61% of Portuguese workers between the ages of 25 and 65 do not save for their retirement, according to a study by Deco Proteste. Lack of money is the main reason.
Currently, each retiree loses about 471 euros per month, or 6594 euros per year, compared to the value of the last salary, according to the answers given by Portuguese retirees between the ages of 65 and 84 in a survey conducted by Deco Proteste and published today. This is the reality for almost half (43%) of pensioners, whose only source of income is the legal pension paid by the State, either through the Social Security, in the case of the private sector, or the Caixa Geral de Aposentações, which serves the civil service, according to the same study.
The loss of income is a consequence of the reduced concern of Portuguese workers between the ages of 25 and 65 to financially prepare for their future retirement. The Deco Protesto study shows that more than 61% of Portuguese of working age do not save for retirement. The scenario is similar, but less negative, in Spain and Italy, where 69.5% and 66.4% of respondents respectively said they were not saving or investing in financial products to supplement their retirement. Belgians are more concerned, with 58.6% ignoring the issue.
Lack of money is the main reason given by the Portuguese for not saving for retirement. “In Portugal, the percentage is more significant, perhaps as a result of low wages,” according to the analysis by Deco Proteste. On the other hand, there is also an optimistic and false perception of the value of the future pension, which discourages investment in financial products.
Those between 30 and 40 years old today will have a pension equal to only 43% of their last salary, according to the latest study from Brussels.
Almost a third of respondents expect to receive between 50% and 75% of their final salary as a pension. And about a quarter believe they will receive between 75% and 100%. According to the European Commission’s latest Ageing Report, the difference between the last active salary and the pension (known as the replacement rate) will gradually fall from the current 74% to less than half of the last salary from the 2050s. In other words, today’s 30- to 40-year-olds are expected to receive a replacement rate of only 43 percent. It is therefore very likely that today’s workers will have pensions that are much lower than the final salary of their contribution career. Yet the majority of respondents (63 percent) do not know how much they will receive.
Deco Proteste compared the responses of those aged between 25 and 65 with those of the older age group and concluded that the former are more pessimistic about the pension they will receive: only 36% of respondents believe that the amount will be sufficient. Among the elderly, 52% said the pension would be sufficient.
For António Ribeiro, the financial analyst at Deco Proteste who conducted the survey, “the Portuguese reality is very worrying: most Portuguese do not save for their retirement and if they do, they start very late. For this reason, “about 80% of savings are in Retirement Savings Plans (PPR) in the form of insurance, a conservative product with a guaranteed capital, but with low returns,” explains António Monteiro. There is still 22% of the population that prefers to leave their money in term deposits and savings accounts.
The ideal way to ensure a good retirement “would be to start investing as soon as you enter the job market, between the ages of 25 and 30,” recommends the financial specialist. At this younger age, António Monteiro explains, “it’s possible to invest in more profitable products, even if they’re riskier, such as investment funds or PPRs in the form of a fund. Later, “at around 57, it is advisable to transfer the capital from these funds to more conservative products, such as PPRs in the form of insurance,” Monteiro concludes.