Planning, savings and enthusiasm: Keys to a happy retirement
Planning, savings and enthusiasm: Keys to a happy retirement
Social Study on Retirement: Expectations and Experiences, promoted by Fundación MAPFRE, offers us a vivid picture of the retired population and those coming up to retirement age. A certain degree of optimism, longing to enjoy themselves and a proactive attitude with respect to the future come up against facts such as greater life expectancy and concern for the coming generations.
Author: Rafael de Luciano | Photos: Latinstock
In Spain those now retiring were born in 1950 and, within a decade, it will be the so-called children of the “baby boom” generation of the 1960s. These are the population groups most clearly affected by the concerns expressed from the political and economic spheres, regarding the sustainability of the economic benefits that, to a greater or lesser extent, workers in our country have been receiving since 1921. Previous to this there were insurance policies that covered various contingencies. As in their subsequent development, they were based on the measures introduced by the chancellor Otto von Bismark in Germany in 1884 and known as social insurance for old age. The underlying concept of this initiative culminated in 1942 when the British economist and politician, William H. Beveridge, proposed his advanced social plans and coined the term Welfare State.
Saving is recommended
The study conducted by Fundación MAPFRE is based on data gleaned from polling 1,200 people who have already retired or are nearing retirement age. They offer us a true picture of how they are living out this stage of their lives, as well as the attitudes of future retirees on forward planning and expectations.
Thus, while 55 percent feel that retirement is turning out as they expected, and 25 percent think it is even better, what is surprising is that the greatest concern of this group, and those about to join them, is the economic future of their children, and that six out of every ten people still working believe they will be worse off as pensioners than they are today.
59 percent recommend saving, reaching their age with a pension plan or some other financial product to supplement their retirement
These concerns reveal an attitude shared by 59 percent of those surveyed: recommend to their children that they save and have the foresight to reach their age in the best conditions, with a pension plan or some other financial product that can complement their state pension. An attitude that can be explained by the current economic situation, but also because 55 percent of those surveyed feel that their savings possibilities are limited. This is why 39 percent of those already retired and 36 percent of those still working have never taken out any specific product to supplement their income during retirement. A mere 13 percent of them declare having been able to save with ease.
The recommendations that both groups say they wish to convey to their children contrast with the lack of concern evident from the fact that seven out of ten citizens, between 50 and 64 years old, have never inquired about the amount of their future state pension. This lack of information influences the low level of saving for tomorrow. However, among those still working, 34 percent have taken out a pension plan or long-term insurance; this percentage drops five points among those who have already retired. Of all these, 72 percent are satisfied with the decision they took.
One curious fact is the attitude of those who took the decision to save with respect to the additional funds they now have; only 30 percent plan to allocate this money to supplement their state pension, compared to 28 percent who declare they have no need to use these savings and will keep them intact to meet unexpected needs.
Saving to enjoy freedom
The Spanish lag far behind their European neighbors when it comes to saving for their retirement. According to the latest data from Inverco, Spanish families save 10.4 percent of their annual income, compared to the 17.8 percent of the Swiss. But, among others, we are also behind the Norwegians (16.4 percent), the Portuguese (12.6) or the Germans (16.4). This is a trend that can be partially – but not fully – explained by wage disparities and the economic crisis. This is because the gap with these countries as regards contributions to savings plans ranges from 1 to 7 percent, although this does not apply to wages. We traditionally invest in property to become homeowners, which reduces the possibility of other forms of savings.
Social changes combined with a higher life expectancy mean that this is starting to change. Spaniards over the age of 40 view saving as being essential and are open to new ways of doing this, whether individually or in collaboration with their companies.
Foresight as opposed to dependence
It is currently not precisely unexpected for Spaniards to exceed 80 years of age. The average life expectancy now stands at 82.98 years, broken down into 85.71 years for women and 80.17 for men, according to official data in 2014. For this reason the so-called “fourth age” (persons aged over 80) will account for over 2,800,000 citizens by 2021, according to statistical forecasts of the CSIC (Spanish Scientific Research Council).
The growing life expectancy and social changes make the need to save imperative for 80 percent of pensioners and 75 percent of citizens currently working
Those already retired and those about to do so are not that keen to talk about the “fourth age”, precisely because it is identified with the age of dependence. Among their chief concerns is that of “not being a burden for their children.” This is the point where, for 75 percent of them, having had the foresight to save and take out a pension plan acquires its full importance: they expect to be able to use these resources to have a solution other than having to rely on their children.
80 percent of pensioners and 75 percent of citizens currently working appear convinced that economic foresight (whether through pension plans or other financial products) is essential for being able to deal with future situations of dependency. This conviction is based on the current life expectancy, together with socioeconomic changes being experienced by society today.
The “fourth age”, people over 80 years of age, will consist of more than 2,800,000 Spaniards in 2021
Changing habits, observable in different areas such as food, sport or health, also entail changes in how individuals manage their economies. Insurance products are already of great importance in the daily life of citizens, in aspects such as the home, transport or health. But now, there is an ever-increasing surge in the numbers seeking savings solutions for a period of life in which, free of imposed obligations, people can enjoy what they have built up during their working life. This marks the start of a new lifestyle, made possible thanks to their foresight, saving to ensure their personal autonomy. I
Resolve your doubts, consult the Guide For Your Retirement
You can “access straightforward information on pensions, the legal reforms affecting them and the solutions offered by complementary retirement plans for the future.” With these words Mercedes Sanz Septién, Manager of Fundación MAPFRE’s Insurance and Social Protection Area, presented a publication which lists the different types of social protection retirement plans that exist in Spain, the conditions for taking voluntary retirement, the concepts taken into account when calculating the amount of the benefits and, what is most important at this time: the different solutions available as regards saving for retirement. In this section, clarity is everything. Therefore, to the question Why should I save? the answer is: “You need to save because the amount of your pension could be reduced in the coming years.” And “the sooner, the better.”
Advice is given on choosing the best product and its tax breaks, on exactly when you can collect it, and on products that complement Pension Plans and PPAs (Insured Pension Plans), such as Long-Term Savings Insurance and Individual Systematic Savings Plans. Get it now on your cell phone or at the website!