Three quarters of retirees regret not saving more. With Spanish savings declining (7.2% of GDP in 2022), it is far from the unusual 17.7% reached during lockdown due to covid, and hours very low with one of the star products (private pension plans) By the Government currently in office With the successive deductions in tax benefits, it’s more necessary than ever to start filling the piggy bank.
Experts agree that pension reform does not guarantee anything. even the financial sustainability of the system is doubtful. Organizations like the Bank of Spain predict that in 2025 the pension system will need to be adjusted to ensure its sustainability, while the Independent Financial Responsibility Authority (AIReF) warns that it “cannot be balanced due to imbalance in accounts”. income growth”. Not only future pensions, but also the standard of living during retirement is more questionable than ever.
Taking these factors into account, the ‘assets’ asked tax experts and investors what they needed to do to supplement their public pension and maintain quality of life during retirement. According to the National Institute of Statistics (INE), the average salary of a Spaniard aged 55 to 59 today is 28,240 euros per year (2,354 euros per month) and the average pension is 1,372 euros. So, From the age of 67, about 982 euros per month would be missing to have the same standard of living.. Asked about a savings plan for different age groups, different financial experts agree on the same thing: The sooner you start saving, the better. Another piece of advice: know your needs and educate yourself before contracting any financial instrument.
In youth, it is common for lower incomes as it is the start of a working career.. There are also many expenses as citizens buy their homes through mortgages and couples start to set up their family projects. During this period, we should not forget to acquire habits of saving that will last until retirement.
Options recommended by experts include: pension plans, mutual funds and‘. For the first stage of work, experts note that it is best to hire a pension plan. “Anyone who works is always interested in a retirement plan,” says Dositeo Amoedo, president of the Association of Educators and Financial Planners (AEPF). There is no need to make large contributions as there is a limit of 1,500 euros per year and the Treasury allows these contributions to be discounted in the income statement. Something that ING head of pension plans Enrique Rodríguez confirms: “They make it possible to create a solid buffer in the long run, so they are excellent products to get started as soon as possible.”
On the other hand, mutual funds. This instrument is taxed only on the tax base of savings at the time of sale and capital gains earned.It is redeemable without tax costs, is cheaper than pension plans, and its capital can be used for any purpose, including retirement. It is a flexible product that adapts to all ages and situations. Something similar is unit-linked, life savings insurance that works like mutual funds, but in this case they are offered by insurers. They focus on people who can take risks.
gaining liquidity
At maturity, from the age of 40, experts point out that the time has come to gain liquidity. If you already have a retirement plan or mutual fund, consider expanding your views. “This is important be disciplined and don’t have the savings we wrote to complete the retirement for other purposes under the pretext of replacing them in the short term.something that rarely happens,” recalls José Carlos Guerrero, Tressis’ estate planning and tax consultant.
This is where an interesting product emerges, the PIAS (individual systematic savings plan), ie a life-saving insurance that allows you to save up to 8,000 euros per year, which is recovered in the form of a lifetime annuity at retirement. This tool provides a 40% reduction in personal income tax for up to 40 years.Decreasing over the years, provided that the money accumulated before the age of 67 is not withdrawn. If not, you will have to pay for capital gains.
Finally, It is important to redirect investment and take steps towards more conservative portfolios.. An important addition at this crucial time is the amount set aside for retirement: “Contributions must be greater,” says Patricia Suárez, Asufin’s president.
consolidate earnings
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From the age of 50, retirement is approaching, and it’s time to secure a profit, not risk a lifetime of savings. To do this, Eva Valero, director of Vida Ahorro y Pensiones, suggests “gradually converting variable income to fixed income if you’re sure you want to recover your savings at 65”. Of course, hedging a small part of the risk. For Suarez, the key is to “consolidate earnings with monetary or guaranteed products”.
There is one financial instrument in the room that might be of interest in the last few years before retirement: SIALP (individual long-term savings insurance). In this situation, if the annual limit is set at 5,000 Euros and maintained for at least five years, no capital gains will be paid out when you withdraw funds. It would be interesting “when one has less than five years to retire,” Amoedo says, “because they’re not profitable in the long run.” If not, “it’s a definite waste of purchasing power.”