As we have been saying, the Social Security is in an unpleasant situation, with a very tight budget and balance in its “piggy bank”. Each year that passes, different “records” are set, all of them contrary to its sustainability… A graph reflects all this.
The retirement pension target
The retirement pension has always been seen in Spain, since its implementation, as a guarantee of obtaining a reasonable income at the time when we cease to be the active population of our society.
The “replacement rate” reflects what percentage of our last active paycheck represents the retirement pension.
An example: if my last paycheck was €2,000 per month and my first pension is €1,500, the replacement rate is 75%. Spain has always had one of the highest replacement rates in Europe (Germany and the United Kingdom have rates of around 30%, less than half that of Spain).
This certainty of obtaining a good pension is being called into question in recent years, given the data that are obtained periodically. These data reflect that, in view of the abyss of retirements in the coming years due to the“baby-boom” generation, we do not know the future of Social Security with respect to pensions.
The chart showing this difficult situation
This image reflects how, year after year, the cost of our pensions continues to grow:
- the increase of retirees and
- because the payrolls of people retiring are getting bigger and bigger:
We are getting dangerously close to 10 million retirees.
The importance of saving for the future
The conclusion to be drawn from all these figures is that personal savings is what supports future retirement in the other EU countries.
Without personal savings year after year, the situation after retirement can be critical. The replacement rate will be progressively reduced as a result of the measures taken by the government, which is well aware of the difficulty of maintaining the pension system as we know it.
If you want to see which savings plans suit you, do not hesitate and contact us. Our Savings and Investment Department will help you. Our clients are our best guarantee.
