Just 28% of Spanish regularly save for retirement

Spain, June 22, 2015

Is this the harsh reality of the financial crisis, or is it more engrained in Spanish culture? Do higher earners save more? This and other issues are addressed in the Spanish report based on Aegon’s 2015 Retirement Readiness survey.

"In Spain we lack a culture of saving. It is evident that Spaniards regularly spend a part of their retirement savings, which can be a huge problem for many families in the long run. It is essential that all stakeholders continue to work to encourage saving among citizens, with the long-term aim of this becoming common practice within Spanish society," explains Jaime Kirkpatrick, CEO of Aegon Spain.

The study analyzes the profile of the population and focuses its findings on two groups: the habitual saver and aspirational saver. A typical habitual saver in Spain is a 45-year old, working full time and with average annual income of 26,000 euros. The aspirational saver is identified as 37 year old, working full time and with an average annual income of 16,300 euros.

...there is no direct correlation between regular savers and higher incomes.

For Jaime Kirkpatrick, CEO of Aegon Spain, "the challenge we face is getting aspirational savers, mostly young people and women, to become habitual savers. One of the most important conclusions identified by the study is that there is no direct correlation between regular savers and higher incomes. Therefore, it is important that people understand that the key to saving for retirement is regular saving, in small amounts."

Lack of planning is also common

Although three-fifths (60%) of Spanish people feel personally responsible for achieving an adequate level of income in retirement, only half (50%) are aware of the need for economic planning for this period. In fact, 47% of the Spanish population has no plan for their retirement and only 28% say they have some plan in writing.

"Poor financial planning may result in many people spending their savings before reaching retirement, which can be a huge problem for those who do not have sufficient income to maintain a comfortable standard of living," explains Jaime Kirkpatrick, CEO of Aegon Spain. "There are many unexpected expenses that may arise during this period and therefore having good financial projection ensures that people avoid unnecessary surprises."

The study also reveals that 65% of Spaniards have no back-up plan, should they become unemployed before reaching retirement age.

Spain, bottom of the ladder in preparation for retirement

The Aegon Retirement Readiness Index (ARRI) measures the level of retirement readiness on a scale of 1 to 10. Of the 16 countries analyzed this year, Spain is among the countries with the lowest retirement planning, ahead of only Hungary and Japan. With a score of 5.1, they are almost a full point lower than the global average (5.9).

Spain in 13th place for the Aegon Retirement Readiness Index

Aegon 2015 Retirement Readiness Index - Spain in 13th position

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"Last year Spain's score was 5, one tenth lower than this year," says the CEO of Aegon Spain. "This clearly reflects that awareness is improving, but there's still a lot of room for improvement. Governments and businesses must continue to provide the necessary tools for society to understand that we are facing a new retirement reality and we must adapt as soon as possible to avoid future problems."

The younger generation are the main focus of this conflict. Two thirds (68%) of Spaniards believe that future generations will be worse off in retirement than today. In fact, it's only when workers reach the age of 40 that they start to become aware of the need to save for retirement. Young people between 20 and 39 years old and women affected by the need to combine work and family, are the most affected when it comes to having the financial resources to save for retirement.

More positive about economic outlook

Despite the crisis of recent years, Spanish perception of the economic situation is improving. 38% of Spaniards believe the economy will improve over the next twelve months and 35% believe that their personal finances will also increase in the short term.
This positive sentiment also applies to the Spanish view of retirement. Five out of ten (54%) say they will retire when they reach 65 and 68% see this period as a positive period where you can enjoy traveling, family, new hobbies or volunteer work.

How Spaniards plan to spend their retirement

Graph of retirement aspirations in Spain - Traveling is most popular

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However, the reality of having enough income to enjoy this stage of life is of real concern for Spanish households. 56% of workers are not sure whether they are on track for a comfortable retirement. This is an even bigger concern for women.

For Jaime Kirkpatrick, "retirement aspirations do not match the financial reality. Unlike other European countries, in Spain many people are convinced that they will stop work once they reach the legal retirement age. However, it is likely that many will be forced to work beyond age 65 if they want to continue to enjoy a comfortable level of income."

The solution lies in the hands of governments, companies and individuals

Businesses, public institutions and citizens themselves must become leaders of change when it comes to saving habits. In fact, 49% of Spanish people say they would be willing to join a pension scheme if their company offered it.

"We believe it is essential that companies set an example, because they are in a position to facilitate and promote savings by offering pension plans that address barriers to savings," says Jaime Kirkpatrick, CEO of Aegon. "Furthermore, they can promote better health among employees through wellness programs, which will help lower costs and increase productivity."

Only 21% of respondents said that their company offers a pension plan to which the company also makes a contribution, while 16% confirmed that their company offers a plan but does not contribute. Also, just 13% said they had enough information to plan their retirement saving effectively.

35% believe that the government should increase funding for Social Security by raising taxes and without reducing pension payments


The Social Security system is also an underlying concern among Spaniards. In fact, 35% believe that the government should increase funding for Social Security by raising taxes and without reducing pension payments.

"Saving is more effective the earlier you start, so this should be instilled in children from an early age," says Jaime Kirkpatrick. "Those in employment should be encouraged to save for their retirement through a company or private scheme. And institutions should encourage reforms that enable employees to remain in active employment for longer and phase into retirement gradually. In short, it is up to all of us improve the system so that everyone can enjoy a comfortable and sustainable retirement. "

The findings of this study they are based on interviews with 16,000 people (14,400 active and 1,600 retired) conducted in 16 countries during February 2015.

Written by: Aegon