How Much Will You Really Need to Retire?
Case study: A 40-year-old professional assumes their pension will be enough but has never calculated their retirement income needs. With 25 working years remaining, the gap between assumption and reality has time to be closed—but only if it is identified now.
Retirement planning in the UAE sits in a particular category of financial conversations that people consistently postpone. There is always a reason—the children need something, the business needs investment, and there is a move coming, a job change planned. And retirement feels distant enough that deferring feels safe.
It is not safe. And for expats in the UAE, it carries a specific risk that does not apply in countries with state pension systems: there is no fallback. No UAE government pension for expat residents. No universal credit. No NHS. When you stop earning, everything comes from what you have built.
That makes the calculation not just useful—it is essential.
Most people plan their retirement based on what they hope they will have. The useful calculation starts with what they will actually need.
Step 1 — Estimate Your Retirement Expenses
Begin with your current monthly expenses (from your budget — see Post 3 in this series). Then adjust for retirement:
Remove: mortgage payments (ideally paid off by retirement), school fees, commuting costs
Add: higher healthcare costs — these increase significantly with age, and in the UAE this is entirely private
Add: travel — many retirees spend more on travel in early retirement than during their working years
Add: leisure and lifestyle — time replaces work, and time costs money
Consider: where will you live? UAE retirement visa exists but residency is not guaranteed indefinitely
A conservative estimate: retirement expenses are typically 70–90% of pre-retirement monthly expenses
Step 2 — Calculate the Capital Required
Once you have an estimated monthly income need in retirement, you can work backwards to a capital target. A widely used planning rule is the 4% rule: you can withdraw 4% of your invested capital annually without depleting it over a 25–30 year retirement.
Monthly income needed in retirement: AED 20,000 = AED 240,000 per year
Capital required at 4% withdrawal rate: AED 240,000 ÷ 0.04 = AED 6,000,000
Monthly income needed: AED 30,000 = AED 360,000 per year → capital required: AED 9,000,000
Monthly income needed: AED 15,000 = AED 180,000 per year → capital required: AED 4,500,000
Note: the 4% rule assumes a diversified investment portfolio. Adjust for inflation and UAE-specific considerations
Step 3 — Identify Your Current Position
Add up what you currently have that will contribute to retirement capital:
Existing savings and investment accounts
Property equity (if you own property you plan to sell)
UAE end-of-service gratuity projection (based on current salary and expected years of service)
Home country pension entitlements (if any — UK state pension, for example, may still accrue for qualifying years)
Business equity (if you own a business you expect to sell)
Any inheritance expected (treat this as uncertain — plan without it, use it as a buffer if it arrives)
Step 4 — Bridge the Gap
The difference between your current position and your capital target is your savings gap. Divide that gap by the number of months remaining until your target retirement age. That is the monthly saving and investment contribution required — in addition to what you already have.
For a 40-year-old with 25 years to retirement, this calculation is still very manageable. The power of compound growth over 25 years means that consistent monthly contributions into a well-structured investment portfolio can close a significant gap.
For a 50-year-old with 15 years, the calculation is tighter but still actionable — it may simply require a higher monthly contribution or a later retirement target.
The UAE Retirement Visa — What It Is and What It Is Not
The UAE offers a retirement visa for those aged 55 and over who meet one of the following criteria: savings of AED 1 million or more, a property investment of AED 1 million or more, or a monthly income of AED 20,000 or more from a pension or passive source. This visa allows residency — it does not provide any financial benefit or healthcare coverage. All healthcare in retirement in the UAE is private and must be self-funded or covered by private insurance.
Meet Carla — HerSphere Trusted Financial Partner
Carla is a UAE-based independent financial advisor specialising in financial planning and management — life insurance, education savings plans, retirement planning, and personal financial strategy. She works with clients in the UAE and internationally.
HerSphere readers receive:
— A complimentary 20-minute introductory consultation
— 10–15% discount on her services when you mention your HerSphere referral code
— Your HerSphere referral code will be shared with you on sign-up. Mention it when you make contact.
Contact Carla:
HerSphere Financial Planning Series · hersphere.ae
Carla De Silvo
Senior Financial Planner
M: +971 (0) 52 168 3614
T: +971 (0) 4 320 8065
