I flew to the UK a few days ago to attend my mother's 90th birthday. The celebration was attended by all four of her children, who were delighted to see their mother partying like it was 1999, even though it is 2011.
Numerous grandchildren and great-grandchildren were also in attendance, doing their bit to make it a truly memorable occasion. The highlight of the evening was probably an all-female, line-dance routine led, naturally, by my mother.
My mother is not a well-educated woman, has never had a professional career, has never made any financial provision for the future, hardly has two beans to her name and has spent all her life slaving after her children and her children's children and, now, her children's children's children.
She lives in a granny flat attached to my brother's house (bought by her two sons), but visits and stays for long periods with the rest of her family, especially when the ironing basket needs her expert attention.
She is very happy with her life, but she defies the rules of financial planning. She has put all her time, effort and money into her four children and has made no financial provision for herself.
She has a full UK state pension of about £90 (Dh532) per week and a net asset value of about £275 - that being the cost of the flat-screen TV we bought for her birthday.
Now, here is the question: has she got it right? Did she choose the right retirement strategy? Or was she lucky?
As a financial planner, I have to say that she was lucky. There is no way that I would depend on my children to provide for my retirement because there are just too many factors that stand in the way of making this strategy work.
The choice of spouse being one of them. It may work in the Middle East and Far East, where extended families tend to be more united, but in the western world, you need to fend for yourself.
Besides, I couldn't adapt to a life that requires me to do my daughter's ironing. And, by my reckoning (but with no scientific justification), the strategy probably requires a minimum of six children for optimal success.
So, unless you are prepared to raise six children and sacrifice your entire life to their well-being, you had better start working on another strategy.
I suggest the conventional one of saving for your own retirement. You can do this in a number of ways. You can contribute regularly to a savings or pension plan. You can make ad hoc lump-sum investments into various asset classes or you can borrow money and buy a house or two.
Many governments encourage you to make provision for your old age by giving you tax relief on your contributions to an approved pension scheme.
The government wants you to look after yourself because it doesn't want to do it for you and, in truth, probably knows that your ungrateful children will not be of much help either.
If you are resident in the UAE, your income is free of UAE income tax. And if you are a UK non-resident, it is also free of UK income tax.
There is, therefore, no tax benefit in continuing to contribute to a UK pension scheme. Money invested in a UK pension scheme grows free of UK tax, but so does money that you invest in an offshore saving scheme. The primary difference is that the offshore plan offers you better access - you can take the money before retirement and spend it on whatever you like. You do not have to use it to buy a regular pension income.
So how much do you need to save? Well, this depends on the lifestyle that you want during retirement, the number of years you have to prepare for it, the amount of money that you have already accumulated or expect to receive from inheritances, for example, and the success that you have with your investment strategy relative to inflation. It also depends on how successfully you manage your pension pot during your retirement.
Assuming that you are 40 years of age, with a net asset value of US$300,000 (Dh1.1 million) and wish to retire at the age of 65 in a house worth $400,000 on an income of $36,000 per annum gross of tax, you would need to save about $1,300 a month to achieve your target.
This calculation further assumes investment growth at 7 per cent per annum net of charges, inflation at 3 per cent per annum and makes other assumptions on the growth of existing assets and the annuity rate for a 65-year-old man. This calculation provides an average value for the estimated saving requirement, but does not guarantee success. If the underlying assumptions prove to be inaccurate, then it may be necessary to save at a higher rate to achieve your retirement goals.
If a lifetime of saving depresses you, then you can always adopt my mother's strategy with a lifetime of self-sacrifice and hope that your children will do the honours. I prefer to save.
Bill Davey is a financial adviser at Mondial-Dubai. If you have any questions about his column, e-mail him at email@example.com