Retirement is approaching and now is not the time to risk your savings, but to lock in your earnings. This is the basic idea to be realized when you turn 50 and start seriously thinking about retirement, which is just around the corner.
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..
Experts recommend changing your savings strategy throughout your career to earn higher returns and maintain or even improve your standard of living when you retire. Also a long-term time horizon and starts a little earlier, at age 40 and even at 30 if possible. If this has not been possible, there is still time and the important thing is to start saving in a planned, systematic way with a long-term perspective.
Financial advisors also believe it is time to consolidate earnings and maintain a conservative profile to minimize risks. Eva Valero, Director of Life Savings and Retirement at Caser, recommends “gradually converting variable income to fixed income if you’re confident you want to get your savings back at 65.” Of course, hedging a small part of the risk. For Patricia Suárez, president of Asufin, the key is to “reinforce profits with monetary or guaranteed products”.
Investing in these final years before retirement will depend on income and future plans. If your income is high and you want to invest in a dependent or successor after age 65, “you no longer need to tie a pension plan to fixed income because The important thing is not when I will retire, but when I will need it.“, underlines Dositeo Amoedo, president of the Association of Educators and Financial Planners (AEPF).
Funds or SIALP
The transition from savings to investment can be made through financial products, such as mutual funds, which have the best tax regime as they are transferable and where profits are declared only after capital has been withdrawn from the investment.
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Funds are the most comfortable option for investors who don’t want the markets to worry day to day. They provide diversification, the most advantageous tax product in Spain and have investment profiles and time horizons for all audiences.
Another financial instrument that might interest you before you retire is SIALP (individual long-term savings insurance). In this case, the annual limit is set at 5,000 Euros and, if maintained for at least five years, the capital gains of the savings are not paid when withdrawn. 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.”