Laying the foundations for a peaceful life after work requires a a well-thought-out retirement strategyThis is especially relevant if, throughout their career, they have held several jobs or alternated between salaried and self-employed work. In Spain, a significant portion of the population works on a series of temporary contracts or maintains several simultaneous activities, which raises questions about how social security contributions are made and how pensions are calculated in these cases.
The objective is twofold: on the one hand, to understand the impact of multiple employment and multiple activities on the contributions, the regulatory base and the retirement ageOn the other hand, it's important to design a multi-income strategy that complements the state pension with investments, smart career choices, and a sustainable spending plan. Furthermore, it's worth considering the well-being factor: staying physically and mentally active is key to... Enjoy a long and high-quality retirement.
Multiple employment and multiple activities: concepts and obligations
In everyday language, they are used interchangeably, but they are not synonymous. Social Security defines multiple employment as the situation of an employee who provides services to two or more companies and contributes to the system. same regimeTranslated: You have two or more employers and they all pay social security contributions for you under the same scheme, for example, the General Scheme.
On the other hand, multiple employment occurs when a person simultaneously contributes to social security. two or more different regimesas someone who works for someone else and is also registered as self-employed. This legal difference changes how contributions are aggregated and affects some limits and bonuses.
Another obligation that should not be overlooked: the situation of holding multiple jobs must be reported to Social Security. Although employers also report this, the ultimately responsible for the notification It is the worker himself. In this way, bases, types, and limits are correctly distributed.
In Spain, and according to the Active Population Survey, they are around 450.000 people in multiple jobsThis figure gives a clear indication of the scope of the phenomenon and why it is so important to understand its consequences for retirement.
Contributions in multiple employment: minimums, maximums and proportional distribution
If you have several jobs as an employee at the same time, the contribution bases are added together within the same Social Security systemHowever, this sum is subject to limits. According to Order TMS/83/2019, the sum of all the contribution bases cannot be less than the minimum or greater than the maximum established for the period, for example, €1.050 per month for the minimum base and €4.070,10 per month for the maximum. maximum base that was described for the aforementioned exercises.
To apply these limits, companies distribute the contributions proportionally to the remuneration they pay. The maximum limit is distributed among all payers in proportion to the corresponding salary in each company, and the minimum is prorated similarly. The idea is that the total contributions respect the limits. neither by excess nor by defect.
There's a key point: no matter how many hours you accumulate across multiple jobs, you can't count extra days of contributions beyond the maximum. A day worked counts for a maximum of one day of contributions. This is an essential concept that prevents the misconception that multiple jobs allow you to... accelerate the counting of years.
In part, a multiplier coefficient of 1,5 To calculate days worked, but the total number of days cannot exceed the number of actual working days. In other words, there's a rule and a limit.
Retirement pension with multiple employment: regulatory base and years of eligibility
When calculating the pension, the regulatory base and the years of contributions come into play. The regulatory base takes into account the following: last 25 years of contributionsThis involves calculating 300 months of contribution bases and dividing by 350, according to the established method. In previous years, such as 2021, 336 contribution bases were used divided by 288 months, a practice that is now obsolete.
If multiple jobs as an employee are accumulated, the regulatory base is calculated using the sum of the bases from all payers, always within the limits. That is why, in many cases, the contribution base may be higher than if there had been only one job, although it will never exceed the maximum established for the period.
Regarding the age of access, the general rule sets ordinary retirement at 66 years if 37 years and 3 months of contributions are not reached, or in 65 years if that period is exceededAccording to the bracket cited for 2021 and which continues to be adjusted gradually until 2027. Multiple employment does not allow for bringing forward the retirement age because, as already indicated, contributions are not made for more than 365 days per calendar year.
In operational summary: multiple jobs allow you to accumulate pension contributions up to the maximum, count a maximum of one day per day worked, and do not accelerate your retirement age. This is a clear framework for manage expectations and plan better.
Official supplements to bolster pensions
There are supplements designed to increase the amount of certain contributory pensions. Among them is the supplement for reducing the gender gap, which applies to pensions granted from February 4, 2021, onwards and which, by 2025, sets an amount of 35,90 euros per month per child with a maximum of four, which can amount to up to 143,60 euros per month, paid in 14 installments.
Regarding requirements, women must be recipients of a contributory pension (retirement, disability, or widow's pension) and have at least one child registered in the Civil Registry. Men must prove that their professional career was affected by birth or adoption, in accordance with the specific conditions published by Social Security.
This supplement is compatible with the contributory pension received and helps to reduce historical inequalities. It is advisable to assess its fit within the retirement income plan, because a small sustained plus improves the annual cash flow.
Investment alternatives to earn extra income
To avoid relying solely on the state pension, it's advisable to develop a diversified investment strategy. A lifetime annuity transforms an initial capital into a guaranteed periodic income for life, which provides stability in the face of longevity.
Investment funds allow diversification across assets, regions, and styles, adjusting risk exposure to each individual's profile. Selection requires considering costs, strategy, consistency, and, of course, understand what you are buying.
Government bonds are a more conservative option and often add a pillar of stability to a portfolio. They can fit as part of a fixed-income basket that cushions the impact of inflation. market volatility.
Real estate remains a classic. Whether through buy-to-let or methods like reverse mortgages, its goal is to generate passive income or convert real estate assets into cash without losing the use of the home in certain ways.
Private pension plans and other retirement savings vehicles can supplement long-term savings. Even after retirement, some allow you to continue contributing. tax benefits which vary according to current regulations. The key always lies in the tax implications and in planning the timing of the redemption.
Career strategies: delayed retirement and career development
Voluntarily delaying standard retirement has its rewards. So-called delayed retirement offers three options: an increase of up to 4% for each full year Overtime work, a lump sum payment upon retirement, or a hybrid model. It's a powerful tool for those who enjoy their work and want to increase their pension.
To access delayed retirement, you must have reached the current legal retirement age, not have previously applied for a pension, and have accumulated at least 15 years quoted and continue working and paying into the system. Once the requirements are met, it becomes a matter of personal strategy.
From April 1, 2025, measures will come into effect that particularly benefit self-employed workers who choose to postpone their retirement, with cumulative incentives and the possibility of combining part of the pension with work activity in certain cases, an approach that opens up new revenue combinations.
It also helps to strengthen your career: seek promotions, negotiate salary increases, continue your professional development, and don't rule out changing companies if better conditions arise. Better salaries today are... contribution bases higher tomorrow, and that directly impacts the final amount.
Why it's a good idea to plan as soon as possible
Planning for retirement avoids uncertainty and maximizes the effect of compound interest. Extending the savings and investment phase allows time to grow. work in your favorThe sooner you start, the more room you'll have to adjust course in response to personal or market changes.
Failing to act in time has costs: cutting back on your lifestyle, taking on more risk than your profile allows, or liquidating assets at inopportune times. With a clear roadmap, you will succeed. stability and freedom to dedicate yourself to whatever you feel like at that stage.
Among the benefits of smart planning are peace of mind, the ability to absorb shocks (inflation, volatility, medical expenses), and the power to decide how and when to spend. Align your goals with a savings and investment strategy to your needs
How much money do you need? Factors, calculation, and useful habits
The exact figure is personal, but there are universal variables: life expectancy, desired lifestyle, expected inflation, healthcare expenses, future income sources, debt, expected profitability, and fixed costs. Putting realistic numbers to each category gives you a quantifiable objective.
- Life expectancyGreater longevity requires more capital or more prudent withdrawal rates.
- LifestyleWhether you're looking to travel, pursue hobbies, or live a quiet life, your budget will dictate the necessary financial cushion.
- Inflation: erodes purchasing power; incorporate a reasonable assumption into your projections.
- Health and care: reserve for treatments, insurance and potential dependency.
- Current and future incomePensions, income, dividends, and rents consolidate the flow.
- emergency fundIt cushions unforeseen events without impacting investments prematurely.
- DeudaReducing it before retirement avoids a burden on the monthly budget.
- Expected return: align the portfolio with your profile and time horizon.
- recurring expensesMonthly and annual list to set your well-being threshold.
As a rule of thumb, the so-called 4% rule suggests that a well-diversified portfolio could sustain annual withdrawals of 4% of the capitalIt's not a law, but a guide that must be adjusted for inflation, return expectations, and your tax situation.
A good method is to automate savings, review the plan periodically, seek supplemental income, and build a diversified and cost-efficient portfolio. Discipline in contributing each month and the flexibility to adjust When your circumstances change, it makes all the difference.
Pension calculators are a handy tool for quickly visualizing figures. If you want accuracy based on personal data and current regulations, the Social Security simulator and specialized banking tools allow you to do so. refine scenarios.
The value of professional advice
A good advisor helps you define your goals, optimize your tax situation, choose the right products, and respond to market changes. That guidance provides criteria and perspective which is often not achieved solely through readings or comparators.
In addition to support, there are professional organizations and associations with training standards, such as EFPA Spain, which represents tens of thousands of advisors and planners. Having someone who speaks clearly about costs, risks, taxation, and realistic alternatives is invaluable. pure gold.
If you don't know where to start, a first look at a retirement simulator will open your eyes to savings ranges, necessary returns, and the effects of delaying or bringing forward decisions. From there, a custom plan will do the rest.
Context in Spain: data, financial education and forecasting
The numbers suggest this should be taken seriously. According to the INE's 2024 Living Conditions Survey, the 5,6% of those over 65 One in six retirees reports great difficulty making ends meet, and another 10,2% are struggling. Nearly one in six pensioners is having trouble covering basic expenses, a situation exacerbated by inflation.
There is also a lack of planning: the SantalucÃa Institute reports that the 39% did not plan Their retirement was well planned, and 28% reached it without savings. That's why financial education, pension simulations, and advice are pillars. As the CENIE's Ten Commandments of Financial Health remind us, our decisions condition future quality of life.
First of all, it's helpful to visualize how you want to live: where you want to live, whether you want to travel, and what kind of care you would like in case of dependency. With that picture in mind, create a budget of your fixed expenses (food, utilities, transportation, home maintenance, insurance, medications, treatments, etc.), and add taxes and inflation and adjust income and savings.
Regarding longevity, the INE (National Institute of Statistics) placed life expectancy in 2023 at 85,8 years for women and 80,3 for menPlanning for 20 or 30 years of retirement is a good starting point to avoid falling short.
To estimate your pension, you can run a simulation on the website of the Ministry of Inclusion, Social Security and Migration. Having this information helps you calculate the gap with your current pension. target income already define how much to save each month.
Taxation and products: what you should know
Pension plans are taxed when you withdraw funds; contributions are eligible for deductions, although these are more limited today. They are useful if you understand their benefits. taxation and feesIn parallel, investment funds offer transparency (each with its own ISIN code), variety, and the possibility of tax-free transfers, allowing for adjustments to the efficient strategy.
Some experts point out that, for long-term savings that won't be touched until retirement, a good fund can be more profitable and have lower costs than certain plans, provided it's chosen wisely. Risk profile and time horizon are key factors. two critical factors when deciding.
If you own a home, there are ways to monetize it: from renting it out to rent advances, reverse mortgages, or lifetime annuities. This should be your last resort if... There were not enough savingsBut it's good to know about it in case it's needed.
Decluttering: how to spend without depleting your savings
There comes a point where the focus shifts from accumulating wealth to spending wisely. Divestment involves converting savings into a sustainable income stream, minimizing the risk of depleting capital too quickly and optimizing its use. tax impact of each withdrawal.
Common challenges: market volatility (even with fixed income), inflation eroding purchasing power, longevity risk, and increasing private healthcare expenses If the aim is to supplement public healthcare by reducing waiting times or improving comfort during non-critical hospital stays, then a flexible plan is needed.
There are several tactics: annual withdrawals at a fixed rate (percentage of assets), a time-based approach using baskets or cubes (short, medium, and long term), or dynamic strategies that adjust withdrawals according to returns and needs. Each has pros and cons; the art lies in combining them to balancing stability and growth.
From a tax perspective, it may be advantageous to first acquire non-deductible products with favorable redemption treatment (for example, PIAs if received as a lifetime annuity and meeting requirements, unit-linked products, investment funds taxed only on returns and based on savings, or SIALP/CIALP) and postpone the instruments of deferred taxation such as pension plans or PPA, whose benefits are taxed in IRPF as employment income.
Don't forget estate planning: regional laws, property location, and personal circumstances will determine the most efficient strategy for transferring assets. An advisor can help you organize your inheritance. taxation and liquidity.
Combining guaranteed income (public pension, annuities) with variable income (financial investments) provides stability and growth potential. Rebalancing the portfolio and adjusting discretionary spending according to market trends and financial health is key. key to resilience.
If you want to calculate how to gradually withdraw your savings, there are specific withdrawal simulators, such as those offered by some financial initiatives, which estimate amounts. duration of capital and sensitivity to profitability and inflation assumptions.
Physical and mental well-being: the other pillar of retirement
Moving daily improves your heart, muscles, and mood. Walking, yoga, or swimming are affordable activities that also facilitate socialization, something vital for a healthy lifestyle. mental health.
Keeping your mind active also adds quality years: reading, board games, music, or continuous learning through in-person or online classes help preserve cognitive function. feeling fulfilled.
If you'd like to learn more about regulations and procedures, you can consult official guides. Here's a useful resource from the Social Security Administration: Download PDF guidewhere you will find practical information about features and processing.
It should be noted that many of the criteria presented here have been adapted to the Spanish context based on public documentation and industry references, including informative analyses. Some explanations have been inspired by publications within the scope of social security and in accordance with the regulations, taxation and healthcare system of Spain.
A solid retirement plan stems from understanding how multiple jobs contribute to your pension, taking advantage of supplemental benefits and incentives like delayed retirement, adding investments that align with your risk profile, and designing an efficient withdrawal strategy. If you add healthy habits and financial literacy to that, you'll be even more likely to succeed. maintain your standard of living and enjoy this stage in peace.