everything you need to know about pensions

What is meant by retirement for self-employed workers?

Retirement of self-employed workers refers to the process by which a self-employed worker stops working permanently and begins to receive a retirement pension. This process is regulated by  Social Security and has several particularities compared to the retirement of salaried workers.

Retirement for self-employed workers involves evaluating aspects such as the contribution base , the years of contributions and other specific conditions to determine the pension they will receive at the end of their working life.

Requirements for self-employed retirement

The legal retirement age for self-employed workers in 2024 is 66 years old. However, this limit may vary depending on the number of years you have contributed throughout your working life. Self-employed workers who have contributed for 38 years and 6 months or more can access retirement at the age of 65.

It is important to note that these requirements may change depending on legislative reforms. The minimum self-employed pension for 2024 will depend on the years of contributions and the contribution bases during that period. These and other requirements are described below.

Years of contribution

To qualify for retirement, self-employed workers must have contributed for a minimum of 15 years. However, to receive 100% of the pension, it is necessary to have contributed for at least 35 years.

Contribution base

The contribution base is a crucial factor in calculating the retirement pension. It is calculated by taking the average of the contributions made in the last 25 years before applying for the pension. The resulting regulatory base is used to determine the amount of the public pension that the self-employed person will receive.

Other conditions

In addition to the basic requirements, there may be other specific conditions depending on the self-employed person’s situation. For example, those who have worked in dangerous or poor conditions may be entitled to early retirement.

Calculation of the retirement pension for self-employed workers

For the calculation the following must be taken into account:

Contribution base

The contribution base is essential for calculating a self-employed person’s retirement pension. It is determined from the contribution bases of the last 25 years, averaging these figures to obtain the regulatory base.

Calculation methods

There are different methods for calculating a self-employed person’s retirement pension. The most common method is to apply a percentage to the regulatory base based on the years of contributions.

For example, with 15 years of contributions, you can obtain around 50% of the regulatory base, and with 35 years of contributions, you can reach 100%.

Practical examples

To illustrate how the retirement pension is calculated, let’s consider two examples:

1. A self-employed person who has paid contributions for 25 years with an average contribution base of 1000 euros per month would receive a pension of approximately 700 euros per month.
2. Another self-employed person with 38 years and 6 months of contributions and a contribution base of 1,500 euros per month could receive a pension close to 1,500 euros per month, by meeting the requirements to collect 100% of the pension.

Early and active retirement

Early retirement allows self-employed people to retire before the legal age, provided they meet certain requirements. Generally, early retirement is available from the age of 63, but it entails a reduction in the monthly pension. This reduction may vary depending on the number of years of contributions and the regulatory base.

Active retirement

Active retirement allows self-employed people to continue working and collect part of their retirement pension. It is an attractive option for those who wish to remain active in the labour market while receiving part of their retirement benefits. Self-employed people can collect 50% of their pension while continuing their professional activity.

Differences with the retirement of salaried workers

The retirement requirements for self-employed and salaried workers are significantly different, although they also share some aspects in common.

The retirement age is the same for both groups. Both self-employed and salaried workers must have contributed for a minimum of 15 years to be eligible for a retirement pension.

The calculation of the regulatory base of the pension is carried out in a similar way for both types of workers. If a person has contributed to both schemes, the contribution bases of each are added together to determine the pension. However, if the requirements for accessing two pensions are not met, the pension of the scheme in which the minimum requirements are met must be chosen.

Differences

There are significant differences in the way contributions are managed. Self-employed workers do not have a gap-integration system, so periods without contributions are not compensated in the same way as in the case of salaried workers.

Furthermore, the contribution bases for self-employed workers are calculated based on their annual net income and are subject to minimum and maximum limits established by law. As a result, the average pension for self-employed workers is significantly lower than that of salaried workers.

Benefits and disadvantages

Self-employed workers can benefit from flexibility in choosing their contribution base, which can allow them to increase their future pension.

However, they also face disadvantages such as a lack of unemployment benefits and the need to plan their retirement more independently.

Supplements and bonuses for self-employed workers

Private pension plans are a viable option for self-employed people who wish to supplement their public pension. These plans allow them to save additionally for retirement, offering tax benefits and greater financial security in retirement.

For example, there is a rent supplement for those with non-contributory pensions, as well as discounts on electricity and telephone bills. Specific aid is also offered for self-employed people who have become parents, including maternity and paternity-related benefits.

Tax credits

There are several tax credits available to self-employed individuals who contribute to private pension plans or make other long-term investments. These credits can reduce the tax burden and increase the savings available for retirement.

Additional aids

Low-income self-employed workers can access specific support programmes, such as additional retirement benefits. These programmes are designed to ensure that all self-employed workers have access to a decent retirement, regardless of their income during their working life.

For example, the  Minimum Vital Income is complemented with  oman email list specific aid for families with dependent children, which can benefit many self-employed workers in vulnerable situations.

Special cases of self-employed retirement

Self-employed individuals with disabilities may benefit from what should i do if my ip is blacklisted? additional retirement requirements and benefits.

For example, they can access early retirement whatsapp number  with more favorable conditions and receive disability benefits.

Partial retirement

Partial retirement allows self-employed workers to reduce their working hours and start collecting part of their pension. This option is ideal for those who want a gradual transition to full retirement.

Compatibility with other activities

In some cases, self-employed persons can combine retirement with other professional activities. This is possible under certain conditions and allows self-employed persons to continue generating income while receiving a portion of their retirement pension.

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Conclusion

Retirement for the self-employed is a complex process that requires careful planning. Understanding the requirements, pension calculations and available options is crucial to ensuring a peaceful and financially stable retirement.

Major changes to the retirement age for self-employed workers in Spain will be implemented from 1 January 2025. This change will affect both self-employed workers and employees, with the aim of adjusting the pension system to current life expectancy and the reality of the labour market.

The change in the retirement age for self-employed workers from 2025 introduces stricter requirements that may affect many self-employed workers. It is essential that self-employed workers inform themselves about these changes and plan their financial future and retirement appropriately.