Health conditions are improving, life expectancy is increasing, and the average retirement age in Spain is rising, and currently stands at 65.1 years, with data from 2023, exceeding 65 years for the first time, as explained to La Vanguard the Minister of Inclusion, Social Security and Migrations, Elma Sainz. “It is important that we are aware of how we are evolving, what our lifestyle habits are like, what the composition of our society is like. And that is why it is a good message that the real age is close to the legal retirement age and that whoever wants can prolong their working life while also having additional benefits,” commented Sainz.
The perception of age changes, and the way we live after 60 has been transforming for a few years: we are more active, we still have many expectations ahead of us and we face what remains of life with a new perspective, if fulfills the good health factor. According to Government data, in 2022 the percentage of people who opted for delayed retirement rose to 5.4% of people who retired, while in the first quarter of 2023 it grew to 7.8%.
“Delayed retirement is different from what is known as active retirement, which would be incompatible. The worker can choose one or the other,” explains Miguel Arenas, labor lawyer of the Ronda Collective and member of the Labor Law Section of the Illustrious Bar Association of Barcelona. There are two requirements to opt for delayed retirement: having contributed a minimum of 15 years to Social Security (the minimum time to access the retirement pension) and having reached the minimum ordinary retirement age set for the current year. Furthermore, the third implicit requirement is that the person must continue working from retirement age and also contributing to Social Security.
It is worth remembering, as Arenas explains, that the minimum retirement age is currently marked by two parameters: to retire at 65 years of age you must have contributed for 38 years. If you do not have contributions for those years, the age is 66 years and six months. “This current transitional period will end in 2027, when 38 years and 6 months will be necessary to retire at 65, and if the retirement age is not reached it will be at 67.”
The benefits of delayed retirement for the worker are economic supplements for retiring later, and there are three options or ways to receive these incentives.
What total incentive can be collected? It is difficult to establish a maximum “but it has to do with whether the person receives the maximum retirement pension, which this year is 3,175 euros. There is no maximum amount to receive. Furthermore, it also depends on the years of contributions: if you have contributed for more than 44 and a half years, you will receive a higher retirement pension,” explains Arenas. Let’s review a couple of examples that the lawyer offers.
An important aspect to keep in mind is that “the bonus as a “lump amount” (in a single payment) is subject to personal income tax and this can have a relevant impact on the income tax return of the person who receives it.” Arenas also adds that the majority of people who are taking advantage of this delayed retirement do so by increasing the pension by 4% for each year worked after retirement age.
On the other hand, a benefit for companies and also for self-employed workers “is that from the moment the ordinary retirement age is reached, if the worker continues working and contributing, the contribution is very reduced,” according to Arenas. Fuster Güell lawyers point out that “companies in which workers who choose to extend their working life carry out their activity will be exempt from contributions for common contingencies of workers who delay retirement, except for temporary disability. In addition, they will have a 75% reduction in contributions during the temporary disability situation of workers who have turned 62 years old.”
To make the decision with all the possible information and well-made calculations about what we are going to receive, it is necessary to know what economic benefit delaying retirement will bring us. The retirement simulator available on the Your Social Security portal allows you to make an estimate of the retirement pension that will correspond to you based on your current employment data. “This simulator allows you to modify personal situations such as the intention to extend your working life to make this estimate and compare it with retirement at ordinary age,” as explained by Social Security.
Although a few years ago the percentage of people who wanted to retire early grew, now more and more people choose to delay their retirement. “This is a matter of opportunity: workers with qualified professions and high pensions usually take advantage of this option. A person in the cleaning sector or a construction worker does not consider working for more years,” says the lawyer. “Calculating the delay in retirement brings more benefits to those with high pensions and these are the ones who are most interested,” he adds.
Although 70 or 75 years of age is often referred to as the retirement age limit, there is no such fixed age; Social Security does not impose a limit for remaining active. Retirement is a right of workers, not an obligation, although it is true that in cases such as public officials the obligation to retire upon turning 65 is declared ex officio. There are some exceptions: university professors can retire at age 70: magistrates, judges, prosecutors and lawyers in the Administration of Justice are forced to retire at age 70, like property registrars who began working before 2015.
