You have probably heard about the three different types of retirement: early, forced and voluntary. But what exactly do they all mean? When can you start collecting retirement benefits, and what are the differences between all three types?
In this article we will analyze the differences between early, forced, and voluntary retirement. We’ll explain exactly when you can start collecting benefits and what each type of retirement may entail. In addition, we’ll answer some common questions you may have regarding early retirement. So, if you’re approaching retirement age (or just curious), read on.
Early retirement entails retiring before the age established by the legal framework. Within this, we find voluntary early retirement, which occurs when the worker retires 2 years before the legal age. In order to be able to opt for early retirement, certain requirements must be met. For example, the employee must have contributed to the social security system for a minimum period of time.
But keep in mind that, if you want to continue working beyond the age of 65, it may also be possible and even advisable in some cases if you want to receive a higher sum of money. To opt for this option, you would only have to continue contributing to the Social Security, be it as a self-employed person or as an employee for someone else.
You may be wondering what the difference is between voluntary early retirement and involuntary or forced early retirement. Voluntary early retirement is when you retire before the official retirement age, but it is something you choose to do. Involuntary early retirement, on the other hand, is when you are forced to retire earlier than planned due to certain circumstances such as job loss or closure of the employing company. These cases are very specific and are usually found in large corporate restructuring layoffs. Among them we find the collective layoffs that can occur by large companies.
Forced involuntary retirement can occur up to four years before the official retirement age, depending on the situation. In addition to this first requirement, we must also meet a minimum period as job seekers and prove that we have at least 33 years of previous contributions.
Let’s suppose you decide that you want to retire a little earlier, at 62 years of age. That’s perfectly fine; in fact, it may even be advisable. But the question always arises as to what kind of pension you can expect to receive, and here we encounter both good and bad news. The bad news is that we will receive a lower economic amount than if we retire at 65. And the good news is that we would continue to receive a monthly payment that would vary according to the previous years of contribution. Basically, the less time we wait to retire, the
lower the amount of the pension.
A worker can retire two years earlier than the legal age if he/she wishes to do so. The law establishes that at least 35 years of contributions must have been contributed in order to be able to retire voluntarily.
To conclude, we can say that the main differences between the various regimes we have seen are that early retirement can be taken voluntarily by the retiree, while forced retirement occurs when an employee is dismissed or terminated for other reasons. On the other hand, voluntary retirement occurs when the retiree decides to leave his or her job before reaching
the age of 65.
Forced retirement can be difficult to cope with, but it can also carry some advantages, such as a termination payout. Voluntary retirement is often considered the best option because it allows the employee to leave on his or her own terms.
Whichever type of retirement you choose, it is important to consult with an expert to ensure you are making the best decision given your circumstances. That’s why at Employing In Spain, we have professionals on hand to help you fully understand the best option considering your particular circumstances, so get in touch today!