Else Beekman
The world upside down: Retirees in Spain now enjoy higher incomes than their counterparts across the European Union, even as the rest of the Spanish population lags behind in earnings.
According to a study by the BBVA Foundation and the Valencian Institute of Economic Research (IVIE), Spaniards aged 65 and over have a median income 6.4% above the EU average. In contrast, working-age Spaniards earn 7.3% less than their European peers.
Growing pressure on the state budget
According to newspaper El Confidencial, these data point to the growing influence of Spain’s senior population. Seniors account for 35% of the population and are projected to reach 43% by 2070. This demographic shift will not only shape national policy due to the electoral weight of older citizens but also place mounting pressure on the state budget. Pension spending, already exceeding €50 billion in annual deficit, is projected to rise from 13.1% to 17.3% of GDP by 2050. The growing dependency ratio means millions more workers would be needed to sustain the system. While reforms have helped protect retirees’ incomes, Spain’s fiscal watchdog warns that long-term sustainability remains unresolved.
Despite the challenges, Spanish pensioners are uniquely well-off. Thanks to generous pension policies, such as high replacement rates and indexation to inflation, they have weathered recent economic shocks, including the COVID-19 pandemic and subsequent inflation, better than younger generations.
Better living standards for seniors
The median annual income for Spaniards aged 65 and over is €19,320 per capita, exceeding the EU average when adjusted for purchasing power. Conversely, those of working age have a median income of €19,545, significantly below the EU median.
Senior Spaniards are less likely to face poverty or social exclusion and tend to own more net wealth. Much of this wealth is tied up in property, which has recently appreciated significantly. With homeownership concentrated among older age groups, rising house prices have widened the wealth gap between generations. For younger and immigrant populations, it is harder to buy property.
A typical household led by someone aged 65–75 now holds net assets of €226,000, nearly triple that of a household headed by someone aged 35–44.
Income gaps based on education
Spain’s economic inequality is also reflected in the disparity among pensioners based on education. Retirees with higher education earn nearly double those with only basic schooling: €30,864 versus €16,807 annually. The income gap between education levels among Spanish seniors is greater than the EU average.
Interestingly, the income of Spanish retirees closely matches that of the working-age population. While Eurostat data shows pensioners earning slightly more, the BBVA-IVIE study suggests a marginal 1.2% shortfall, attributable not to earnings, but to the lower education levels of the older population. Adjusted for education, pensioners consistently earn more than workers across all qualification levels. The disparity is most pronounced among those with secondary or vocational training, where pensioners earn 26.3% more.
Income gap continues to grow
Thus, pension income is the only income category in which Spaniards outperform the EU median. In all other age groups and employment situations, whether employed, unemployed, young, or old, Spanish incomes fall short.
The study concludes that recent pension reforms, which maintain purchasing power and high replacement rates, are reinforcing this imbalance. As a result, the income gap between pensioners and the rest of the population continues to grow.
Also read: The benefits of new digital pass for pensioners in Spain