Nature has endowed human beings with a complex brain that allows us to anticipate the consequences of our actions and change our decisions based on that anticipation.
Planning for the future is a beneficial cognitive skill and allows us to act based on the greatest possible personal benefit.
Planning for retirement involves planning an essential part of our life cycle; life expectancy in 2040 is estimated at more than 85 years on average (for women a little more). Therefore, our savings planning must ensure that those 20 years of our stage as retirees, we can enjoy a life without economic stress that allows us to take care of ourselves and enjoy each day.
And suppose the above still makes any of us think that “I still have a long way to go to retire” or the classic “I’ll think about it tomorrow,” with which our mind deceives us by pushing us not to make long-term decisions. In that case, we leave you some data in figures that will help dispel any doubts about it.
8 data that indicate the need to plan for Legitimate life insurance retirement:
Decrease in the birth rate
Since 2010 the number of births has decreased by 32.7%, and it is a trend that does not seem to change much.
Increased life expectancy
According to the population projection of the National Institute of Statistics for 2020-2070, in 2040, 28.8%, almost 1 in 3 Spaniards, will be over 65 years old (in 2020, this percentage was 19.6%).
Increase in the dependency rate
As a consequence of the two previous data and if current trends are maintained, the dependency rate, which is the proportion between the dependent population (under 16 years of age or over 64) and the population of working age (from 16 to 64 years ) will reach 70.1% around 2040. That means that there will be seven dependents on their contribution to the system for every ten working-age people.
Truly worrying demographic data, but they are not the only ones that we have to consider.
Social Security Reserve Fund
It was created in the year 2000 within the framework of the Toledo Pact to meet the payment needs of contributory pensions, which could arise in times of economic crisis.
Since 2011 the so-called pension piggy bank has been gradually reduced and is currently practically exhausted.
Social security debt
In July 2021, the Social Security debt amounted to almost 92,000 million euros, an unprecedented figure requiring making important decisions regarding the number of pensions and their cut to balance the system. For comparison purposes, the maximum size that the Reserve Fund reached was almost 67,000 million euros in 2011.
Replacement rate
The replacement rate is the percentage of the retirement pension on the last salary; Spain, with 81.8%, has one of the most generous in Europe and the OECD.
This replacement rate in Spain means that if a worker earns 1,000 euros and retires, their average public pension is €818 per month.
Experts have already been warning of the unsustainability of the situation, and current and future reforms must succeed in reducing this replacement rate, in such a way that our retirement pension will represent a lower percentage of the last salary and therefore we will inevitably need a supplement to be able to maintain our standard of living prior to retirement.
In addition to the demographic data and those referring to the public pension system and its sustainability, we have to take into account two groups that are particularly affected by their special employment and contribution situation.
Women
According to Social Security data for August 2021, the average pension for women throughout the system was €833.40/month, and that for men amounted to €1,257.15/month. The data referring only to retirement pensions is that men earn an average of €1,371.82 per month and women €918.08.
We are talking about a 33% gender gap in pensions that means that, in order to equal the income of a retired man, a woman must plan her retirement supplements even more carefully despite having fewer resources according to the data available from the wage gap in Spain.
The freelancers
The self-employed also constitute a group that is especially vulnerable to guaranteeing themselves a decent retirement and sufficient resources to maintain their standard of living. According to Social Security data in 2021, the average retirement pension for self-employed workers is €794.19, 40% less than the average pension for retirees under the General Regime, which amounts to €1,337.91.
There would be little left to add for a group that plays a vital role in a country’s economy and whose quality of life is diminished at the time of retirement; good long-term savings planning is essential in your case.
It is not surprising that all these data trigger the concern of Spaniards about their pensions, settling in society at all levels until it is in third place, after unemployment and corruption, as the issue that most worries Spaniards according to the latest CIS barometer.
It is always a good time to start saving for retirement to increase our peace of mind and guarantee the future.
