Retirement Before 65: Early Retirement and Pre-Retirement in Spain
Retirement is a right that all workers in Spain acquire upon reaching the legally established age, but the path to that moment is filled with legal and economic aspects that must be clearly understood. In this article, we analyse the implications of withdrawing before the age of 65, the reductions that may apply in such cases, and the concept of pre-withdrawal, which has gained relevance in recent years.
The Retirement Age in Spain
In Spain, the withdrawal age has been gradually increasing due to pension reform. Currently, the legal withdrawal age is 66 years and 4 months (for those who have contributed less than 37 years and 9 months) and 65 years (for those who have contributed more than that amount). However, the system allows for some flexibility, leading many workers to consider the possibility of withdrawing before reaching the standard age.
Reductions for Withdrawing Before 65
Withdrawing before the age of 65, although permitted, charges certain penalties in the amount of the pension. These reductions are applied to maintain the financial balance of the public pension system, as early retirement implies a long payment period, which affects the system's sustainability.
The reductions vary depending on how far in advance the worker decides to withdraw. For example, if a worker decides to withdraw at 63 years old, the reduction in their pension may be around 8% for each year prior to the statutory age. It is important to note that these cuts are applied progressively, so the amount of the pension will be reduced based on the number of years brought forward relative to the legal age.
Pre-Retirement: Concept and Characteristics
The concept of pre-withdrawal differences from early retirement. Pre-withdrawal refers to situations in which a worker—generally under a prior agreement with their company—withdrawals before the age of 65 but receives an agreed-upon financial compensation, which may include the coverage of the public pension through an agreement with Social Security. Such agreements typically occur in companies undergoing restructuring or in sectors where the advanced age of employees poses a challenge to competitiveness.
In pre-withdrawal, the worker does not apply for early withdrawal individually; rather, it is part of a collective process in which the company and the employee reach an agreement. The pre-retired worker receives financial compensation that allows them to maintain their income level until they reach the legal withdrawal age.
What You Should Know When Considering Early Retirement or Pre-Retirement
If you are considering withdrawing before the age of 65 or entering a pre-withdrawal process, it is essential to take into account the following aspects:
Impact on the pension: As mentioned, withdrawing early implies a reduction in your pension. Planning and calculating this impact is crucial.
Pre-withdrawal agreements: In cases of pre-withdrawal, the agreement with the company is key. Make sure you fully understand its conditions and how they will affect your income and rights.
Legal advice: Consulting a lawyer specialized in labor and pension law is essential to ensure that you make informed decisions that will not harm your future financial stability.
