The sooner you start, the greater the potential impact on your retirement savings and your standard of living when you get older.
And even steps you take right up to your 60s can make a difference – it’s never too late to take action.
Here’s a checklist of retirement planning essentials based on your age.
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Planning for retirement in your 20s
Planning for retirement in your 30s
Planning for retirement in your 40s
Your 20s are your first decade of financial liberation. So, it’s probably the most challenging time to sit down and think about life after work.
You’ll want to spend the money you earn. And things like traveling and socialising might be higher on your list of priorities than your pension fund.
But it’s also a great opportunity to get a head start and set you up for financial freedom later on.
If you’re a UAE national, you and your employer should be making mandatory contributions to your pension. If you’re an expat living here, you might want to consider retirement planning if you don't have access to a pension in the UAE.
Explore: What is a pension?
While you may want to indulge, try to keep track of where your money’s going and set limits where you can. This will help you make the most of it.
From creating meal plans and being cost-effective with your weekly food shop, to cancelling any unused TV and app subscriptions, you can save a lot of money over time without great sacrifice.
Even if it’s just a small monthly amount, starting to save early will help make it a habit. You’ll get comfortable living on a budget, and your early savings will get the chance to grow over a long time.
If you’re debt free and have an emergency fund in place, you could also consider investing. There’s always the chance your investments could fall – as well as rise – in value, especially over short periods. But, with 30 or 40 years until your retirement, it could be the ideal time to start – giving your money lots of time and potential to grow.
In your 30s, you may be a little more settled. You might have a partner and plans for a family, a flourishing career, or just a more long-term view on life in general.
It’s a good time to review your spending, and start putting more into your retirement fund if you can afford to.
Whenever you're paid, try adding money to your retirement fund on payday to prioritise your savings goals. Setting up an automated payment is the best way to build this habit.
If you're unable to add to your retirement savings on payday, try add to them in a way that works for you – just make sure you have enough for your rent or mortgage payment and any other bills.
You might find yourself fairly settled into a daily routine, which can mean regular spending each week – and this creates a great opportunity for saving.
If you’re buying lunch at work every day, for example, consider making it at home instead. Or, if you’re commuting by car, make sure you’re using the cheapest fuel station in your area.
Changes to the things you do every day or week can add up over time. For example, AED 45 a week is AED 2,340 a year, which could turn into more over time if you save or invest it.
Technology allows you to review and manage your spending more easily than ever before. With tools like mobile banking, SMS payment notifications, and other money management apps, you can let technology do most of the hard work for you.
You might be at the peak of your career, setting up your own business, or retraining for an entirely new venture. But in your 40s, you’ll definitely want to start thinking more about your retirement plans.
Undertake a thorough overview of your finances – including any debt you have – and consider what shape you’ll be in if you continue the way you’re going.
If you’re on track – great, but don’t stop there.
And if you’re not on track – now’s the time to start taking positive steps.
At this point, you might have settled on where you want to retire and what kind of lifestyle you want.
Do you want to travel and see the world? Or do you want to settle down to the quiet life and enjoy simple pleasures?
Whatever appeals to you, make sure you budget accordingly.
This includes thinking about the cost of living for where you’ll retire. You might find differences in other countries, like the cost of fuel being higher, or the tax you pay on your retirement income.
Explore: Tips on saving for retirement
If you’re willing to take a little risk, investing could be a great way to help build your retirement pot.
Keep in mind, the value of investments can fall as well as rise.
Explore: Investing for beginners
Your 50s is a time when the idea of retirement can start to feel much more real.
It’s an important time to be allocating a good chunk of money to your retirement fund.
In general, people tend to be less comfortable taking risk with their finances as they get older.
It’s good to review your finances, and any investments you may have, regularly throughout life, but now’s an important time to ask yourself about investment risk and how much you’re prepared to take.
It’s good to do this regularly throughout life, but now’s an important time to ask yourself about investment risk and how much you’re prepared to take.
For example, you could consider selling your riskier investments in shares and adventurous funds, and investing in lower-risk options like a savings account or fixed income bonds.
If you’re unsure, a financial planner could help determine the right risk level for you and advise on your next steps.
Hopefully your family will need to depend on you less as you get older, but you may still want to help them – especially with big things like university or buying their first home.
Consider setting up separate savings accounts designated for your family’s needs.
Your retirement should be about doing the things that mean most to you.
While you may need to spend smartly, it shouldn’t be all about compromise and strict budgeting – you want to find the balance between living within your means and enjoying your later years in style.
More and more people enjoy ‘semi-retirement’ in the modern world. Continuing with some ad hoc consultancy work, running a small business in your free time, or keeping up a part-time job, are all great ways to top up your income.
Many people find continuing work into retirement not only helps pay the bills, but can also help them maintain social connections.
You may have a good idea of your retirement wealth at this point, so weighing up your budget against your retirement income will be a valuable exercise.
Knowing your lifestyle is sustainable could give you just the peace of mind you’re looking for in retirement.
