As the UAE’s workforce eagerly anticipates their annual bonuses, a recent survey by market research company YouGov, commissioned by Zurich International Life, part of Zurich Insurance Group (Zurich), sheds light on how residents are approaching financial planning, particularly in terms of retirement.
The findings underscore a shifting landscape where saving for retirement competes with other financial priorities, urging individuals to reconsider how to spend their bonus in a bid to meet their financial goals.
Conducted in January 2024, the survey covered 1,000 residents in the UAE, including parents and married residents across various income groups, nationalities, occupations, genders and age groups.
Bonus expectations across demographics
The survey reveals that 68% of respondents anticipate receiving a bonus this year, compared to 48% in 2023, marking a notable increase from last year. Among the nationalities surveyed, Emiratis were more optimistic about receiving a bonus this year at 78%, followed closely by Arab expats and Asians at 65%. Only 54% of the Western expats surveyed were hopeful of receiving a bonus in 2024. While 32% expected a bonus of up to AED20,000 in 2023, 77% expect a bonus of up to AED25,000 in 2024.
Among respondents, saving for children’s education stands out as the main priority for 37%, with holiday spending trailing closely at 34%. In contrast, only 22% prioritize saving for retirement, reflecting a decline compared to last year (34%). UAE residents over the age of 45 years exhibit a higher inclination towards retirement savings (30%), indicating a generational gap in financial planning priorities.
Desire to retire in the UAE
Almost 7 in 10 express a desire to retire in the UAE, reflecting confidence in the country’s long-term prospects. Notably, younger UAE residents between 18-24 years show a strong inclination towards retiring in the UAE (89%), underlining a growing belief in the country’s economic future, the allure of its dynamic lifestyle and career opportunities, and challenging traditional notions of retirement abroad.
The surge in prioritizing retirement planning among individuals aged 45 and above, many of whom (42%) have called the UAE home for more than two decades, underscores a growing understanding of the importance of securing your financial future. This is influenced by a deep-rooted attachment to the UAE as a preferred destination for retirement, further strengthened by recent government initiatives.
Investment trends and financial planning
The survey reveals that only 4% currently invest through a retirement savings plan, with a majority opting for gold (50%) and real estate (47%). The dominance of gold and real estate investments suggests a cultural affinity for tangible assets and a preference for investments perceived as stable and appreciating over time.
Despite the importance of retirement planning, a staggering 61% have not considered seeking financial advice, suggesting a gap in financial literacy and preparedness. This finding underscores the urgent need for enhanced financial literacy programmes and accessible advisory services.
“Financial planning can be a daunting task, if done without proper guidance. Seeking expert financial advice regularly is crucial, no matter where you are on your life journey. With the right advice, individuals can make informed decisions, getting one step closer to meeting their financial goals,” said Taru Singhal, Head of Retail Distribution, Zurich.
When it comes to retirement goals, the desire to start a business emerges as the top priority for 44% of respondents, closely followed by maintaining their current lifestyle at 37%. However, concerns about financial comfort in retirement remain prevalent, with 61% of respondents expressing apprehensions about their financial situation post-retirement.
According to the survey, 22% of the respondents said that saving 16-20% of their salary would be sufficient to enable them to achieve their financial goals, compared to 31% who felt that saving between 6-15% of their income was enough.
“Residents are now looking to retire as early as 50. Our latest survey shows that 73% of working individuals in the UAE aim to retire between the ages of 50 and 65. The earlier you plan to retire, the more important it becomes to plan ahead, ideally through a dedicated savings plan, to ensure a stable financial future,” said Taru.
The survey also revealed a notable divergence in investment strategies between age groups where 56% of younger individuals (18-34 years) showed a higher tolerance for risk and were in favour of non-traditional investments. In comparison, older respondents (45 and above) favoured traditional investment avenues (63%) and prioritized safeguarding retirement funds (22%).
In conclusion, the survey paints a nuanced picture of the UAE’s financial landscape, emphasizing the need to re-evaluate bonus spending and retirement planning. While most residents spend a big chunk of their bonuses on holidays and investments in assets like gold and real estate, it’s essential to emphasize the critical nature of long-term financial security, notably through dedicated retirement savings. As residents contemplate their financial futures, prioritizing retirement planning and seeking professional advice is instrumental in ensuring a comfortable retirement here in the UAE.
