GOODWILL GUIDE TO

RETIREMENT

&

PENSION PLANNING

GOODWILL INSURANCE

BROKERS L.L.C. Protection Against Catastrophes

RETIREMENT AND PENSION PLANNING

In life, we all work to gain financial independence. After years of hard

work, we reach a point where we feel the need to take a step back. It is at

this point, a pension needs to be paid out to our families to sustain the

expenses. People have different strategies for this some live off rental

income from income generating assets (e.g. property), others liquidate

assets and buy an annuity to give them a regular income, whilst some

depend on employer / government designed retirement plans.

In financial planning, it is very important to diversify this includes your

investments as well as your sources of income on retirement. On

retirement, while it is important to cover your expenses, you would also

need to consider the effects of inflation and the costs of leisure.

Individuals need to realize the importance of starting their own

retirement plans without depending on their employers or the

government. State pensions in many countries cannot fully sustain their

entire population. With people living longer, governments can no longer

afford the responsibility of supporting all of them. By saving a percentage

of your monthly income, you develop financial discipline and can save for

the future. The future takes care of you if you care for it now. We all like

to spend money when we can, but it is more about finding the right

balance in living your life today and keeping reserves for a rainy day and

for your future.

Many people are in fact forced into early retirement due to a serious

illness or a major accident; therefore to protect against these unforeseen

circumstances, please refer to the Goodwill Guide to Income Protection

(Critical Illness Cover).

When designing a retirement plan, you need to know two things HOW

much to save and WHERE to invest this money saved. The amount of

money a person should save (assuming no retirement plan is in place):

If retirement plan is initiated between,

AGES 18 25 : 10 12%

AGES 26 35 : 12 15%

AGES 35 40 : 15 20%

AGES >40 : >20%

With this savings guide, upon the assumed retirement age of 65, you

would be able to regularly receive approximately 50% of your last income

after retirement. The strategies used to invest this money saved are

discussed next in the Retirement Investment Strategy.

Percentage of

monthly income to be

saved for the rest of

plan term.

Which of these are you prepared

to do without when you retire?

Your car

Your holidays

Golf or other sports

Socializing

Dining out

Clothes

Presents for grandchildren

Hobbies

This guide will help you design your ideal,

financially independent, and comfortable

future.

E-mail us for expert advice on - gib@eim.ae

How long have you spent

planning the longest

holiday of your life

Your RETIREMENT ?

EQUITY

RETIREMENT INVESTMENT STRATEGY

This strategy shows how to make use of the volatility in the markets to

invest over the long term.

The following five asset classes are what an investor can primarily

explore:

Equity Bonds Cash Property Commodities

Example: If you have 25 years to retirement, the following ABCD

strategy could be used:

(A)ggressive (B)alanced (C)autious (D)efensive

Year 1 7 Year 8 15 Year 16 23 Year 24 25

1. Equity

2. Property

3. Commodities

1. Equity

2. Emerging Market Bonds

3. Property

1. Developed Market Bonds

2. Cash

3. Property

1. Government Bonds

2. Cash

To make sure this strategy works, Dollar Cost Averaging1 is the best

methodology to adopt as it captures the volatility of the markets in the

initial stages and protects your wealth as you move closer to retirement

by moving into less risky asset classes.

Every person moves through 3 stages in life:

- Asset Accumulation (Age 18 45) - Asset Preservation (Age 46- Age 65) - Asset Distribution (>Age 55)

For Asset Accumulation & Asset Preservation the above mentioned

strategy works best, whereas for Asset distribution; Trusts, Family

Foundation and a Personal Will would come into play2.

Notes:

How this strategy works:-

Formula:

1. Term to retirement 2 (last strategy term period) = Number of years of ABC Investing

2. Number of Years from Equation 1 divided by 3(no. of strategies) = Number of Years for each segment of A,B & C

According to the above example:

1. 25 yrs 2 = 23 yrs (term for ABC investing) 2. 23 yrs / 3 = 7.33 yrs (term for each phase of A, B and C)

EXPLANATION OF EACH ASSET CLASS:

EQUITY Investing in shares of companies using mutual

funds. This can be in a country or in a sector.

This is considered a volatile investment and is

expected to make substantial returns over

the long term.

PROPERTY Buying shares in companies that develop

property or companies which manage

property for its investors or companies which

lend money to property owners. This

investment can be made internationally or

into specific markets through funds. This is a

long term investment and can be volatile

especially if invested in emerging markets in

comparison to developed markets.

COMMODITIES Investing in metals, agricultural products and

by products, natural resources, etc. is

considered high risk but involves high returns.

BONDS The fund invests in either corporate or

government bonds which provides a stable

return or help in preserving capital. Emerging

market bonds tend to be riskier than

developed market bonds. Hence as the

portfolio becomes more conservative, shifting

from emerging market bonds to developed

market bonds and then to government bonds

is the ideal strategy.

CASH Holding money market securities is equated

to cash and these involve low returns with

low risks and are close to fixed deposit rates

or government depository rates.

1 Goodwill Guide to Dollar Cost Averaging

2 Goodwill Guide to Asset Distribution

d

The graphic story of 100 young

people now aged 25

40 years later at retirement

Will be rich

Will be financially stable

Will still be working

Will be dead

Will be broke

Will be dependent on famil

It is very easy to spend money; it is

much harder to spend money wisely

Disclaimer: This document is not intended as an offer to invest. G

GOODWILL INSURANCE BROKERS LLC.Registered (Registration Number 12

by such law.

HEAD OFFICE:

Bank Street, Bur Dubai

506, The Atrium Centre,

Tel: +971-4-3595566

Fax: +971-4-3595567

Email: gib@emirates.net.ae

www.goodwillinsurance.com

The graphic story of 100 young

40 years later at retirement

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The future will take care of you, The future will take care of you, The future will take care of you, The future will take care of you,

if you take care of the present.if you take care of the present.if you take care of the present.if you take care of the present.

Will be rich

Will be financially stable

Will still be working

Will be dead

Will be broke

amily & friends

easy to spend money; it is

much harder to spend money wisely

st. Goodwill Insurance Brokers LLC. does not accept responsibility for any actions or in

Est. in 1999, providing Corporate &

Insurance Solutions

Financial Planning & Wealth Management

GOODWILL INSURANCE BROKERS LLC.123) under UAE Federal Law Number 6 of 2007, and its activities in the UAE are governed

www.goodwillinsurance.com

JEBEL ALI SERVICE CENTRE:

LB02 023, Near Fire Station,

Main Entrance, Jebel Ali Free Zone

+971-4-8818011

+971-4-8818012

Email: gib_jafz@emirates.net.ae

The future will take care of you, The future will take care of you, The future will take care of you, The future will take care of you,

if you take care of the present.if you take care of the present.if you take care of the present.if you take care of the present.

or inaction resulting from this document.

Est. in 1999, providing Corporate & Individual

Insurance Solutions along with guidance on

Financial Planning & Wealth Management

GOODWILL INSURANCE BROKERS LLC. 3) under UAE Federal Law Number 6 of 2007, and its activities in the UAE are governed