Retirement in Dubai – Everything you need to know

Cost of living is rising all over the world and financial planning for your future and especially retirement has become more than important. Improved quality of life, zero income tax, modern infrastructure, and comparatively low cost of living are some of the reasons due to which expat started to consider Dubai as their retirement destination. 

But again the major part of your retirement plan is to understand how much you need to retire in Dubai. Prospr always wants you to enjoy success in every stage of your life. Therefore, we are here to answer this question in detail for you. 

Are you ready to dive in? Let’s get started and find out:

How much money do I need to retire in Dubai?

Since you are planning to retire in Dubai with utmost comfort and ease, it will all begin with your savings at the present moment. Dubai expat believe that their retirement income goals are saving $100,000 per year to enjoy convenience.

This goal isn’t that hard to achieve if you manage your personal finance well. If you want to retire in the UAE, you must have an annual income exceeding $150,000. 

As you are already living in Dubai, you will have a house and all the amenities arranged in your home sweet home. So, the major expense of your life will be health. Thankfully, health insurance plans in Dubai will come to rescue you. Other things you need to save for are food and extracurricular activities. You can save throughout your working period to enjoy a happy retirement life with your partner in Dubai.

Some expat believe that $100,000 per year from passive income is sufficient to live a comfortable life in Dubai. But the amount you need during retirement is completely subjective. For some expats it will be $100,000 but for others it can be less or more. It all depends on your lifestyle and plans you want to follow during retirement. For some people even $500,000 won’t be enough. But the best range to have at your side is $100,000 to $150,000. It’s because inflation will soon increase the cost of living in Dubai as well. 

You need to save not only for yourself but also for your family members and their education. If your kids are getting married, you may need to support them as well. So, it’s not always you and your partner for whom you need this retirement money. But if your kids are independent, you can skip the support part and focus on yourself.

Fundament of retirement planning in the UAE

There are some basic aspects of your retirement planning that you can’t afford to overlook. It will all begin from careful planning about your future and then stay disciplined with your saving. 

Start with 4-percent rule

You can follow the theory proposed by William Bengen- financial planner in the 1990s. According to this theory, you need to withdraw 4 percent of your retirement savings at the start of your retirement period and later you can adjust this amount by following the rate of inflation every year. 

According to this, when you have $1 million as your retirement savings, you can withdraw $40,000 for the first year and when inflation rate is 5 percent, you can withdraw $420,000 next year. 

25x Multiplication rule

Another way to decide about the amount you need for saving is to rely on future estimates. Let’s say your annual expenses will be AED 200,000 for your retirement period. Now your expected cost of living is 200,000, multiply it by 25x and it’s around AED 5000,000- this is the amount you must have in your retirement savings.

When it comes to accumulating this savings, you need to decide a percentage of your income, it could be 2 percent or more. You can save money from your rental income, bonuses, dividend income, not just the salary.

Diversification is a must

If you are in your 30s, then you must have some savings that you can turn into investment and have fixed income or high ROI. Thankfully, you can find tons of investment opportunities in Dubai.  The UAE government has made it quite simple for you to start your business in Dubai. Reforms and laws are quite supportive where foreigners can 100 percent share of a business. 

In case you have some idea of business in mind and don’t know whether it is feasible in the Dubai market or not, feel free to get market study from Prospr’s expert. We will sit by your side and provide you with an insight into the UAE market. Our feasibility report helps you understand whether an idea can turn into a successful business in Dubai or not. Send us inquiries on hello@prosprplus.ae

Whether you start investing in your own business, equities, real estate of ETFs, they will help you earn fixed income. If you take advantage of the tax-free environment of the UAE, you can make the most of the power of compounding. Reinvest your return on investment to save plenty of money for retirement.

It’s always a good idea to spread risk and invest across different assets. It will help you get multiple sources of income and minimize the risk factor. 

You can start saving for your retirement fund as early as you want. The sooner you begin, the more options and ideas you have to try for; and even more money.

Rental vs buying a property

If you plan to retire in Dubai then a major question you have to answer during financial planning is whether to buy a property or rent it out. Buying a property in Dubai is indeed a great idea because it will offer you long term stability and let you avoid increasing rent rates. 

But when you invest in a property, you need to make a significant upfront payment and besides you will spend money on its maintenance. 

Know everything about Retirement visa in UAE

Always check the pros and cons of both options. Renting is a good idea when you don’t have a plan to stay for a long term in Dubai. But there are risk of rent hikes and the threat of eviction. When you are unsure whether you retire in Dubai or not, renting seems like a good and flexible option. 

Buying a property on the other hand, is your way to build and grow wealth in Dubai. Choice at the end is always yours.

Prospr can help with Investment plans for retirement funds

The UAE government has revolutionized the investment methods for expats. They have improved quality of life and promoted economic stability for them. You can expect top-notch health care services and excellent support networks here. Now when it comes to investing in Dubai for retirement, it’s a big decision. You can either start a company or invest in real-estate, both options are great. But which one is suitable for you? If that’s what seems hard to decide, let Prospr help you. We have helped tons of expats set up their business in Dubai and enjoy lavish lifestyles here by guiding them what can work for them. We can help you the same way. Call us now