The definitive guide to retirement in Spain: everything you need to know (2024)

Some people are counting down the years to retirement, while others want to delay it as long as possible. It doesn’t matter! Retirement, whenever it may be, is a new stage in life and you need to be ready for it. The first step is to think ahead and save. After that, there are lots of other things to think about.

When facing this new stage, you have to take into account the latest changes and developments in pensions, the requirements to claim a pension, how to apply for your pension and how to supplement the pension benefit, among other key questions. At VidaCaixa, we make it easy for you with the definitive guide to retirement in Spain.

Latest changes in retirement in 2024

Minimum and non-contributory pensions grow in 2024. Spending on contributory pensions reached €12.1 billion in November last year, representing more than 11% of GDP.

With the CPI figure published by the Spanish Statistical Office (INE), it is now possible to calculate by how much contributory pensions will rise in 2024, as the annual increase in pensions has been linked to the CPI under the pension reform. Thus, the increase is expected to be around 3.8%, and the new minimum pension amounts are between €813 and €1,003, with average pensions of €1,360.

Among the other developments in retirement in 2024 is the pushing back of the retirement age, which reflects the goal of having a minimum retirement age of 67 by 2027. There is a new increase of two months compared to 2023, and in 2024 those who have contributed a minimum of 38 years can retire at the age of 65, while those who do not reach that figure cannot retire before they have reached 66 years and six months.

Requirements for claiming a pension

As a general rule, anyone retiring at the legal age at any given time must meet the following requirements:

• Be of the legal retirement age. In Spain, this age has been rising slowly but steadily for more than ten years. This process will end in 2027. In 2024, the normal legal retirement age will be increased by two months compared to the previous year, to 66 years and 6 months if you have contributed for less than 38 years. If you have accumulated 38 or more years of contributions, you can retire at the age of 65.
• Meet the minimum required contribution period. The minimum contribution period in 2024 remains the same as in 2023. You need to have paid 36 and a half years of contributions, of which at least 2 must have been paid in the last 15 years.

Early voluntary retirement

On the other hand, those who wish to apply for early voluntary retirement may do so 24 months before the legal retirement age, although this option entails percentage penalties on the monthly amount that the person retiring will receive.

Retirement age: How can you retire early?

As mentioned above, you need to reach retirement age before you can draw a pension. Voluntary early retirement is possible up to 2 years before the normal retirement age. In the case of involuntary or forced early retirement, you can take early retirement up to 4 years before the normal age.

• Therefore, in order to take voluntary early retirement in 2024, you must be at least 64 years and 6 months old if you have less than 38 years of contributions. If you have 38 or more years of contributions, you can take early voluntary retirement from the age of 63.
• In the case of involuntary early retirement, in 2024 it will be possible to take forced early retirement from the age of 62 years and 6 months if you have less than 38 years of contributions, or from the age of 61 if you have made 38 years or more of contributions.

Types of retirement: partial or flexible?

Partial retirement is the most traditional way of combining work and pension. This type of retirement after the age of 60 happens while still having an employment contract or linked to a relief contract with another unemployed worker:

• It is not possible to combine a full-time job with drawing a pension.
• You are entitled to this type of pension if you are an employee or a worker-member of a cooperative and meet the conditions for a contributory retirement pension.
• There are two ways to qualify for partial retirement: with or without a relief contract. In other words, you can opt for a part-time contract or a full-time contract in which an unemployed person partially fills in as a relief worker.

Flexible retirement also allows you to combine your pension with a part-time contract, but this is only for people who are already retired and want to return to the labour market.

There is also so-called delayed retirement, which covers those who decide to remain 100% active and delay retirement. They can also improve their benefits or receive other advantages that are applied to the contribution base:

• If they have contributed for 25 years or less, there is an increase of 2% for each year added.
• If the contribution period is between 26 and 37 years, the increase is 2.75%.
• If 37 years of contributions have been paid, the pension is increased by 4%.

Retirement for the self-employed

According to the study ‘Emprende tu jubilación’ (Plan your retirement), conducted by VidaCaixa and the University of Barcelona, the average pension of a self-employed person is half that of an employee. Here are some tips about retirement for the self-employed:

• Self-employed workers must be very aware of their contribution base when planning their retirement.
• The contribution base you choose when making payments to Social Security can be changed twice a year. The deadline for changing the contribution base is from 1 January to 30 April, with effect from 1 July that year, and before 1 November, with effect from 1 January of the following year.
• More than 85% of self-employed workers pay the minimum contribution base. This means their pension would not exceed €635 per month, almost 50% of the average pension of an employed person.
• 75% of self-employed workers do not think that the public pension they will receive will be sufficient for them once they retire
• Following the latest pension reform, the self-employed are now eligible for early retirement, although the age is not fixed. Instead, it depends on the normal retirement age at the time of their retirement.

How to calculate your retirement pension

The pension situation in Spain is quite tricky, as the ageing population is posing many challenges. The government has had to made adjustments, like gradually pushing back the retirement age and increasing certain taxes to raise funds.

To understand how to calculate your retirement pension and how much you will receive when you retire, you first need to know the numbers to input into the simulation. These include

• The regulatory base. The regulatory base is understood to be the average of contribution you have made during a specific period of time prior to retirement. To calculate the regulatory base you have to take into account the last 25 years, which is 300 months of contributions. Those of the last two years will be calculated at their nominal value, while all previous ones are updated in line with the Consumer Price Index (CPI) throughout that period.
• The percentage of the regulatory base. The worker receives a percentage of the regulatory base according to the number of years they have contributed. To receive 100% of it, from 2027 you will need a total of 37 years of contributions. A minimum of 15 years will be required to earn any pension. With 15 years of contributions, you will be entitled to 50% of the regulatory base. For those who are retiring in 2024, in order to be entitled to 100% of the regulatory base, you need at least 36 years and 6 months of contributions (also applicable for those who retire in 2023, 2025 and 2026).

The pension system is a big challenge, which is why it is vital to plan for your future and your retirement, financially speaking. You can calculate your pension or learn about the products that best suit you and start improving your future straight away.

How to apply for a pension

If you are going to retire, the first thing you need to do is go through all the relevant processes with your company, first giving notice of voluntary resignation due to retirement. This procedure is completed in writing and you can ask for help from advisers and professionals if you are unsure how to prepare it.

The procedure for applying for a retirement pension can be completed on the Social Security Electronic Office website. You can also visit in person, although you must first make an appointment. This procedure can also be carried out on the Social Security Electronic Office website or by downloading the app.

The system provides a locator code, which you will need to use if you return to the procedure, for example to change or cancel an appointment. You must submit the following documents:

1. Correctly completed retirement application form.
2. National ID (DNI) or Foreigners’ ID (NIE) or passport.
3. If someone else is going to attend on your behalf, they must bring proof that they are your legal representative.

How to supplement and improve your retirement

Find out how you can supplement your pension and protect yourself for the future. In Spain, saving for retirement is a task that is still on our to-do list, both individually and as a country. For example, only 1% of companies offer employment schemes to their employees.

However, supplementing your pension income is possible and the only trick is to save money. Here, time and consistency are key. However little you save, getting into the habit of saving and giving your money time to grow is vital in reaching your retirement goal.

People often wonder where to start when they decide to save. VidaCaixa will give you a few guidelines to help you. These are five key factors in the form of questions to help you analyse what you really need and would like for your retirement.

• How will I live my retirement?
• What do I need?
• How much do I need to save??
• How and when do I need to sav
• When should I start saving?

Pension schemes are an investment alternative that offer income tax benefits. At VidaCaixa, we provide you with solutions for your retirement, so that you can choose the one that best fits your age, needs and investor profile. Some benefits of pension schemes are:

• Flexible contributions. You can decide on the frequency of your deposits to suit your circumstances, whether monthly, quarterly, half-yearly or yearly.
• Tax benefits. Make the most of our products and services: pension schemes are the only type of financial product that is deductible against income ta
• Combine schemes to suit you. Our schemes are not exclusive. You can combine them as you wish if you deposit a maximum of €1,500 per year.
• Transfer your money from another entity. You can transfer money from another entity into any of our schemes, choosing the one that best fits your investor profile.

The future is in your hands, save with the peace of mind that you will be able to have a better life when you retire. At VidaCaixa you can find the pension scheme that best suits your profile. Go to our pension scheme simulatorto find the one that best suits you!