Early retirement is one of the dreams of workers who want to retire from active life to enjoy their retirement stage. Not everyone can do it, but there are certain citizens who, if they meet a series of requirements, can retire at 63 years of age.
To know who these workers are, one must be familiar with the legislation on early retirement and the ordinary retirement age . The regulations establish that workers can retire up to two years before the ordinary age, which in 2021 is 65 years for citizens who have contributed at least 37 years and three months . Therefore, it will be these people who have the option to retire at 63 years of age.
But they should not only have that minimum quoted period. Social Security includes other fundamental requirements to be able to retire early at that age. They are as follows:
-To be registered with Social Security or in an assimilated situation.
-Have at least two years of the last 15 years prior to the retirement application.
-The resulting pension must be higher than the amount of the minimum pension remaining at 65 years of age.
What will be the amount of your pensions?
To find out the amount of the pension, you must go to the Social Security calculation method , which takes into account the contribution bases of the last 24 years, a total of 288, an amount that is divided by 336. The resulting amount it is the regulatory base.
Subsequently, you have to take into account the years worked to know what percentage of the regulatory base you are entitled to. It takes 15 years to access the minimum pension or 50% of the regulatory base, and from that moment on, 0.21% of the regulatory base is added for each of the first 106 months of contributions and 0.19% for each of the following 146 months. According to these parameters, the worker has to contribute 36 years to be entitled to a pension amounting to 100% of the regulatory base.
But for early retirement workers, the story doesn’t end there. As compensation for this early retirement, the system considers pension reduction coefficients that depend on the period of retirement advance. It is a model that the Minister of Social Security, José Luis Escrivá, has remodeled with the intention that by the end of 2021 new monthly coefficients that directly affect the amount of the pension will be finally approved.
For the moment, the coefficients have not changed: they are quarterly and affect the regulatory base. Workers who want to retire at 63 years are only affected by the coefficients of the first year in advance (the following would imply a retirement at 64 years) and are the following:
-For workers with less than 38 years and six months of contributions : retirement between 24 and 22 months in advance has a reducing coefficient of 16%, retirement between 21 and 19 months in advance has a coefficient of 14%, retirement between 18 and 16 months in advance has a coefficient of 12% and retirement between 15 and 13 months in advance has a coefficient of 10%.
-For workers between 38 years and six months up to 41 years and six months of contributions : if they retire between 24 and 22 months before the reduction is 15%, for advances between 21 and 19 months the reduction is 13.1% , for advances of between 18 and 16 months it is 11.3% and for advances of between 15 and 13 months the reduction coefficient is 9.4%.
-For workers between 41 years and six months and 44 years and six months with contributions : if they anticipate their retirement between 24 and 22 months the reducing coefficient is 14%, if the advance is between 21 and 19 months the coefficient is 12 , 3%, if the advance is between 18 and 16 months the coefficient is 10.5% and if retirement is advanced between 15 and 13 months the coefficient is 8.8%.
-For workers over 44 years and six months of contributions : early retirements between 24 and 22 months have a reducing coefficient of 13%, those between 21 and 19 months have a coefficient of 11.4%, those between 18 and 16 months have a reduction coefficient of 9.8% and retirements of between 15 and 13 months have a reduction coefficient of 8.1%.
However, it may be the case that, after the application of the reduction coefficients on the regulatory base, the resulting amount remains above the maximum amount of contributory pensions (2,707.49 euros per month in 2021). This occurs in the cases of high salaries of those workers who contribute above that maximum pension. For these people, Social Security establishes reductions of 0.5% per quarter in advance to the amount of the pension.
The idea of Minister Escrivá is to also modify these retirements with the pension reform and apply the same reducing coefficients as to the rest of voluntary retirements.
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