Times have changed and so has the way we look at life. Earlier, retirement meant 65 years of age for people in Dubai, but not anymore. But retirement has got less to do with the benchmarks set by organizations & more to do with the age when you stop working for money! Retirement to me is spending time as one pleases, doing what you want. The fact is that retirement is the ability to be in control of your time.
So how do you achieve this?
If you only have a dream and no planning, the chances of you retiring early are less.
However, if you can create a plan by building savings, creating contingencies, preparing for it from the beginning and working on it, early retirement is not that tough in today’s time.
But what is early retirement?
Before we get to the points to help you retire early, you need to ask yourself – why do I want to retire early? Early retirement means different things to different people. Retirement does not necessarily mean you will stop working and earning. Early retirement is more about financial freedom – the freedom to do what you want to do and when you want to do it. You should be crystal clear about your reason for early retirement. If you need help, get in touch with financial advisors in Dubai.
Ways to retire early in UAE
Today, we will break the early retirement for you in simple steps. Below are the things you need to do for early retirement in Dubai
1. Know when you want to retire: You need to be specific when you say you want to retire early. Start with a number in mind – for example at the age of 50 or when I have a particular target of savings & investments. By doing this you give yourself a goal to work towards. But do keep in mind, to give yourself adequate time. If you are 35 today and plan to retire at 40 – it will not be easy. You need to give yourself at least ten years for early retirement planning.
2. The amount you need to retire: You know your retirement age. The next thing you need to find out is the average life expectancy. For UAE (or Dubai), as per the World Bank 2019 report, the average life expectancy is 77.97 years. So if you want to retire at 50 years, you need to plan for the next 28 years on average. You should calculate the amount you will need for these 28 years to maintain the same living standard. You need to bring the inflation factor into consideration. The calculation may not be easy, and hence you can take help from Dubai financial advisors if you plan to retire early in Dubai.
3. Save and invest: The next thing you need to do is evaluate whether you will be able to achieve the amount or not based on your present and future income. If you can, what are the different investment schemes you should invest in? The key here is if you want to retire early, you have to start now. You may be in your 20s, but if you dream to retire early, the best time to start is NOW. Get into a savings habit and invest your savings in ETFs, Mutual Funds and other long-term investment options. If you need investment advice in Dubai, get in touch with a financial advisor in Dubai who has experience in investment for Dubai based investors.
4. Prepare for the unexpected: Life is full of uncertainties, and even though you cannot predict future life events, you can prepare for them. When you plan for early retirement, the crucial thing is that you should stay invested for years. However, in a medical emergency, if you have not protected yourself and your loved ones, a large percent of your savings will go to treatment. Hence, you should have an adequate health insurance plan and cover each family member under the insurance plan.
5. Stick to your plan: Retirement planning is a long journey, and there are chances that you may deviate from your path. As mentioned earlier, you must not withdraw your savings and investment. You may have a temptation to withdraw the funds and spend on vacation or buy a new car that is not needed. To ensure that it does not happen, invest your money in an instrument with have lock-in feature.
6. Also, since it is a long journey, you may start to invest but stop investing for early retirement. For that, you must automate your investment. As part of your plan, if you need to invest 10% – 30% of your income every month, make sure it gets invested automatically at the start of every month.
7. Monitor your progress: The last point on the list but essential. You have to monitor the progress. You do not have to do it every month. Once a year should be good to evaluate everything. If the initial goal was to get a 10% return on investment, you should calculate how much your overall investment made during the year. It does not have to be 10% every year, but if you are continuously falling short of your goal, something is wrong with your planning, and you need to revisit your plan. In such cases, take help from a financial advisor in Dubai and understand what needs to change.
Plan for early retirement but enjoy the present
You have to start saving early if you want to retire early. The beauty of starting early is that you can achieve your goals even if you start small because of the power of compounding.
You should start saving for a better future, but do not be burdened by it and stop living your present. You should not have regrets when you start your second innings that you did not enjoy your life. The foundation of your beautiful future must be laid on a beautiful today.
If you want to plan for early retirement in Dubai, you can reach out to me with your concerns, and I’ll be happy to assist you with the finest resources.