Do I Have To Pay Zakat On Money Saved For Retirement?
The principle is that assets in personal use are exempt from zakat. That’s why jewelry for a child’s wedding is considered exempt. Same is the case for a child’s education – it’s a pre-determined future personal expense that one can make an ijtihad to make it exempt from zakat. Zakat is applicable on any assets that are meant to save money, which includes retirement savings. Hopefully the following two videos will shed some light: Video | Ghamidi.tv Video | Ghamidi.tv Please also see the following Zakat FAQ with answers to many related questions. Discussion 46733
Children’s education expense is one’s commitment to provide for one’s children so one may make an ijtihad for their exemption. “Retirement” is just a big bucket for all future expenses after a certain age. Exempting that completely nullifies the spirit of zakat. Whether a person holds a piece of land with his excess money holds an account and assumes it to be for retirement, materially there’s no difference between them. They’re both assets not in personal use hence are subjected to zakat.