#Savings&U

15 Aug 2017

Retirement Planning for Expats in the UAE

by RAKBANK

They say time is a thief; without careful financial planning, time will steal your money as well as your years.

 

Despite the good intentions of those who come to its tax-free shores, many workers in Dubai don't put a dirham towards their future during their time here. According to a survey by Guardian Wealth Management, over 60% of UAE residents have no pension at all. In fact, the GCC has one of the highest number of residents in the world that don't have any form of retirement fund.

 

With a young population, it's easy to understand why the residents of the UAE havent turned their minds to retirement. However, retirement planning is something that can't wait until the last minute; the sooner you start saving, the more comfortable your retirement will be. Although many may not like to think about old age, with a retirement plan in place you can look forward to the future rather than worrying about what it might bring.

 

The first question to ask yourself is what sort of retirement you want. To maintain your current lifestyle once you retire, experts suggest you will need two thirds of your current income. However, if you're looking forward to indulging in some of the finer things which you never had time to enjoy while you were working, you will need to save a bit harder.

 

It is, or course, very difficult to know exactly how much money you will need. You could start by drawing up a budget for the sort of life you would like to live in your twilight years, allowing for the basics and a few luxuries such as a meal out a month or an exotic holiday a year. With this done, you have a financial goal and something to look forward to.

 

When you have an idea of the annual income you'll need for the retirement you want, the next big question is what savings and investments you'll need to provide this.

 

The worst mistake you can make is relying on one source of income. Savings alone won't pay enough for a comfortable retirement, and even low-risk investments can be unpredictable. Your End of Service Benefits should never be deemed a substitute for a pension - even if you intend to use a chunk of it for this purpose.

 

The next decision is where you should pay into your pension. The best retirement plans involve a range of investments, including savings accounts, investment schemes and property. As an expat, you have three choices over where to invest: your home country; your country of residence; or off shore.

 

If you have a pension scheme in your home country and plan to retire there, your best option may be to keep it there rather than transfer it to a local scheme, which can prove costly. If a local scheme charges hefty commissions, an advisor could end up enjoying your retirement funds instead of you.

 

However, if you plan to retire outside your home country transferring your pension might be the best option. Depending on where you hail from, a pension in your home country may not be easily portable. Legislation is also constantly changing; for example, in March the UK Government announced that transfers on a qualifying recognised overseas pension scheme (QROPs) will be hit with a 25% tax from March 2017, effectively ending a previously attractive option for Brits abroad.

 

An offshore pension can offer greater flexibility, tax efficiency and superior returns - if you pick the right one for you. Offshore pensions that can be transferred from one country to another and invest in multiple currencies are a good option for serial expats. If you're not sure where you'll spend your twilight years, you will want to consider a scheme that pays out anywhere in the world. However, it is vital to get the correct advice before uprooting your pension. Be very wary of investing in schemes that you don't fully understand. 

 

Once you've made your investments, it is vitally important to monitor their progress. If you've budgeted on the assumption that your investments will perform in line with long-term trends, you might be caught short if returns aren't what you'd been promised. Keep a watchful eye on your money; if your investments are not performing as you'd hoped, you may need to save a little more. Equally, they could be outperforming, giving you more financial flexibility for the present.

 

Before you move your money anywhere, get qualified advice, choose transparent investments and commit to a plan which is fully tailored to your individual needs. As a RAKBANK Customer, you can get in touch with your relationship manager and our financial advisers, who will be happy to assist you and will be able to provide a qualified advice based on your needs and requirements.

 

Take care of your money now, and it will take care of you later.

 

Written By: Isla MacFarlane, Banker Middle East

 


Tags :




Retirement Planning for Expats in the UAE

15 Aug 2017

Tags :

They say time is a thief; without careful financial planning, time will steal your money as well as your years.

 

Despite the good intentions of those who come to its tax-free shores, many workers in Dubai don't put a dirham towards their future during their time here. According to a survey by Guardian Wealth Management, over 60% of UAE residents have no pension at all. In fact, the GCC has one of the highest number of residents in the world that don't have any form of retirement fund.

 

With a young population, it's easy to understand why the residents of the UAE havent turned their minds to retirement. However, retirement planning is something that can't wait until the last minute; the sooner you start saving, the more comfortable your retirement will be. Although many may not like to think about old age, with a retirement plan in place you can look forward to the future rather than worrying about what it might bring.

 

The first question to ask yourself is what sort of retirement you want. To maintain your current lifestyle once you retire, experts suggest you will need two thirds of your current income. However, if you're looking forward to indulging in some of the finer things which you never had time to enjoy while you were working, you will need to save a bit harder.

 

It is, or course, very difficult to know exactly how much money you will need. You could start by drawing up a budget for the sort of life you would like to live in your twilight years, allowing for the basics and a few luxuries such as a meal out a month or an exotic holiday a year. With this done, you have a financial goal and something to look forward to.

 

When you have an idea of the annual income you'll need for the retirement you want, the next big question is what savings and investments you'll need to provide this.

 

The worst mistake you can make is relying on one source of income. Savings alone won't pay enough for a comfortable retirement, and even low-risk investments can be unpredictable. Your End of Service Benefits should never be deemed a substitute for a pension - even if you intend to use a chunk of it for this purpose.

 

The next decision is where you should pay into your pension. The best retirement plans involve a range of investments, including savings accounts, investment schemes and property. As an expat, you have three choices over where to invest: your home country; your country of residence; or off shore.

 

If you have a pension scheme in your home country and plan to retire there, your best option may be to keep it there rather than transfer it to a local scheme, which can prove costly. If a local scheme charges hefty commissions, an advisor could end up enjoying your retirement funds instead of you.

 

However, if you plan to retire outside your home country transferring your pension might be the best option. Depending on where you hail from, a pension in your home country may not be easily portable. Legislation is also constantly changing; for example, in March the UK Government announced that transfers on a qualifying recognised overseas pension scheme (QROPs) will be hit with a 25% tax from March 2017, effectively ending a previously attractive option for Brits abroad.

 

An offshore pension can offer greater flexibility, tax efficiency and superior returns - if you pick the right one for you. Offshore pensions that can be transferred from one country to another and invest in multiple currencies are a good option for serial expats. If you're not sure where you'll spend your twilight years, you will want to consider a scheme that pays out anywhere in the world. However, it is vital to get the correct advice before uprooting your pension. Be very wary of investing in schemes that you don't fully understand. 

 

Once you've made your investments, it is vitally important to monitor their progress. If you've budgeted on the assumption that your investments will perform in line with long-term trends, you might be caught short if returns aren't what you'd been promised. Keep a watchful eye on your money; if your investments are not performing as you'd hoped, you may need to save a little more. Equally, they could be outperforming, giving you more financial flexibility for the present.

 

Before you move your money anywhere, get qualified advice, choose transparent investments and commit to a plan which is fully tailored to your individual needs. As a RAKBANK Customer, you can get in touch with your relationship manager and our financial advisers, who will be happy to assist you and will be able to provide a qualified advice based on your needs and requirements.

 

Take care of your money now, and it will take care of you later.

 

Written By: Isla MacFarlane, Banker Middle East