With a life expectancy of 82.8 years, Spain is one of the twenty countries in the world with the longest population, according to the Collection of information about the world of the CIA. A trend which will increase, since, according to the OECD, by 2050 it would be around 90 years. Although longevity is a great achievement for societies, it also poses significant challenges. Above all, if we consider that from 2030 the generation of baby boomthe largest since it represents more than 20% of the Spanish population.
In the case of economic resources, many people are not ready to face this step. According to a study by the Family Savings Observatory, 70% of elderly people do not plan their future expenses and income, and 43% of the population not only do not plan, but doesn’t even check bank statements.
“As a society, there are still gaps in financial preparation for a life that can extend up to 30 years after retirement. Although young people and adults recognize the importance of saving, the percentage real income allocated to it is generally insufficient”, ” says José Manuel Jiménez, director of the Santalucía Institute Precisely, the studies of this platform indicate that the average savings of young people, for example, is around 8, 6%, while 76% of retirees in Spain regret not having saved morewhich shows the gap between awareness of the problem and the actions taken.
In this sense, according to the 2021 Financial Skills Survey, 38.8% of the Spanish population consider that in economic terms they have planned their retirement regularly or poorly and, approximately, 97% of people believe that the system public pension will be a source of income in retirement. “We are underprepared because we rely too much on the public pension system, while We ignore certain aspects that jeopardize financial forecasts facing retirement”, warns Sara Fernández López, professor of financial economics and accounting at the University of Santiago de Compostela. The expert highlights three aspects in this regard:
- Believing that in retirement we will be physically and cognitively more or less as we are now. “However, the probability of suffering from problems due to age increases. In fact, the dependency rate of the Spanish population over 64 years of age has continued to grow until reaching 30.91% of the population in 2023. These situations will have a serious impact on family budgets, since they usually involve the need to hire a caregiver, an aspect that is often not included among the financial forecasts for retirement”, emphasizes Fernández López.
- The tendency to have children later and later. “In 2019, 10% of people born in Spain had mothers over the age of 40. When these mothers and fathers reach retirement, their children will often be at an age where they will still need to be financially supported by their family,” he recalls. teacher
- Access to property (and a mortgage) later and later, around age 41. “As a result of these last two factors, a household entering retirement may find that, unlike previous generations, the burdens derived from age (greater dependency and probability of manifesting illnesses) are added to those derived from “a mortgage and continue to provide for his descendants without the ability to become financially independent”, summarizes Fernández López.
At the same time, we must not forget precariousness of youth employment which, combined with aging, calls into question the viability of the retirement system. In fact, Spain faces a youth unemployment rate of 26.6%, more than double the global average, according to the latest data from the World Labor Organization (ILO). “Job insecurity generates contribution gaps which, in the future, will result in insufficient pensions, so that workers who enter the labor market today run the risk of reaching retirement with few resources,” explains José Manuel Jimenez.
The cost of aging
Obviously, the increase in life expectancy not only means that we can live longer, but also increases the risk of loss of autonomy and the need to rely on help from third parties. “Spanish society is not aware the fragility involved in the vital process of aging. The perception of the need for care in old age is not anchored as a need that must be protected in the vital stages preceding dependence,” indicates José Miguel Rodríguez Pardo, president of the Mutualidad Abogacía Foundation School of Thought.
As the study shows Economic dimensions of longevity: data from the Spanish caseof the BBVA Foundation, the oldest people, due to their advanced age, are most likely to become dependent. This age group has a higher prevalence of chronic diseases and is more likely than other age groups to become frail and dependent. Indeed, according to the Ministry of Health, the increase in life expectancy at 65 recorded over the last decade has been accompanied by a reduction in years of healthy life, both among men and among women, and an increase in years of dependency and dependency. disability.
“The costs associated with caring for older people, such as residential care, home help and home adaptations, can be significant. These expenses are often underestimated or is not considered until the situation becomes urgent. Many people believe that the public system or family members will cover all needs, which is not always viable. You have to show foresight,” underlines the president of the Santalucía Institute.
According to the study What is the value of informal care in Spain?at BBVA, the cost of an external caregiver could be between 17,000 euros/year, in the event of mild dependency, and 32,000 euros/year for severe dependence. “Compared to these figures, the average retirement pension in Spain in 2024 is 1,441 euros per month. It is enough to multiply this figure by 12 months to realize that practically the entire pension would be used to pay for child care. a member of the household with a slight dependence and would not be sufficient in case of serious dependence”, underlines Sara Fernández López.
In this sense, as the BBVA study explains, in general terms, despite their scale and importance, these costs are generally not revealed and their magnitude does not appear on the tables of decision-makers at the highest level at the time of the policy design. distribution of resources between the different lines of action, since, unlike health expenditure or professional services, there is no budget item linked to the family resources used, so in some areas they have been classified as “invisible costs”. What is not defined cannot be measured. What is not measured does not exist and therefore cannot be improved.
“Spain has begun to realize the implications of longevity, but education and training efforts aimed at preparing citizens for a longer life and the financial challenges that come with it are still insufficient. Financial education and preparation for longevity are not fully integrated into general education or the public agenda,” says José Manuel Jiménez.
The need for financial education
Although in Spain more and more efforts are being made to improve the financial education of the population, Sara Fernández López recalls that “they are not sufficiently focused on how to meet the challenge of longevity. They are very evident among the young populationwho often still remain in the education system, and for whom retirement is very far away.
According to the professor of financial economics and accounting at the University of Santiago de Compostela, “they should be carried out campaigns including target are people over 45 or 50 years oldto prepare for retirement. For example, there could be a larger tax credit on retirement plan contributions in exchange for a 2 or 5 hour course (which may be online) on savings and investment forecasting. retirement expenses.
All the experts consulted in this way agree on the fact that there is no lack of interest by the population in terms of financial training. For example, a study by the Santalucía Institute reveals that 52% of Generation Z want to improve their financial skills. “It is necessary to offer clear and practical financial education, adapted to the real needs of people,” explains the director of the Santalucía Institute.
In his case, José Miguel Rodríguez Pardo argues that “one of the most effective levers to achieve an economically independent, and therefore autonomous, old age is financial education from childhood until after retirement.” Concerning this last vital step, “everything remains to be developed, the citizen in the retirement phase does not have the appropriate financial skills to manage his assets in a life horizon of more than 20 years and with health risks and the need for care. » In this sense, economic independence must be harmonized with inherited assets, “without arriving at the maxim according to which any inheritance is a poorly managed asset during life. A balance must be achieved and for this financial education is very relevant.”
