A peaceful and financially stable retirement is the goal of many Portuguese people, but relying exclusively on the State pension may not be enough. According to DECO PROTeste, the average value of old-age pensions in Portugal continues to be low and, in many cases, is not enough to cover all essential expenses.
Data from the National Statistics Institute (INE) show that around 70% of pensioners receive less than a thousand euros per month. At the same time, 38.5% of workers choose to retire early, which implies significant cuts in the value of their pension.
Life expectancy at age 65 is currently 20 years, according to INE, which means another two decades of expenses after the end of active life. The European Commission even predicts losses of up to 60% in pension income for those who retire from the 1950s onwards.
According to DECO PROTeste, planning in advance and creating a supplement to the State pension is essential to guarantee security and quality of life.
From 30 to 40 years old: starting early is half the battle
At 30, time is your greatest ally. DECO PROTeste emphasizes that long-term savings benefit from the so-called capitalization effect, in which interest generates new interest, making the accumulated amount grow.
The first step is to draw up a monthly budget and define how much you can save. Small changes in habits can make a difference: bringing lunch from home instead of eating out can mean more than 200 euros saved per month. Invested with an annual return of 5%, these amounts can turn into more than 300 thousand euros over 37 years.
Another essential point is to eliminate short-term debt, especially credit cards. “The effort rate should not exceed 35% of the household’s income”, recalls DECO PROTeste, which recommends avoiding successive consumer credits.
With the accounts in order, the next step is to invest. The organization recommends starting by creating an emergency fund and then investing in PPR with a larger share component or global share ETF, products that allow you to diversify your investment and take advantage of long-term stock market growth.
From 40 to 50 years old: consolidate and diversify investments
At this stage, the objective is to grow assets in a balanced way. “It is important to review the budget and gradually increase the savings rate”, says DECO PROTeste.
Diversification is one of the main rules of financial security. This means not putting all the money in a single product, but distributing it across several options: term deposits, savings certificates, real estate funds, shares and ETFs.
The organization reminds us that investing in funds with income capitalization is advantageous, as the return is reinvested automatically, increasing the effect of compound interest.
From 50 to 60 years old: protecting what you have already built
As reform approaches, the focus must shift from accumulation to preservation. DECO PROTeste recommends gradually reducing risk by transferring PPR from shares to PPR insurance with guaranteed capital, such as Lusitania Poupança Reforma PPR, which offers loyalty bonuses and exemption from commissions for DECO members.
Another recommendation is to create sources of passive income. Investing in funds that pay regular dividends, purchasing bonds with fixed interest or owning rental properties can guarantee a stable flow of income during retirement.
At the age of 60, it is already possible to redeem the PPR, but suggests doing so in a phased manner, taking advantage of the tax benefits and keeping part of the investment to pay off.
Finally, the organization recommends regularly reevaluating the investment portfolio, adjusting risk and reinvesting gains until retirement age.
Financial planning and discipline are the two key words to guarantee a peaceful old age. And the sooner you start, the less effort will be required to achieve a smooth reform, even in a pension system that is already showing signs of exhaustion.
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