Most people reading this post will either be because they are or identify with the self-employed. As we pointed out in the article a few weeks ago, it is not easy to deal with all of the difficulties of a self-employed person. Today we are going to focus on the retirement pension of the self-employed and how we can improve it.
Self-employed contributions
A 86% of the self-employed pay the minimum rate of contribution, according to 2016 data. In other words, with regard to the Social Security (hereinafter referred to as the S.S.), their income amounts to 893.10 per month (' 10,716 per year). This percentage increases even more if we only count the under 47 years old: the 93% is quoted at the minimum.
This fact has a number of consequences, the main one being that all the the benefits provided by the S.S. are reduced enormously; both a temporary leave of absence, such as widows', orphans', orphans', invalidity and retirement pensions. We will discuss the latter in order to compare how it is affected.
Retirement pension for the self-employed
The comparison between the average public retirement pension of a self-employed person and an employee is terrible:
- A worker as an employeeby the end of 2015 I was earning 988 euros per month (by now this is already over 1,000 euros).
- A worker freelance has a 623 per month on average.
In a nutshell: self-employed retirement pensions are on average 37% lower, This is a real barbarity.
This is despite the fact that, as retirement approaches, the self-employed are gradually trying to increase their contribution base in order to try to increase the pension they will have left.
The state of Social Security
The Social Security situation is very complicated, and without wishing to be alarmist, it is not clear how the pensions of retired people, which are increasing every year, will be financed in 20 years' time, to the detriment of a smaller working population.
As has already been pointed out by the Bank of Spain and the Spanish Government itself, the pension schemes are becoming an increasingly essential alternative, receiving the support of the tax advantage of a tax allowance that can be as high as 8.000 € contribution per year (New January 2021: contribution limited to €2,000 per year)
If you want us to help you supplementing your retirement pension, If you are looking for both financial and fiscal profitability, contact us and put yourself in good hands.
