Retirement, and what is going to be collected, are two of the great concerns of the Spanish. It is one of the factors that ends up determining savings, especially in the more adult stages and close to retirement. But the calculations show that the longer you wait, the worse, because a greater effort will be required to complement the benefit.
Although there are no magic figures for how much you should have saved according to age, when planning personal finances it is usually recommended that 20% of income go to savings. With this figure, at the end of the year you should be able to save about two and a half salaries if you are constant. At five, you would have a full year's salary. For each decade worked, two annuities.
But at the moment of truth it has something of a milkmaid story and it becomes difficult due to the beginning of the working career with lower salaries, the payment of debts, the rent, the unforeseen events, leisure, the education of the children. .. That's why planning is crucial. "You have to consider saving as soon as possible. At first in active life the capacity is lower, because you tend to get into debt with the mortgage. Then it equals out, about halfway through the race, when you enter a stage of saving more "says Santiago Satrústegui, president of the Spanish Association of Financial Planners and Advisors (EFPA). These are precisely some key years: "If at 40-45 you don't have savings, you have to worry. Just as you start to worry about the doctor and health at that age," he compares.
Before planning, it must be remembered that the replacement rate in Spain, which represents the pension on the salary that had been received, is between 75-80%, according to the latest OECD report Pensions at a Glance. That is, when you retire, you start to earn less than when you work. "Despite having one of the most generous systems in Spain, when we retire we are not going to earn the same as today. But expenses are going to stay the same or even go up, because you have more free time," says Paula Satrústegui, advisory partner assets in Abante Asesores.
In this situation, there are two alternatives: adjust expenses in the future to the new reality or find a way to maintain the standard of living. If the latter is preferred, it will be necessary to get down to work beforehand, with a savings and investment cushion that allows you to add your own income to the public benefit. In low salaries and pensions, "the little you save will improve the situation," they expose from the EFPA.
The first step is to calculate the level of current spending and raise a similar income throughout retirement. Let's imagine that Pedro charges 1,500 euros. Since he wants to maintain his style of life and points out that he will have a pension of 1,000 euros, he sees that he will need an extra income of 500 euros per month from the age of 67 to 90, a reasonable life horizon. There are more than two decades to cover. How much money will he need to save to get it?
Looking at several scenarios, if a person reaches 30 years of age without savings and seeks to have an income of 500 euros upon retirement, the savings they will need each year will depend on how much return they get. Experts recommend putting savings to work. Invest so that you do not lose purchasing power. Starting from an inflation average of 2%, the ECB's objective, if from 30 to 67 years of age that money achieves an inflation return plus 1% per year (conservative investor), it will be necessary to contribute 2,968 euros per year to our piggy bank until retirement, according to Abante's calculations. If an inflation rate plus 3% is achieved, the necessary annual savings fall to 1,642 euros.
With 40 years of age and something previously saved (10,000 euros), 3,849 euros will be needed in the first profitability scenario and 2,107 in the second.
Giving the jump to 60 years, the subject is twisted. As it is intended to finance an income to be collected between the ages of 67 and 90, the contribution that will have to be made in the 7 years remaining to retire skyrockets. In a conservative scenario, you have to save 15,223 euros per year and in a more profitable scenario, 10,771 euros.
The later you start, the more uphill it gets. "What these scenarios show is that the sooner you start saving, the less effort you will have to make. And that the effect of profitability makes a difference", summarized from Abante.
The same happens if you seek to supplement the pension with an income of 1,000 euros. Without previous savings, from the age of 30 onwards it will be necessary to save 5,935 euros a year if later what accumulates yields 1% above inflation. Or 3,285 euros if you do it 3% above.
At 40 and already with a savings base of 10,000 euros, 8,130 euros and 4,767 euros per year will be needed respectively.
If the planning has been nil and you reach 60 with 20,000 euros, to get the income of 1,000 euros per month when you retire, the necessary contribution is much larger. For example, if the investor is very conservative and barely beats inflation by 1%, he will have to save and invest 33,476 euros per year.
