Many retirees wish they had saved more earlier. In Spain, the savings rate slipped to about 7.2% of GDP in 2022, far below the lockdown peak of 17.7%, and private pension plans have not always provided the cushion people expected, especially as tax benefits shrink under the current government. The trend highlights the need for individuals to build a personal reserve alongside the state pension.
Experts warn that pension reform alone may not guarantee long-term stability. Institutions like the Bank of Spain suggest adjustments could be required by 2025 to keep the system sustainable, while the Independent Financial Responsibility Authority (AIReF) has cautioned that existing accounts show imbalances that cannot be fixed with a quick fix. The outlook for pension adequacy and retirement living standards remains uncertain.
Against this backdrop, wealth managers and investors were asked what steps can help supplement public pensions and maintain quality of life in retirement. The National Institute of Statistics (INE) reports that the average salary for Spaniards aged 55 to 59 is about 28,240 euros per year (2,354 euros monthly), while the average pension stands around 1,372 euros. From age 67, this implies a shortfall of roughly 982 euros monthly to sustain the same living standard. When evaluating savings plans for different life stages, most financial experts share a single message: the sooner one starts saving, the better. It is also vital to understand needs clearly and educate oneself before choosing any financial instrument.
In the early career years, incomes are typically lower as people begin professional life. Housing costs pile up with mortgages, and families form and grow. Habitual saving should start early and be reinforced as years pass to support retirement goals.
Experts commonly recommend a mix of options, including pension plans, mutual funds, and other instruments. In the early career phase, contributing to a pension plan is often advised. Dositeo Amoedo, president of the Association of Educators and Financial Planners (AEPF), notes that anyone who works benefits from a retirement plan. The annual contribution cap is 1,500 euros, with tax relief available on the income statement, and ING’s head of pension plans Enrique Rodríguez stresses that these plans help build a solid long-term buffer and serve as a strong starting point.
Mutual funds are another viable path. They are taxed on savings bases at sale and on capital gains and can be redeemed without extra tax costs. They tend to be cheaper than pension plans and their capital can be redirected toward various goals, including retirement. Unit-linked life savings insurance offers a similar structure through insurers and is often suited to investors who are comfortable taking on more risk.
Unlocking liquidity
Starting around age 40, attention shifts to liquidity. If a retirement plan or mutual fund already exists, it may be prudent to broaden investment horizons. José Carlos Guerrero, a tax and estate planning expert at Tressis, emphasizes discipline: savings set aside for retirement should not be diverted to short-term replacements—this is a common misstep that undermines long-term goals.
One notable product is the PIAS (individual systematic savings plan), a life-insurance vehicle allowing annual contributions up to 8,000 euros. The money can be converted into a lifelong annuity at retirement. PIAS provides a 40% reduction in personal income tax for up to 40 years, tapering over time provided funds aren’t withdrawn before age 67; early withdrawals trigger capital gains taxes.
Finally, prudent investors should consider shifting toward more conservative portfolios as retirement nears. Patricia Suárez, president of Asufin, stresses that greater contributions become essential during this crucial period.
Consolidating earnings
From around age 50, retirement planning intensifies. Eva Valero, director of Vida Ahorro y Pensiones, recommends gradually moving from variable income to fixed income as retirement nears to protect savings set aside for age 65, while still hedging a portion of risk. Suárez also highlights the goal of consolidating earnings through reliable or guaranteed products.
There is a retirement option that has gained interest in the years leading up to retirement: SIALP (individual long-term savings insurance). If the annual limit is kept at 5,000 euros for at least five years, no capital gains are paid on withdrawals. Experts suggest this can be beneficial only for those with less than five years to retirement; otherwise, it may erode purchasing power.