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Retirement age to hit 66.7 in 2025

Photo by Oxana Melis on Unsplash

It's confirmed: the average life expectancy has risen again, which means that the legal retirement age will increase next year, reaching 66 years and 7 months.

By law, the retirement age is determined on the basis of average life expectancy at 65. Each year in November, the National Statistics Institute (INE) publishes a provisional estimate of this indicator, which allows the retirement age to be calculated straight away, although it is only confirmed in the spring of the following year.

On Wednesday, the figure for 2025 was confirmed: ‘In 2021-2023, life expectancy at age 65 was estimated at 19.75 years for the total population,’ reads a press release.

From these figures it is possible to realise that the age of access to the old age pension in 2025 will be 66 years and 7 months.

This figure is three months higher than currently. Retirement age as of 2023-2024 wa 66 years and four months.

In 2023, there was a three-month drop compared to the age set for 2022, something unheard of since retirement age was linked to average life expectancy.

“Both the reduction in 2023 and the maintenance of the age for 2024 are associated with the drop in average life expectancy due to mortality associated with the Covid-19 pandemic, and its impact on the older population”.

Early retirement cuts

The data released on Wednesday also impacts pension cuts associated with early retirement. Based on this data, it is possible to see that this cut will be 15.8% in 2024.

By law, the sustainability factor is calculated based on the ratio between the average life expectancy at 65 in 2000 (16.63 years) and the average life expectancy in the year before the pension starts, i.e. in 2023 for those retiring next year.

However, this is not the only cut applied to early retirees. In addition to the sustainability factor, most early pensions are penalised by a cut of 0.5% for each month brought forward in relation to the legal retirement age.

Excluded from these penalties are Portuguese who request early retirement at the age of 60 with at least 48 years of contributions, or who request it at the age of 60 if they have 46 years of contributions and started their career at the age of 16 or younger. The same ‘relief’ is applied to Portuguese professionals considered to be fast-wearing.

On the other hand, if the Portuguese take early retirement at the age of 60 with 40 years of contributions, they are exempt from the sustainability factor, but continue to suffer the 0.5 per cent cut for each month brought forward in relation to the retirement age.

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