Have you thought about planning for retirement? As we know, the pension system is severely affected by socioeconomic circumstances. Rising life expectancy makes it unsustainable in the long term.
Even now, pensioners’ income is leading to a decline in real disposable income. Therefore, preparing early, making sound decisions , and finding alternatives to supplement your pension are essential.
For this reason, we encourage you to plan ahead and take additional steps to ensure that your retirement is more financially secure.
1. Why Should You Plan for Retirement?
Retirement payments are always lower than your final salary in your last job. The average contributory pension in Spain is 1,137.99 euros, and the non-contributory pension is 751.47 euros. Don’t you think these figures are too low to live with the quality of life you deserve during this golden age?
It’s also important to keep in mind that some care needs can be quite costly. Did you know that around 60% of nursing home beds in Spain are private? When an elderly person or couple needs a caregiver, a day care center, or a spot in a nursing home, their financial burdens skyrocket.
For this reason, companies are already emerging that offer specific financial solutions for this demographic if they own their own home. It’s an emerging market, with an upward trend, that perfectly reflects the growing interest and concern surrounding these issues.
As of 2023, the retirement age for receiving a 100% pension has been set at 66 years and four months. It may seem like you still have a long time ahead of you, but we recommend that you start planning for retirement as soon as possible. With proper planning, you’ll secure a better income with less effort.
Do you want to substantially supplement your pension without making major sacrifices? At WorkCapital, we want to help you achieve that. Take note!
2. What You Should Do to Increase Your Future Retirement Income
Do you know where to start to significantly supplement your pension? Planning is the key. If you follow this five-step action plan, you’ll be much closer to increasing your retirement income.
Calculate your projected retirement benefit
This is the essential starting point: determining how much you’ll receive when you retire, based on your work history and personal circumstances. There are online calculators you can use to get an estimate. Once you know this figure, you can start planning the retirement you want and how to achieve it.
Estimate your expenses and out-of-pocket costs
To anticipate your expenses, you need to do some research and try to analyze what expenses you’ll have during that stage of life. Base your estimates on a thorough analysis of your current costs and extrapolate them into the future. Also, set aside funds for other special expenses, such as medical care, caregivers, travel, and so on. You should also factor in your current costs when making your projection.
Start saving
If you want to maintain your purchasing power after retirement, make up the difference between your previous salary and your future retirement income as soon as possible.
You can start with a small monthly savings amount, such as 10%. The important thing is to make it a habit. As you get closer to retirement age, you’ll need to gradually increase those amounts—for example, by 5% each year.
Open a savings account
Once you’ve saved a specific amount, it’s time to make the most of it and put your money to work.
This is, of course, the time to look into pension plans —and why not sign up for one? They offer clear tax advantages that you can benefit from.
Become an investor
This is the final step in this process aimed at ensuring a sufficient retirement income. Given the current economic and financial landscape, the returns on pension plans are no longer as attractive.
There are other ways to make the most of your savings. For example, investing in alternative financing or other comparable products. Do this only if you’re confident, fully committed, and have a safety net for unforeseen events.
As you’ve seen, planning for retirement is important and offers nothing but benefits. If you truly want to increase your future retirement income, get started as soon as possible.
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Image from Freepik
