.
5. How well do you cope with risk?
Do you take chances or do you like to play safe? You can choose to save in a variety of ways, so find a way that fits with your attitude to risk. Often, people take more risks when they are younger - more time to recover from setbacks - and less as they approach retirement in order to consolidate gains. There are products available that allow you this flexibility.
6. Take advice
Advice cannot make a stupid person wise, but it can make a wise person successful. Consider your options, which could include taking advice from an independent financial adviser about the amount you need to save, the types of financial options you have available, as well as all the associated risks. But, always remember, it's your future and no one will care more about it than you do.
Do you want to wake up one morning and think 'I don't have to work today or ever again'? The only way to achieve this sense of financial security is to make sufficient personal provision while you are working. And the time to do that is now.
Peter Ellen is the operations director at Nexus Insurance Brokers