Next year, the statutory retirement age was raised to 66 years and seven months. The good news has been pushed back to 2023, when the age for retirement benefits will drop to 66 years and four months for the first time in the country. This is a reduction of three months from the age for the old-age pension required in 2022 and two months from 2021. This decline was due to a decline in life expectancy at age 65.
Data published by the National Institute of Statistics (INE) showed that this indicator, which measures the average number of years a person must live after reaching age 65, dropped to 19.35 years in the 2019-2021 triennium. An evolution that, according to INE, is the result of an increase in deaths in the context of a pandemic.
However, workers applying for early retirement in 2022 will have a lower penalty in the amount of their old-age pension due to the resilience factor due to the decline in life expectancy at age 65 in the 2019-2021 three-year period.
The reduction related to the sustainability factor applies to pensions requested in advance, except in exceptional cases provided for by law. These old-age pensions are also subject to a reduction of 0.5% for each month of waiting, taking into account the age of access to the old-age pension or the personal age to access the old-age pension.
Just this week, the OECD criticized the Portuguese resilience factor, created in 2007, which was later revised, and praised the simplicity of its calculation formula. And the warnings don’t end there. The pandemic crisis will delay the entry of many young people into the labor market, who will receive less money. The OECD warns in a study that shows an increase in the retirement age in Portugal.
“However, for future retirees, the crisis can cast a shadow on retirement. Young people have been severely affected by the economic and social impact of the crisis, and their future benefits could diminish, especially if the pandemic results in long-term scars and career difficulties. ”
However, not all employees intend to stop working after reaching the statutory retirement age. In fact, those who continue their professional activities are rewarded. If you only retire after 66 years and 6 months, you will have access to a subsidized pension. The amount of this bonus depends on the number of years during which the contributions are made. For every month above the statutory (or personal) retirement age, you receive a percentage increase in your pension.
This percentage is multiplied by the number of months you worked after reaching retirement age.
Alternatives Experts have been warning about the problem for a long time. Your best bet is to create alternative solutions so you can live more freely. The offer is varied, and you only need to choose what works best for your occasion.
To better achieve this goal, you must set goals, time frames and savings in order to monetize this amount. Ideally, to make sense, savings should be in the order of 5-10% of monthly wages over a lifetime. But there are experts who advise consumers to save 10% to 15% of their monthly salary. For this reason, discipline is one of the golden rules you must follow to ensure a quieter retirement.
In addition, he must invest in products that guarantee a return on capital above inflation – a general rise in prices affecting the purchasing power of money – a situation that is not always cared for at the moment. For example, one thousand euros today may be worth less in the future, and the reason is the devaluation of money caused by inflation.
It is ideal to place bets on products that guarantee high returns, and in most cases, this bet will eventually fall back on products with no capital guarantee. The truth is that returns vary, but this risk also allows for higher returns.
Setting a fixed salary for savings and scheduling transfers can help keep savings accurate. And in this case, to make the task easier, you can ideally save money when you receive your paycheck.
The sooner this task starts, the better. This is because the more time you have before retirement, the more opportunities you have to see your money grow by capitalizing on your investments. But let’s face it: if you are 50 years old and you save € 75 a month for your retirement egg and apply that amount to a product that brings you an average of 4% a year, you will reach retirement age. with savings of just over 18 thousand euros. However, if you start saving 15 years earlier, your investment will reach 51,000 euros.
Alternatives
Savings and Pension Plan (PPR)
The main advantage of PPRs was the tax relief they provided, as they allowed them to withhold 20% of annual payments of up to € 300, € 350 or € 400, depending on the age of the subscriber. But since 2015, the rules have changed: restrictions are based on age (€ 400 under 35, € 350 for 35 to 50, or € 300 for those over 50) combined with limits on the total amount of deductions. to the collection.
Most PPRs have guaranteed capital, so the risk profile is moderate. According to Deco, those less than ten years away from the reform should not have to deposit more money in PPR in order to be able to buy back in 60 years without problems. People between the ages of 40 and 55 can continue to invest because some have higher interest rates than deposits.
Reform certificates
They are also known as State PPR. The product was launched in March 2008 and at the time represented an alternative to the pension supplement. You can withhold 2%, 4% or 6% of your salary monthly, depending on your age. This means that you will only reach the maximum benefit limit if your monthly income exceeds € 3,645 (subject to a 4% discount) or more than € 7292 (2% discount).
These discounts go to a kind of fund managed by the state. The pension premium will be higher the earlier you join the scheme and the higher the dropout rate. Investors cannot choose the product that best suits their profile and be able to suspend it, but they can only do so in February of each year.
Treasury Certificates
Treasury Savings Certificates (CTPs) have replaced Treasury Savings Certificates, but they remain an alternative to long-term deposits. On average, over seven years of maturity, new certificates bring in 1%. But you have to hold the bonds until the end to get this return.
As with the previous product, the rate increases: 0.7% in the first two years, the rate rises to 0.8%, 0.9% and 1% in subsequent years, and in the sixth and seventh year, payments offer a reward of 1. 3%. and 1.6%. Capital is guaranteed, but despite the possibility of early repayment, it is more suitable for medium and long-term investments.
investment funds
Consists of several separate investments that are applied together in different markets and in different financial values such as stocks, real estate, etc. That is, small investors donate their savings to a professional manager. Whenever the investor wishes, he can buy back the corresponding investment from the fund. They always have the advantage that they have portfolios with some diversification and where small amounts can be invested.
Those who are more risk averse can bet on real estate funds. Those looking for investments in the medium to long term can invest in bond funds, while those looking to avoid risk can bet on equity funds. In fact, the more you risk, the more income you will get.
pension funds
Open-ended pension funds are managed by management companies and aim to fund retirement plans for various participants. However, they don’t have to have any kind of common bond. New membership is always subject to acceptance by the governing body. It should be noted that these funds have varying degrees of stock exposure.
Closed-end pension funds, on the other hand, concern only one participant or, if there is more than one, when there is a business, associative, professional or social connection between them, their consent is necessary for new participants to join the fund. … The supervisor should issue regulatory standards and carry out their reviews.
Investor. See your profile
Have in the account
The risk is directly related to the amount that you are willing to lose in order to ultimately make a certain profit. The greater the risk, the greater the reward. A good way to manage your risk is to diversify your investment portfolio. Do not forget that one of the main enemies of an investor can be his nature. In the realm of emotions, fear and over-ambition, as well as lack of investor discipline, are obstacles to this whole business. Associated with the emotional component, the vast majority of investors are not prepared or determined to incur losses, so they usually create psychological protection to keep their investments.
Conservative profile
The main task of the investor is to preserve the invested amount. For this reason, he prefers low-risk investments and, as such, also has a more limited expectation of return. In this case, he must invest, for example, in time deposits, savings certificates and capitalization insurance.
Moderate profile
The investor is already ready to take on significant investment risk in order to promote sustainable growth of the invested capital in the medium and long term. Invest in real estate funds, for example, as they pose a moderate risk as capital is not guaranteed, but they tend to yield more than term deposits.
dynamic profile
The main goal of the investor is to contribute to the significant growth of his investment portfolio in the medium and long term. In this case, you are taking a high risk in the solutions that you sign and buy. If you find yourself in such a situation, then one of the exits will be a bet on the stock market.
