The doubts about the viability of the public pension system continue . The 21 recommendations agreed by the Toledo Pact to make the system sustainable and that will serve as a roadmap in the next pension reform have fallen short .
Therefore, saving for retirement is now more necessary than ever if current workers intend not to lose purchasing power in their retirement stage. To achieve this they have to avoid making 10 mistakes.
Worrying and not caring
This is one of the main mistakes of the Spanish. While most are concerned about retirement, few take it a step further.
“We worry, but we usually leave that worry for tomorrow. Furthermore, although the vast majority of us think that when we retire, the public pension that we will receive from Social Security will be less than the current one, we trust too much in the public system and we do not think about private savings ”, they point out from Abante .
For Isabel Casares, general secretary of the Organization of Pension Consultants (OCOPEN) , “to think that the public retirement pension is going to be enough to maintain the purchasing power that we had before retiring is a mistake.”
For this reason, he considers it “essential that workers plan their future needs and, based on them, calculate what savings they need to accumulate in the long term to maintain quality of life at the stage when less money is entered.”
He recommends starting saving for retirement “from the moment we start working and receive income , so that we have time to supplement the public pension. The more we delay saving, the less benefits we are going to obtain from it ”.
Lack of financial culture.
The limited financial knowledge of the Spanish people lead them to not understand what the future consequences of their economic decisions are.
This is evident in the fact that the financial product par excellence of the Spanish is deposits . “We are not aware that if we leave our money immobile, the only thing we are going to achieve is to lose purchasing power over the years,” they point out from Abante.
Get carried away by the experiences of others
Lack of financial literacy leads many to design their retirement savings like their parents have.
Big mistake when the scene has changed. The increase in life expectancy will make current workers live longer, which means a considerable increase in expenses. They will need more money and will have fewer public resources.
Associate the savings with a specific product and not with a project
Savers often think of a certain financial product to save for retirement, normally, they opt for a pension plan .
They do so without answering key questions such as: When am I going to want to retire? What are my goals for when I stop working? Will the public pension be enough for me? How much does everything I want to do cost? How much do I have now and how much can I save?
Answering these questions should always be the first step before investing for retirement, they recommend from Abante, since “if we do it the other way around we run the risk of investing in a financial product that is not the right one for us.”