Here’s How Much Money You Should Have Saved by 50
50 is an age that is considered as a threshold to sit back and reflect upon the past and consolidate your plans for the future. To feel comfortable, one should have a considerable amount of savings for both short term needs and long term retirement with an eye on financial freedom.
There is no hard and fast rule as to how much one needs for retirement and these figures vary from person to person; depending upon their present stature, future needs and how and where they want to retire amongst other factors. If someone wishes to settle in the metropolis city or abroad, they may require more in their nest egg, compared to a person intending to retire in the countryside. Similarly, someone with good health would have fewer medical bills in old age and need a smaller nest egg than someone whose medical needs are above average.
According to financial experts, an average white-collar professional in Dubai needs 6 to 8 months of present salary available to meet emergency needs; while long term savings for retirement should be targeted at AED 2 to 4 million, taking into account individual needs, inflation rates and return on savings.
If you are 50, earning AED 30,000/month, and you want to retire with USD 1 Million i.e. AED 3.675 Million in your bank account by the time you retire at the age of 65, you should have at least AED 1 – AED 1.5 Million saved as on today*
If you are not close to that number, then you need to start pumping in more towards your retirement savings. For example: Everything above remaining the same and instead of having AED 1 – 1.5 Million of savings, you only have AED 360,000 of savings as on date, you will need to start putting 23% of your income towards retirement today or delay your retirement age to after 65.
Hence it is easier to reach your retirement savings goal if you start earlier. Financial advisors such as Fidelity recommend saving 10% -15% of annual income towards retirement. Those who are not able to put aside 10-15% of their earnings now towards retirement savings should not postpone savings but start saving small amounts followed by a well-defined goal with a firm resolve to systematically save. You should gradually attempt to reach those levels by diverting pay hikes, bonuses etc., to the retirement fund. The shortfall in the earlier stages should be made good by apportioning a higher percentage towards the retirement fund, when the monetary position improves.
As been said earlier, 50’s is the time to reflect upon savings, and plan for increasing it, if required. Retirement planning is a priority that no other financial goal should snatch away. That way, you can keep yourself afloat in tougher economic conditions at old age and live a dignified life.
Your Retirement Planning with NAIB
Whatever may be said in praise of investment, the fact remains that it is not easy to ascertain what the best course of action is. New Age Insurance Brokers (NAIB) brings a wealth of knowledge and wisdom towards retirement planning with many focused financial instruments that will successfully take you towards attaining your retirement goal.
Feel free to call us at +971 4 3573378 or e-mail us at email@example.com to make an appointment with an advisor.
*assumptions include: annual inflation and income increase of 4%, return on investment at 6% and 50% of income replacement required at the time of retirement