Nicholla Henderson Hall hasn’t even hit the big 4-0 yet, and she is already planning on living until she’s at least 100. But unless your health is in tip-top condition, living to such a grand old age, as about a quarter of us are expected to do, will be expensive.
“I do worry about what my health will be like by the time I retire”, says Ms Hall, 39, an Abu Dhabi-based social media coach and podcaster from the United Kingdom. “It’s important to me to get to that age in as healthy a state as I possibly can. I eat more alkaline-based foods, I keep to an 20-80 meat-vegetable balance, I just ran the Dubai marathon – I do all these things to make the best of my body.”
Life expectancy is rising to an all-time high. In the UAE, people can expect to live to an average of 78, compared with 75 in 2003, according to United Nations statistics. But in many ways the quality of people’s health is not improving, so those later years will not necessarily be lived out in comfort.
Ms Hall started putting 20 to 30 per cent of her wages into a retirement fund when she was 24 to ensure she could afford the best health care possible, during the time of her life when she will probably need it the most.
“When we are older, we might stay in the UAE, or move to Thailand”, she says. “But wherever we end up, what matters is having the income there to support the lifestyle that we want.”
A recent study from HSBC, The Future of Retirement 2016, polled more than 1,000 UAE residents and found that almost half the working age population believe that poor health will make saving for their retirement more difficult. And nearly eight out of 10 pre-retirees in the UAE blame a lack of free time or work commitments for preventing them from leading a healthier lifestyle.
With 61 per cent of the UAE’s pre-retirees unable to predict how much they are likely to spend on health care in retirement, UAE residents risk being financially unprepared for a comfortable retirement, says HSBC’s head of wealth development in the Mena region, Gifford Nakajima.
“Health coverage is not something that normally pops up on the radar when you are doing your retirement planning,” he explains. “But people need to bear in mind that once they retire, their health insurance premiums will no longer be covered by their company. People here tend to be less active in their daily lifestyle – they don’t usually walk or cycle to work, they might have maids, which means they don’t do as much in the home, and they’ll hop in the car and try to find a parking space close to the entrance.”
Mr Gifford stresses that with health costs escalating, people need to make sure they have money when they retire that will provide the sort of health service they might require.
According to a report released last month by EY, “Investment Big Bets – Health Care and Life Sciences in the GCC”, the growing dependence on modern technology, hot climate and physical inactivity mean that GCC countries continue to rank among the highest in the world for risk factors related to diabetes, hypertension, cardiovascular conditions and obesity, which all contribute to rising healthcare bills in retirement.
Mita Srinivasan, 59, from India, who owns Market Buzz PR in Dubai, is planning to move to Nepal to devote more time to her favourite charity projects when she retires. But the healthcare aspect of the move is causing her some concern. “At the moment, the company pays for health insurance and that takes care of worries”, she says. “In the future, I don’t see any health insurance companies that offer decent, affordable health insurance for older people in regions such as South East Asia.”
Ms Srinivasan says it was only when she started planning her 60th birthday gathering that she began to seriously contemplate the concept of retirement. “I am hoping to carry on working for as long as I can without taking away from the service levels I offer right now. As a business owner, I also have to think how my actions would affect others on my team. As an expatriate I’m also quite reliant on how long they would keep renewing my visa, so I need to plan for that.”
Ms Srinivasan says she pulled out of her own retirement fund when she needed the cash for something else.
“I guess my share in the business is now my retirement plan. I have no other. But there is no point in regrets,” she adds.
Caroline Domanska, who owns Money Mindset Coaching, which has clients in the UAE and the UK, says she thinks there is a tendency among the UAE’s expatriates to see their gratuity pay as a form of pension pot.
But she cautions against this short-sighted mentality. “The trouble is that there always seems to be something else to spend the gratuity money on when the time comes. So you move employers and you think, ‘well, some of it should be used for a treat to celebrate the new job’. Should you be getting your gratuity when leaving the country, it may well get swallowed up in moving costs. That’s why retirement pots in other countries are not available until you reach some sort of retirement age, because human nature is to use money when it comes to us.”
Hedley Butterfield, 66, from the UK, has been working in Abu Dhabi as a college English teacher since 2003 and has been an expatriate for the last 36 years, in Hong Kong and Brunei as well as the Middle East. He now regrets that he didn’t start saving for retirement at a younger age.
“I have only been seriously thinking about it for the last 15 years, since I came to the Middle East, which is silly really,” he says. “Before then, paying the mortgage off was a bigger priority. In hindsight, a bit of earlier planning would have been sensible.”
HSBC’s survey found that 50 per cent of pre-retirees in the UAE consider buying a house as a barrier to retirement saving, while others say the costs of raising children and their own poor heath prevent them from building up a sizeable nest egg.
A study undertaken by the finance comparison site compareit4me.com last month reveals that 53 per cent of UAE residents do not think they earn enough to save, while a third claim not to save a penny.
Ms Domanska thinks it is hard for people to face up to the reality that they may retire in their 60s and easily live for another 30 years – “which may or may not be in good health. While we don’t want to dwell on the negatives, a lot of people think they will be able to keep working in some capacity into older age, on lucrative consultancy packages, but this will not be the same for all”.
Currently, the retirement age in the UAE is 65 for expatriates and 60 for Emiratis, but one-year visas are given for expatriates who are older than 65 on a discretionary basis.
When the time came for Mr Butterfield to retire at 65, his employers were happy to allow him to stay on for another two more years, enabling him to build up more of a retirement nest egg. He is now starting to look for work in the UK for his return when his current contract ends this summer. “I’m mentally and physically fit, so sitting around in retirement is not really my cup of tea, to be honest,” he says. “My ideal scenario would be some sort of part-time work or private tutoring. Apart from the money, I feel like I would be wasting my brain otherwise.”
But Mr Butterfield’s passion to carry on working for as long as he can is not shared by everyone. HSBC’s report found that 29 per cent of UAE pre-retirees aged 45-plus would rather retire in the next five years if they could. And a fifth of those blame their early retirement dreams on the negative effect work has on their mental and physical health.
The final message, concludes Mr Nakajima, is that you shouldn’t wait until you retire to start worrying about your health. “You can start saving for retirement now and you can also start thinking about how to stay healthy now, because people are living longer, that’s the great news, but you do want to have a healthy retirement to enjoy those later years.”
Mr Gifford says HSBC partners with an insurance company and says many applicants for life insurance tick the box declaring they are not smokers.
“But then when the medical check up happens, it turns out that they do shisha – so people don’t have this sense that they are actually doing something that is detrimental to their health,” he adds. “ The healthier you stay, the less you’re going to be paying for medical costs in retirement. In a sense, it’s almost a financial bonus for staying healthy.”
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