Only 16% of baby boomers have a pension plan

The baby boom generation that will retire in the next two decades threatens to strain Social Security accounts with a rise in spending on benefits fueled by the improvements in careers in Spain experienced in the last 20 years. Now, this generation will entrust most of their retirement income to the public pension that they will receive from the State, since the group registers meager levels of complementary savings. Specifically, only 16% of Spaniards born between 1957 and 1977 (who today are between 44 and 64 years old) have a retirement pension plan.

This follows from the X Survey of the BBVA Institute of Pensions prepared by the retirement studies service of the banking entity, which concludes that the majority of baby boomers think that they will have to retire later and that they will have less pension.

In this way, the baby boomers foresee a worsening of their retirement compared to that of those who already enjoy it today. Specifically, 81% of the active interviewees think that they will take more years to retire, while 68% believe that they will receive lower pensions.

Despite all this, the group considers itself a beneficiary and transmitter of social progress: 75% think that their life up to now has been better than that of their parents, and 69% of those who have children believe that, up to now, their children have been able to enjoy a better life than they themselves had when they were their age. However, 70% of boomers consider that the retirement of their generation will be worse, compared “with the life of current retirees.”

high concern

Most of the group is concerned about their retirement and very few would work beyond retirement age (82% are against it). 75% express their preference for retiring as soon as they have secured “a retirement pension that allows them to cover their basic expenses.”

There is a general lack of knowledge about what they will receive when they retire. Up to 75% of respondents do not have a rough idea of ​​what the amount of their pension will be. Among those between 57 and 63 years old, with their closest retirement, the proportion is lower (60%).

60% of employees on the verge of retirement believe that their pay will be less than everything quoted

In any case, the vast majority of active baby boomers (60%) believe that they will receive less than what they have contributed during their working life. The survey shows that the (mistaken) idea prevails among the population that Spanish retirees earn less than what they contributed to Social Security.

This data allows us to suppose that the baby boomers would support a pension that “returned” what was contributed to Social Security throughout their working lives. Getting paid based on what you contribute enjoys broad support among those interviewed. The bulk of the generation will mostly have the public pension as their only income during retirement: this is stated by 57% of the active interviewees. Only 26% affirm that they will have some additional income.

Of the latter, the majority (63%) indicate that this income will come from a pension or individual retirement plan. 31% affirm that they will come from income from properties other than the one in which they reside, and only 2%, from rentals or reverse mortgages of their own home.

One out of every two respondents affirms that they do not have savings for their retirement, while 41% do have them, but do not know if they will be enough to cover the needs that may arise during that period.

Regarding savings vehicles, 16% of those interviewed have an individual pension plan. Of them, before the limit on contributions to individual plans was reduced in 2021, 65% contributed less than 2,000 euros annually. However, two thirds are also the proportion of respondents with pension plans who rate the amount that can be contributed in 2021 (2,000 euros) as very low (20%) or low (47%).

Finally, 88% of those interviewed consider it necessary to guarantee the purchasing power of pensions, as provided for in the pension reform bill. However, 47% of those interviewed say they are not willing to pay more taxes to preserve the purchasing power of pensions. It should be remembered that for the next year 2022, the General Budgets will provide a transfer of 18,000 million from taxes to cover benefits.