Early retirement for self-employed workers
Most self-employed people who reach retirement age receive lower pensions than employees, which is usually due to the fact that they usually pay the minimum amount into Social Security. In Spain, the average pension for a self-employed person is 646.30 euros per month, 10% less than that of an employee. The differences do not end there, the requirements for early retirement for the self-employed also differ from the conditions that apply to salaried workers.
Retirement for self-employed workers: Requirements you must meet
A few years ago, early retirement for the self-employed was not even conceived. In 2007, provision was made for exceptional cases in which there was a disability or activities ghana mobile phone number that were dangerous, toxic or involved a great physical burden. Fortunately, with the approval of the Decree-Law to favour the continuity of the working life of older workers and promote active ageing , now the self-employed can also retire early. In addition, they must have their severance pay .
The requirements for early retirement are:
Being two years younger than the corresponding legal retirement age, taking into account that the retirement age in 2018 is 65 years and 6 months but will increase progressively, so that in 2027 it will be 67 years, which means that you could retire at 65 years old.
Having contributed to Social Security for at least 35 years, although the contribution periods will also increase gradually, so that in 2027 38 years and 6 months will be required for ordinary retirement. It is allowed to count one year of compulsory military service or the substitute social benefit.
Prove that at least two years of contributions were worked within the fifteen years prior to the request for early retirement.
That the amount of the pension to be received exceeds the minimum pension that would correspond to you based on your family situation when you reach 65 years of age.
In the case of self-employed workers, early forced retirement due to the crisis, layoffs or similar situations is not contemplated, scenarios that are provided for in the General Regime, in which case these workers could retire four years before the statutory age, provided that they have contributed for at least 33 years.
Does early retirement pay off if you are self-employed?
Applying for early retirement means that the pension you will receive will be lower than what you would receive if you continued paying contributions for a few more years, so you will have to do the math to see if it is really worth it.
Please note that reduction coefficients are applied depending on the time you have been contributing and the number of quarters you would need to reach the statutory retirement age:
1.5% per quarter for a contribution period equal to or greater than 44 years and 6 months.
1.625% per quarter for a contribution period equal to or greater than 41 years and 6 months and less than 44 years and 6 months.
1.75% per quarter for a contribution period equal to or greater than 38 years and 6 months and less than 41 years and 6 months.
1.875% per quarter for a contribution period of less than 38 years and 6 months.
This means that if you retire at 63 and have contributed less than 38 years, for example, your pension will be reduced by 15% throughout your life.