Anyone planning to stop working in 2026 will have to review their accounts. The retirement age rises to 66 years and nine months, the highest value ever, and the impact is not just limited to those who are still far from the end of their career. For some workers, this change will result in a direct loss in the value of their pension.
According to the National Statistics Institute (INE), the increase results from the evolution of average life expectancy at age 65, which between 2022 and 2024 was estimated at 20.02 years. This indicator is used annually to adjust the legal retirement age, reflecting the average time each person can expect to live after age 65. The calculation is simple: the longer the life expectancy, the later the retirement age will be reached.
The factor that reduces the value of the pension
The increase in the pension access age has, however, an indirect effect on those who decide to retire early. According to Jornal de Negócios, updating average life expectancy also increases the so-called sustainability factor, a mechanism created to balance the pension system and which, in practice, determines the cut applied to those who retire early.
The newspaper writes that this factor will stand at 16.9% in 2026, the highest value since it came into force. In practice, this means that anyone who submits a retirement request before the legal age will see their pension reduced by almost 17%, not counting other additional penalties.
Accumulated cuts can exceed 20%
The publication adds that, in addition to this initial cut, a reduction of 0.5% is applied for each month in advance of retirement age. Thus, a worker who retires a year early could see his pension shrink by more than 20%. According to the same source, this scenario should lead many to reconsider the decision to move towards retirement next year.
According to the news portal specializing in economics, Contas Poupança, workers with more than 40 years of contributions benefit from a special rule that allows them to advance their retirement age by four months for each additional year of contributions. Still, this bonus does not eliminate the cut, it only mitigates it.
Is it worth retiring now?
The insurance company’s website explains that the decision to request early retirement must be considered carefully, as reductions in the value of the pension are definitive. The financial impact depends on age, duration of deductions and the average value of contributions. According to the same source, it may not be worthwhile to proceed with the request if the penalties are high or if the resulting income is insufficient to maintain the standard of living.
It should be noted that the increase in penalties scheduled for 2026 is a direct consequence of the increase in average life expectancy, and should continue as long as this indicator continues to rise. The final value of the retirement age for 2027 will only be known after a new update of the data by INE next year.
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