How To Save For Retirement

Do you want to know how to save for your retirement? The rising cost of living makes it increasingly challenging to make our savings profitable. Here, we share a list of tips to save and invest for your retirement. 


Many people facing the final stretch of their working life face retirement with many doubts to resolve about saving. On the verge of retirement, doubts arise, such as: Have I saved enough? Do I need to save so much for my retirement? How can I save more? From age 25, financial experts recommend investing 15% of our salary in savings for the future. This task is not always easy. If you are concerned about your savings or have not yet started saving, here is a list of ways and tips to save and invest for retirement.  


Set a retirement savings goal 

Setting a retirement savings goal is a complex and challenging personal challenge, unlike saving for a more immediate purchase such as a car or real estate. Before setting a goal, it is essential to ask yourself questions such as the age at which you will stop working when you will finish paying for your home, or how long you will live. These are all complicated variables, but they should be considered. 


The Center for Retirement Research at Boston College says that people should set a goal and start saving around 15% of their income from the age of 25 if they aspire to retire before the age of 62. If you start saving later, experts recommend increasing your savings percentage and reducing expenses. 


Choose where to invest.  

According to the latest data published by the INE, one of the highest inflation rates in history is 9.8%. Anyone saving for retirement will need to invest for their savings to grow. Keeping our money in a bank account or under the mattress will not give us enough return to enjoy our retirement. Below, we provide a list of different investment methods for retirement. 


Adjust your savings percentage to your context 

If you cannot immediately save 15% of your income for retirement, you can start by saving a smaller percentage. It is essential to capitalize on your savings early on. To help you reach retirement savings goals, many financial advisors recommend increasing the amount you contribute to retirement accounts. By 1% each year, reaching at least 15% of your salary.  


On the other hand, experts recommend avoiding lifestyle inflation, which refers to spending more when there is a salary increase or a bonus. From the age of 25, financial experts recommend investing 15% of our salary in savings for the future. 


Pension Plan 

The pension plan is a product that consists of making periodic or one-time contributions and then withdrawing and enjoying them during retirement. The money cannot be withdrawn for at least 10 years, until retirement or in specific exceptions such as severe illness or disability. The contributions made in this plan correspond to previously established profitability and risk criteria.  


Once retired, the capital can be fully withdrawn as an annuity. In annuity until the death of the beneficiary. Or in a mixed form by withdrawing a part at once and the remaining part through an annuity. 


Retirement plan 

Unlike the pension plan, a retirement plan is an insurance managed through insurance companies, not financial institutions. This product has less risk and less profitability; on the contrary, it can be withdrawn anytime. Another big difference is that the retirement plan is not deductible. Although it is not tax-deductible, only the interest generated is taxed when it is withdrawn. 


Sale and leaseback for life 

There are repeated cases in which, in old age, people suffer liquidity problems due to scarce savings and low pensions. To this, we must add a series of fixed expenses such as mortgage payments, water, electricity, or schools that have made savings impossible.  


However, these financial difficulties contrast with a real estate patrimony to which, usually, economic yield is not taken out. Spaniards stand out for saving on housing. Therefore, selling and renting for life is the solution for those who have not been able to save for their retirement but have real estate assets. 


The sale and rent for life is the best option on the market to obtain additional income during retirement. It consists of the sale of the property with a simultaneous lease contract that guarantees that the interested party can continue living in the property for as long as he/she wants.  


This product is intended for people over 65 who want to obtain liquidity during retirement through a single payment or rentals. Being over 65 years of age and being the habitual property, the capital gain obtained from the sale is exempt from income tax. 



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