It is no secret to anyone that the pension system in Spain and in the world is about to explode, and it seems that it is only a matter of time.
The state pension system was sold as one of the fundamental pillars of Europe’s social welfare model, but the problem seems. To lie in the fact that in none of the countries that shared this model did they realize that it was necessary to save in order to be able to pay for these benefits.
In addition to this, factors such as the increase in the standard of living and the fall in fertility throughout different countries of the world will end up making the pension system unsustainable over time.
Where is this crisis born? Retire-
According to analysts, the first pension system arose not as a mechanism to provide a comfortable retirement to workers, but rather, with the idea of being able to provide protection and avoid poverty for the elderly. Over time, this idea evolved and became a system that, according to experts, will have to stop being what it is now and return to the original idea.
5 points
To better understand where this crisis in the pension system is born, it is worth reviewing these points:
- When the pension system was conceived (approximately a century ago), at that time life expectancy in developed countries was only 51 years. Currently, life expectancy has increased by about 20 years. This means that retirees should receive pensions for a longer time.
- On the other hand, the fall in the birth rate, as opposed to the greater life expectancy, has meant that if we currently have a number of people over 65 years of age who represent 17% of the population; by 2050 that figure would be expected to be 26%.
- In the case of Spain, together with Italy, they become the oldest countries in the world, with barely 2 people of working age for each retiree. This undoubtedly makes us jump with concern since we can see that the money may not be enough to pay our pensions. In fact, we do not save money for our retirement.
- Another aspect that contributes to the crisis is that the public pension systems do not have enough money saved to be able to face all the payments that they should make in the future. All this will cause citizens to experience economic pressures and lower their standards of living.
- Finally, most of the money from pensions is invested in fixed-income assets, and in recent years these have seen a decline in their profitability. It has not exceeded inflation, which will undoubtedly become a new challenge for managers.
For example, retire situation in Spain
Did you know that Spain is one of the countries where the aging of the population is most notable?
Life expectancy is one of the highest in the world, being 80 years for men and 85 for women. In addition, demographic projections made by the United Nations indicate. In 2030 there will be 15.36 million Spaniards over 60 years of age compared to 11.24 million in 2015.
If we add to this the fact that the Bank of Spain in its latest report warns of a considerable reduction in the potential growth rate of the Spanish economy in the medium term, combined with rising social spending, it turns the situation in Spain into a scenario of terror.
What can we do?
Apart from waiting for our politicians to agree, given this dark panorama, it seems that the only viable solution that we are going to have will be the habit of SAVING.
According to José María Lejarraga, General Director of Cajamar Intermediadora, we must save what we can at all times, always trying to respect the legal maximums, which are around 2,000 euros per year in pension plans; although the same expert reminds us to consider at least a minimum of 5% of our annual income to constitute sufficient capital for our retirement.
Cajamar also makes its calculator available to us, a tool through which you can find out how much money you must save per month to obtain a pension of 600 euros that allows us to complete a public pension for 20 years.
In the end, the most advisable thing is that if we save for when we retire, we do it thinking about a long-term time horizon, so we will not have to think so much about the market situation, neither in the short nor in the long term.
When you retire, do you think you’ll be able to support yourself without working?
I recommend that you do not retire your future in the hands of chance, and try to educate yourself financially from now on. Remember that you are not alone; If you wish, you can count on my help through my different financial coaching programs. If you want to wear
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