Five points for GCC expats to consider when planning their retirement

Deciding where to retire is a key part of the planning process



It is less than a year since Bahrain was named the top destination in the world for expatriates in a global survey that also listed Oman and the UAE among the top 30 global destinations.

However, the impact of global economic factors and the changes in approach that this has prompted is should be giving existing and future expats to the region some food for thoughts as they begin to plan for their own retirements.

There are obvious reasons why the Gulf region remains an attractive place to live and work for those with specialised skills. Factor in the climate, the safety, the cultural diversity and the location of the UAE as a central hub, from which it is easy to go anywhere, and the attraction is apparent.

And there are other advantages to making your life in the region: you are living and working in a low tax environment; the quality of life for families is good, and housing has become more affordable as building work has increased.

Financially, with most currencies pegged to the dollar, we are also a little more insulated to the more dramatic financial fluctuations.

This, though, has largely applied to individuals able to secure good, well paid jobs. However, with companies having looked to reduce costs over the last few years, it is likely to continue to be harder for western expats to demand the inflated salaries to which they were once accustomed. This means that although expats here still have the ability to save, we are seeing signs of this decreasing as employment packages become more frugal.

The UAE, for example, is home to over 200 nationalities and has one of the world’s highest percentage of immigrants.

Many companies are now recruiting more staff from India, Pakistan and Sri Lanka in part because they demand lower salaries with Indians and Pakistanis forming the largest expatriate groups in the country, making up 25 per cent and 12 per cent of the total population respectively.

However, with most expats typically living in the region due to the better remuneration packages and not intending to retire here, there are questions that each should begin to address in order to plan efficiently and effectively for their eventual retirement.

That includes deciding where to retire – given the absence of pensions in the UAE and more widely in the region – together with fragmented pension assets and, of course, lifestyle choices.

So, what should the key planning points for expats be?

1. As obvious as it may sound the first and immediate step is to actually make a plan. You can’t start doing this too early. A little like setting your new year’s resolutions, being clear about what your aspirations for your retirement are will help you understand where you want to be located for that period of your life. This, in turn, will make it more likely that you will be able to achieve them.

2. An important part of this process is to understand the real cost of living of where you want to eventually retire.

3. Currency fluctuations are also an important issue to factor into your thinking. Sterling, for example, has been on a downward trend compared to the US dollar over the past number of years. The lesson from this is that it is extremely important to ensure that you bullet proof your retirement plans as far as possible by considering the impact of any currency fluctuations.

4. Consider how the diversification of your assets between asset class and territories can ensure that each of your assets will deliver the maximum potential return during your retirement.

5. And last but by no means least, if you are planning to remain in the Middle East for the duration of your retirement – or, for that matter, to enjoy your retirement anywhere outside of your own home country – it is extremely important to clearly understand your visa rights, and likely medical costs associated with getting older.

Chris Ball is the managing partner of Hoxton Capital Management