Young people will have to delay their retirement age if they want a good pension.

MadridThe length of a person's working life has a direct impact on the retirement benefits they receive once they stop working and, consequently, on whether they are forced to postpone or delay leaving the workforce for even longer. In fact, to be eligible for retirement, it is necessary to contribute a minimum number of years, in addition to being of legal pensionable age. However, there are a number of factors that make this path difficult, especially among today's young people. One of these is entering the labor market later, as confirmed by a study by the Valencian Institute of Economic Research (IVIE) and the BBVA Foundation.

"The later entry of young people into the labor market, with an employment rate between the ages of 16 and 29 15 percentage points lower than in 2007, will make it more difficult to complete working careers long enough to receive a pension at the ordinary retirement age that allows them to maintain their previous standard of living." Specifically, according to the study's projections (which point to the year 2065, that is, in forty years), "young people today who have only been able to contribute for thirty years until 2065 will be forced to retire at 71." In contrast, those with "thirty-five years of contributions could retire at 68, and those with forty years of contributions, at 65."

These projections look at how long and to what age these young people would have to work so that the replacement rate (the difference between the pension and the last salary received) is as small as possible. "The shorter the working life, the lower the pension will be compared to the last salary. This, coupled with lower base salaries, could lead to problems of adequacy and, therefore, a lower level of well-being during working life, but also after retirement," the text states.

The report is based on the employment rate for young people aged 16 to 29. In 2024, it stood at 43.2%, 15 percentage points lower than the 2007 rate for that same age group. However, it should be noted that just before the financial crisis, many young people entered the workforce earlier because the economy was experiencing a boom. But after the Great Recession, the trend changed, and over the years, this group has opted to extend their studies, as organizations such as the Bank of Spain have confirmed.

The study, in addition to questioning the latest reforms to the pension system, points out that one element that could alleviate the future situation of these young people is having sufficient accumulated savings, either through a private pension or through receiving an inheritance. However, the ability to save is closely linked to the income received, as well as the cost of living. In fact, the same report notes that, "in general, young people are more exposed to changes in the economic cycle and the average quality of their jobs is worse": "25.3% of young people work part-time, 12 percentage points above the population average, and the temporary employment rate among employed youth (31.5%) is also higher."

Likewise, the report identifies wages as a third dimension of greater job insecurity among young people: "The wages of young people between 16 and 29 years old are 34% lower than the average, and their income growth throughout their working lives is slower."