Lorraine Williamson
Spain’s pension system is set for further changes in 2025 as retirement becomes more expensive, delayed, and less secure—particularly for baby boomers. Those born between 1958 and 1977 will be most affected by new reforms aimed at addressing the financial pressure of an ageing population.
Since 1 January 2025, the statutory retirement age increased again. Anyone who has contributed to the system for fewer than 38 years and 3 months will need to work until the age of 66 years and 8 months. Only those with longer working careers will still be eligible to retire at 65.
This is part of a reform process that began in 2013. By 2027, the standard retirement age will reach 67 for those without a complete employment record.
Baby boomers hit retirement milestone
The baby boomer generation in Spain begins to retire en masse in 2025. Spanish media outlet El Confidencial reports that around 285,000 people are expected to retire next year, 15% more than in 2024.
Between 2025 and 2050, over 12 million people in Spain will retire. This will increase pressure on the country’s worker-to-retiree ratio. In 2022, there were 2.3 workers per pensioner. That figure could drop to 1.3 by 2050 unless employment rates rise significantly.
A rapidly ageing nation
Spain has one of Europe’s fastest-ageing populations. According to the national statistics agency INE, in 2023 the number of people aged 65 or over reached 10.7 million. That’s 3.2 million more than those under 18.
The average age of the population has climbed to 44.2 years. In cities like Barcelona, there are 171 people aged 65+ for every 100 minors. Valencia and Madrid follow with similar ratios, showing how demographic changes are more severe in urban areas.
Foreign labour eases the burden
Despite this ageing trend, the growth of the foreign workforce is helping to stabilise the labour market. In 2024, Spain added more than 505,000 jobs—40% of which were taken by foreign workers.
The number of foreign employees in Spain has increased to 13.4% of the total workforce, up from 10.4% in 2018. Migrants are filling key roles in construction, hospitality and administrative services.
Spain’s Minister of Inclusion and Social Security has acknowledged that without foreign workers, the pension system would struggle to survive. The government estimates it needs 200,000 to 300,000 new workers each year to balance retirements.
Rising costs and declining security
A recent report from the EAE Business School warns that pensions for Spain’s baby boomers will be “longer, costlier, and less protected.” As people live longer, they draw pensions for more years, stretching the system.
To maintain the system, Spain has already introduced higher social security contributions and new tax measures. However, uptake of private pension schemes remains low. Fewer than 9 million people have employer-backed pensions, and the benefits are often small.
Part-time work after retirement becomes more common
More retirees are now combining pensions with part-time work. Legislative changes allow people to continue working while drawing part of their pension. For many, this helps bridge the income gap caused by lower public pension payouts.
As Spain continues to grapple with demographic change, flexible work options for seniors may become increasingly important to maintaining income and reducing state burden.
Spain´s ageing population