In this article, we will explore the key aspects that affect the finances and rights of older people in their retirement, to help you prevent problems, make good decisions, and ensure a dignified old age without any surprises.
Financial planning before and after retirement: decisions that shape the future
Retirement should be a stage of tranquility, enjoyment, and security. However, many people face this life milestone with financial uncertainty, lack of support, or legal confusion.
At Mr. Loris, we believe that well-being depends not only on physical health but also on feeling protected, informed, and accompanied. And this includes fully understanding such important and complex topics as pensions, wills, contracted services, or potential financial abuse.
Before retirement: anticipate intelligently
It is important to anticipate and obtain all the relevant information to make intelligent decisions for the future. Before retiring, make sure to address the following topics:
Calculating the public pension to be received
It is essential to know the amount of the public pension that will be received. Retirement pensions in Spain vary according to the contributions made during one's working life. Realistic planning starts with knowing how much of a public pension you will receive. To do this, it is recommended to consult the Social Security simulator (available in "Tu Seguridad Social") and consider:
- Years contributed (a minimum of 15 to be entitled to a contributory pension)
- Regulatory base: the average of the contribution bases of the last 25 years
- Penalties or bonuses for early or delayed retirement age
For example, a person with 30 years of contributions and an average base of €1,500 will receive a pension close to €1,050 - €1,150 if they retire at the legal age without penalties. This amount usually represents 60 - 80% of their last salary, which can mean a drastic drop in purchasing power.
Supplementing with savings and investment: beyond the pension plan
Since the public pension may not be enough to maintain the desired standard of living, it is advisable to consider complementary savings products that allow you to accumulate additional capital for retirement. Diversification is key. Some options to consider are:
- Individual or employment pension plans: with tax advantages during the contribution phase, but fully taxed as employment income upon withdrawal.
- PIAS (Individual Systematic Savings Plans): very attractive because they are only taxed on interest if maintained for more than 5 years.
- Conservative investment funds: allow for adjusting the level of risk and withdrawing according to need, which provides great flexibility.
- Real estate investment: buying properties to rent out or sell during retirement.
From age 55, it is advisable to rebalance your portfolio, reducing risk exposure and prioritizing liquidity and security.
Debt reduction strategy
Before retiring, it is advisable to pay off debts and adjust your level of spending. This helps to reduce financial pressure during retirement. It is recommended, as far as possible, to:
- Pay off mortgages before age 65, if possible, as it reduces future expenses.
- Avoid long-term personal loans that limit financial flexibility during retirement.
- Use part of your savings to pay off debt if the capital return is lower than the financing cost.
Evaluating housing options
Deciding whether you want to keep your current home, sell it, or rent it out is an important decision. Housing can be an additional source of income if you choose to rent out rooms or sell it and move to a smaller place. Depending on whether you own your home or rent, make sure you consider all possible aspects:
- Homeowners: consider renting rooms, sale with usufruct, reverse mortgage, or naked ownership.
- Renters: evaluate contractual stability and protection against abusive rent increases.
The 2023 Housing Act strengthens the rights of vulnerable tenants, especially older or dependent people.
After retirement: maintaining and protecting assets
Redefining your budget
After retirement, it is essential to adapt your budget to your new financial reality. This includes adjusting expenses to the pension received and avoiding unnecessary costs that you cannot afford. It is recommended to:
- Classify expenses into essential (housing, health, food) and non-essential
- Create a liquidity buffer (6-12 months of fixed expenses)
- Avoid early withdrawals from plans with high tax impact (withdrawing as a lump sum can spike your income tax)
Taxation: avoid overpaying
People over 65 in Spain can benefit from tax deductions. It is necessary to know and take advantage of them to minimize your tax burden. For example:
- People over 65 are exempt from paying tax on capital gains from the sale of their primary residence.
- There is an exemption for reinvestment in life annuities (up to €240,000).
- Possibility of applying reductions for joint taxation with a pensioner spouse.
It is recommended to have an annual review with a tax advisor specialized in older people to detect new savings opportunities, adjust withholdings, and optimize your income tax return according to your personal and financial situation.
Legal and asset protection
As the years go by, it is important to plan not only from an economic point of view but also from a legal one. Anticipating situations of dependency, incapacity, or death allows you to protect your assets, avoid family conflicts, and ensure that your personal wishes are respected. These are the three key pillars to achieve this:
- Preventive powers of attorney: to anticipate possible future incapacity and designate who will manage your economic or personal affairs when the time comes.
- Updated will: avoids disputes, legal blocks, and ensures that assets are distributed according to the owner's wishes.
- Estate planning: lifetime donations with usufruct, inheritance agreements (in regions that allow them), or well-structured life insurance can optimize the transfer of assets and reduce the tax burden on heirs.
A lack of legal planning can lead to frozen bank accounts after a death, prolonged family conflicts, or even complex judicial processes.
At Mr. Loris, we know how important it is to take this step with calm, clarity, and guidance. That is why we have launched a new legal and juridical advisory service specialized in issues related to older people, to help you resolve these matters with security and the backing of professionals who understand this stage of life.
Prevention of financial abuse
Older people are especially vulnerable to fraud and abuse. It is important to be alert and have legal advice to avoid scams or financial abuse. Seniors can also be pressured into signing loans, changing wills, or giving up properties.
Checklist: Financial and legal planning for retirement
Before retirement
- Calculate estimated public pension
- Review years contributed and contribution bases
- Explore complementary savings (plans, PIAS, funds...)
- Pay off debts before 65 if possible
- Reorganize expenses and avoid future financial commitments
- Think about housing: sell, rent, reverse mortgage, or naked ownership
- Consult with a financial or tax advisor
After retirement
- Adjust monthly budget to the actual pension
- Create an emergency fund (6–12 months of basic expenses)
- Take advantage of tax exemptions (sale of primary residence, life annuities)
- Review will, inheritance, and powers of attorney
- Set up alerts on bank accounts
- Be alert to signs of financial abuse or forced decisions
- Evaluate if legal advice and support are needed
Security, peace of mind, and quality of life in retirement
Planning for retirement is not just a matter of numbers; it is a way of caring for the future with responsibility and love. Preparing in advance allows you to live this stage with greater autonomy, tranquility, and dignity. From managing savings and pensions to legal and asset protection, every decision counts toward building a secure and worry-free old age.
At Mr. Loris, we are here to support you with services designed especially for older people and their families, because we believe that well-being is also built through information, prevention, and expert support. Your peace of mind, and that of your loved ones, is our priority.
If you would like to know more about how we can help you, we invite you to discover our advisory service specialized in older people.
