More than half of retirees in Portugal say that their monthly income does not cover essential expenses. At the same time, a large proportion of active workers do not have a financial plan for retirement, which puts the sustainability of the Social Security system in the spotlight.
Retirees face budget difficulties
According to DECO PROTeste, a consumer protection association, the survey carried out between April and May 2022 with two representative samples of the population shows that 61% of working people admit that they are not preparing for retirement and that 43% of retirees depend only on their pension as a source of income.
According to the same source, the average difference between the last salary and the pension of those who only have the legal benefit is 471 euros per month.
In 2025, the pension update included a legal increase plus a permanent increase of 1.25% for pensions up to three times the index, with an average increase of around 3.85%.
Among retirees, it is common to reduce leisure and travel expenses, postpone health care and resort to family support to balance the budget. For those receiving lower pensions, small unforeseen expenses can have a significant impact on the ability to pay current bills.
Few active workers plan retirement
Among Portuguese people aged between 25 and 65, 61% admit they have no financial plans for retirement. Some consider it too early to think about the future, while others point to the lack of disposable income as an obstacle.
Among those who save, the majority resort to conservative products with reduced returns over time, such as term deposits or retirement savings plans in the form of insurance.
Between the ages of 65 and 84, just over a third say they have prepared financially to leave the job market. Those who did not do so indicate a lack of income throughout their working lives and financial choices that did not allow them to accumulate a significant supplement to the public pension.
Long-term perspectives and projections
The legal retirement age in 2025 is 66 years and 7 months, adjustable with the evolution of average life expectancy. There are schemes that allow early retirement in specific situations, usually with a penalty on the value of the benefit.
Projections from the European Commission’s Aging Report 2024 indicate a significant reduction in the replacement rate in the coming decades, with the average pension potentially falling to around 38 to 40% of the last salary if no structural changes are made to the system.
According to , these projections highlight the importance of supplementing the public pension with adequate savings and of monitoring legislative reforms.
The Government’s latest information on pension updates indicates a regular increase of approximately 2.8% for the next review period.
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