Working until almost 70 years of age may be the necessary condition to guarantee a pension similar to the salary received during active life. The age at which people leave the job market, especially for those who are starting their contributory careers today, tends to extend over time, and only around the age of 68 will it be possible to bring retirement closer to the last net salary. SIC Notícias cites a recent OECD study that estimates the requirements to ensure a replacement rate above 90%.
The same source indicates that a young person who started deductions in 2024, at the age of 22, will need to accumulate 46 years of work to avoid suffering cuts in the final value of the pension. This condition only applies when the worker retires at the legal age and maintains a continuous contributory career.
Age rising and pensions to follow
In the coming years, the extension of working life will place Portugal among the countries with the highest retirement ages. If the estimates are confirmed, the country could reach one of the top positions among OECD members in terms of the level of income replacement at the time of retirement. With a career completed up to the age of 68, the amount received upon retirement could exceed 90% of the last net salary.
The publication writes that this approach to final income is not common in most European countries. The European Union average points to a pension equivalent to 68% of the last salary after taxes.
Renovating early can be expensive
There are, however, those who choose to leave early. In these cases, warns the same source, the cuts could exceed 17% next year, reflecting an early penalty. The planned retirement age for 2027 is 66 years and 11 months, a threshold below what is necessary to guarantee the highest replacement rate scenario indicated by the OECD.
The contrast becomes more evident when compared to other geographies. In countries such as Lithuania or Ireland, workers can end their working lives with pensions of between 28 and 33% of their last salary, with retirement ages ranging between 65 and 71 years.
Europe at different paces
It reminds us that, in Europe as a whole, Portugal appears above average when it completes a long contributory career. Even so, the time requirement poses significant challenges to the generations that are starting the activity today. Extending your career means ensuring a pension that is closer to the final salary standard, but also postponing the moment of leaving the job market.
The alternative to this route is to accept a reduction in future value, if the decision to retire is made before the legal limit. In this equation, the choice between time and income becomes central for those planning the end of their working life.
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