Planning your financial future – the top 10 mistakes you want to avoid

Too many people bury their heads in the sand when it comes to planning for their financial future so we need to face some facts.

The reality is that most people are facing a significant shortfall in their retirement income.

According to recent figures, the average UK pension pot totals just £50,000 and the average pension income is £500 a week. That income will not just be from the pensions, but from other sources such as the state pension, personal investments or property.

The average UK resident has savings of just £17,365 and 34% have no savings or less than £1,000. Equivalent figures are not available for GCC expats but given that our incomes are higher than UK averages I would hope it is rather more. That said, I all too frequently come across people without any savings or investments.

In this article I  look at some of the mistakes you want to avoid and issues that you really cannot afford to ignore.

When I use the term ‘pension’ I am referring to any kind of investment being used as retirement provision, rather than just traditional plans and as expats such arrangement are rarely available to us.

If you want to ensure you have enough money to live comfortably when you retire, here is my list of the top 10 retirement planning mistakes to avoid.

  1. Not having a retirement fund

Obvious but true. If you are not saving and investing, what are you going to live on when you stop working?

Will you ever be able to stop working? Will you even be able to get a job in later life?

Even if you have your own business, what if you are physically unable to work for your whole life?

You know that if you want a comfortable life in your later years, you need to save and plan for it now. While we all need a certain amount of accessible cash, we all need to actively invest in a range of assets.

  1. Relying on a government pension

State Pensions, for the global minority who are eligible for such benefits, are low and as an example the basic UK state pension is £203.85 a week for the tax year 2023/24. That’s assuming you have paid contributions for 35 years and will receive the full amount. If so, that’s just £10,600 in the current tax year.

The age from which the UK state pension is payable is increasing and if you are 40 years old now, you won’t be able to claim until age 68 years.

State pension ages are also increasing in many countries, so if you want to retire earlier you certainly require private provision.

  1. Delaying your retirement saving

We all procrastinate. It’s human nature. But you can’t put off planning your future forever or it will be too late and you will not have enough to live on.

The two biggest factors that determine how much your pension funds will be worth at retirement are the amount you put in and the length of time it remains invested. The sooner you start saving into a pension the better, even if you are saving a small amount

Research by the UK insurance company Legal & General revealed that to achieve an annual pension income of £10,000 by the age of 65, if you start saving at the age of 25 you would need to save £105 each month.

Leave it until you’re 35, and you’ll have to find £195 a month; until 45, £405 a month; and wait until you’re 55, £1,100 a month, at least.

As a general rule of thumb, people should be saving about half of their age as a percentage of their income. So, if they start when they are 20, they should be saving 10% of their income each year into a pension, but if they leave it to 30, they need to save 15% of their income into a pension each year and so on.

You cannot invest just AED 2,000 a month from age 40 and expect to have millions to live on at age 55. It is not going to happen.

The more time you have on your side the better – for any investment.

Few people get to retirement age and have too much money and if you start saving and investing, in sensible amounts, in your 30s and 40s, you will be glad you did so by the time you reach 60.

The End of Service Gratuity payable to employees in the UAE, whilst certainly useful, is not an adequate replacement for a well-funded pension scheme so you must make additional provision.

  1. Not realising how much you really need for a comfortable retirement

We are living longer, often remaining healthy for longer, and an active retirement costs money.

Recent research shows that the average American wants to stop working at age 62 years. Workers in the age group, 25 to 40, want to retire before age 60.

Despite this, far too high a number of those still working at age 65 expect to have to keep working for many more years, usually as they simply cannot afford to retire.

I speak to many people who say they’d like to stop working on a full-time basis at age 55 years but few will be in a position to do that – unless they are seriously investing many years ahead.

Large sums are required to generate a decent, and sustainable, level of income, but for many this is achievable if they start soon enough and plan properly.

As part of my financial planning service, we can look at what you have accrued so far, project forward, and work out of you are on track for the retirement that you want. If you aren’t, steps can be taken to improve your situation.

  1. Thinking your home is your pension

This is a fairly common suggestion, but there are reasons why this is wrong.

The probability of ever benefiting from an increase in the value of your home is actually quite low. You will always need a roof over your head so if the home you’re living in is supposed to be an investment how does that work?

You may be able to downsize at a later date but you will still require somewhere to live so you will never have the full value to live on.

In many cases. the sentiment that “my home is my pension” is an excuse to avoid making real retirement provision.

Your home only becomes an investment when you are prepared to sell it and trade down for the rest of your life.

  1. Stopping contributions in a bad market

When stock markets fall and the economy falters, many investors get nervous. Some decide to stop contributing to their investments or pension in case the value of the funds they are invested in fall, but this could be a mistake.

When the markets fall in value, it is actually cheaper to invest as unit costs are reduced and this will result in bigger increases when markets recover.

Right now looks like a good time to be investing for the long-term.

  1. Failing to review your pension provision regularly

Do you know how much your pensions are worth? Or what level of income they will provide? Do you know how many you have or where they are? How about the type of funds they’re invested in or how much risk is involved? Have you considered the effect of rising inflation?

If the answer to any of these questions is no, you need to take stock and plan to review your pensions and investments at least once a year and every time your personal circumstances change.

Make sure your pension is on track to grow enough to support you in retirement. The sooner you take action, and thus control of your future, the better.

The same applies to other investments. Markets change and sometimes adjustments are required, or funds are disappointing. My clients all receive regular, detailed reviews with personalised advice.

  1. Getting locked into costly, long-term plans

I have never been a fan of the 20/25 year savings plans that are sold in this region. It is far too long a period to commit to a contractual arrangement and these days there is just no need to do that.

While you should be investing for the long term, and on a regular basis, you can access flexible and well-priced schemes without hefty surrender charges. Full transparency, all fees and charges disclosed, thousands of funds, and true visibility.

You can add to the investment when suits you, perhaps from an annual bonus, stop payments if really needed and have control over your money without being penalised. All with expert investment management.

Take a look here for more. The future of investing is flexible

These days, flexible investment is the best option for just about every expat in the UAE/GCC.

  1. Not being aware of tax issues

Being an expat when it comes to retirement planning can have both advantages and disadvantages. Whilst you may not have access to home country pension plans with tax incentives for contributions, most of us can now invest without any tax deductions on growth.

It is important to ensure that your savings plan won’t leave you with a tax liability if you repatriate, but certain investment options can even have advantages when you return to a home country.

Potential future tax issues should be part of any investment discussion and a proper adviser will be aware of this.

  1. Not getting the best advice

Be wary where you get your advice from. There are few real investment experts and I come across too many cases where people have received poor or inappropriate advice.

A recent study, produced by the International Longevity Centre (ILC) with the support of Royal London, shows that Brits who took professional financial advice between 2001 and 2006 enjoyed an average increase in their assets of nearly £48,000 after 10 years, compared to those who took no advice.

Multiple studies have shown that people who work with experts (and I don’t mean sales people so do check qualifications) are better informed, save more, and achieve better returns on investments over time.

Be aware that not all UK pensions should be transferred to alternative arrangements, even if you are living outside of the UK. Unbiased advice matters.

See this article to find out what a real financial adviser can do for you:

What has a financial adviser ever done for you?

I want you to make money and have your interests at heart. My charges are transparent and I provide advice on just about all aspects of personal financial planning for expats.

Real advice is not about setting up one plan and disappearing. Instead, it is about managing investments and working together over many years to help you reach your financial goals. A kind of life coaching if you will, but focussing on your money and lifestyle in the future.

Your future is too important not to plan it properly.

To arrange a discussion on any aspect of your personal financial planning, please email me at

I write articles such as this one as part of the holistic personal financial planning service that I provide to expats, and the general consumer, financial and legal information that I provide in The National newspaper, and on the Facebook group British Expats Dubai.

Please take a look at the other useful articles on this website.

UK National Insurance & the State Pension – what expats need to know


About FinancialUAE

A qualified and experienced Independent Financial Adviser based in Dubai, UAE. Professional and ethical. Freelance writer on personal financial issues & the On Your Side column in The National. Founder of Facebook group British Expats Dubai. Senior Partner at Holborn Assets LLC, Dubai, UAE.
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