Around half of millennials in the UAE agree that they will live much longer and will need to support themselves for longer than previous generations.
Dubai - The millennials have experienced weaker economic growth than previous generations.
Published: Tue 16 May 2017, 12:00 AM
Updated: Tue 16 May 2017, 10:22 AM
A combination of complex economic conditions, rising bills when it comes to starting a family and increasing pressure to support their older relatives has put millennials in a tough spot when it comes to saving for their retirement.
A new study has shown that the majority of millennials in the UAE still haven't started saving for their retirement, however, they are also the generation that is the most concerned about the issues that they will face, should they run out of funds during their retirement.
New research from HSBC shows that 51 per cent of working age people across the country agree that millennials have experienced weaker economic growth than previous generations, a perception in line with the global average which stands at 53 per cent. HSBC's "The Future of Retirement: Shifting Sands" survey also found that millennials realise that their generation is facing unprecedented financial pressures, but are not adequately prepared for this phase in later life.
More worryingly, the research showed that 53 per cent of people in the UAE believe that millennials are paying for the economic consequences of the previous generations. As many as 41 per cent of millennials have not started saving for their retirement, compared to 35 per cent of Generation X and 29 per cent of baby boomers.
Around half of millennials in the UAE agree that they will live much longer and will need to support themselves for longer than previous generations. In fact, this generation is expected to cover for an average of 16 years of retirement, compared to 15 years for Generation X.
"Despite apparent awareness of the tough macroeconomic conditions their generation is facing globally, millennials do not appear to have grasped the full implications of their retirement. Our study shows that around two thirds of people in the UAE are aware that it will be more difficult to save for a comfortable retirement following the global financial crisis in 2007-08," said Matthew Colebrook, head of retail banking and wealth management for the Mena region and Turkey at HSBC Bank Middle East.
"Therefore, it is not surprising to see that only two in 10 of the people in the UAE think millennials are in the best position for a comfortable retirement. Therefore, it is now more important than ever before to create a solid financial plan in order to secure a comfortable retirement."
The biggest challenge that many millennials face when it comes to saving for retirement stems from the fact that they are at the age where they are starting their own families. Rising costs of living and increasing school fees have already put them in a tough financial situation, to the point that many consider saving for retirement to be a luxury that they can't afford at this time. In addition, many millennials also cited the fact that they are responsible for caring and providing for their older relatives. Yet another reason that is often cited by millennials is the fact that they struggle to pay off student loans especially if they are pursuing their higher education or if the have younger siblings that are still in university.
When it comes down to saving for retirement, Petr Klimes, global head of marketing at Abu Dhabi Islamic Bank, said that many millennials fall short of their expected target.
"We have conducted customer research, which shows that millennials aspire to save close to 20 per cent of their income, while our actual customer data shows that most save below 10 per cent. However, our research also shows that they seek to improve their financial knowledge and decision making through access to experiences of others."
To capture this and to complement millennials' needs, he revealed that ADIB will soon launch an online knowledge sharing and community platform with tips and tools helping millenials better plan and manage their finances.
"This platform is an evolution of ADIB's comprehensive financial education outreach program built since 2011 which has included money saving and financial education programs with various activities such as holding seminars for school and university students encouraging them to save and manage their finances early on. Savings behaviour is also driven by the availability of suitable savings products," Klimes said.
Similarly, Jayash Patel, head of "Liv." at Emirates NBD, spoke about how the bank has launched a platform specifically targeted towards millennials. "As millennials navigate their finances and lifestyle choices in an increasingly digital world, Emirates NBD launched Liv., a digital-only banking proposition for millennials earlier this year. Available on both Android and iOS, Liv. is designed to help millennials achieve their lifestyle goals while maintaining their financial wellness."
Liv.'s "Wallet" feature provides instant feedback after every purchase and offers a detailed insight into where customers spend most of their money, allowing them to better manage their finances and live smarter. It also offers guidance on achieving goals that customers set for themselves while deterring them from impulsive spending. "Liv. provides personalised financial advice using smart analytics and as the digital-only bank evolves, we will be launching more such managerial tools that will enable our millennial customers to realise their dreams and maintain their financial health simultaneously," Patel added.
- rohma@khaleejtimes.com
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