Why I want to retire earlier - When the public system is a fraud

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I’ve read a few posts talking about the topics “finance freedom” and “retire early”. Everybody had a good and respectable reason. In my case I have to say is a little bit different. It’s about scaping from a statal scam and an economic disaster.

I’m going to explain how it is working and paying taxes are in Spain, let me introduce you to the key data.

An unsustainable system

At the time of writing this post, Spain’s unemployment rate is at 16.3%, which is 3.722.900 people. In 2021, probably the number will grow up to four million or more due to COVID-19.

The public employment is at 2.600.000 people and private employment is around 16.576.000. And most important, the number of retired persons who receive a public pension is nearly 10 million. As you see, there are 16.5 million people maintaining 12.6 million public salaries, and I’m not counting all the people that receive welfare.

The problem of public pensions

In Spain, people retire at the age of 65 approximately and our life expectancy is about 83 for men and 85 for women. In the next graph, you can observe the evolution of the average pension in the past 15 years.

Evolution of the amount of the average pension

As you see, the average in 2020 is 1008.83€ per month for a retired worker. However, the average salary for a worker in Spain is about 1700€ per month.

How many workers are needed to pay the salary of a pensioner?

Currently, there are two workers per pensioner, but because this is unsustainable, the government adds the rest issuing debt. Is expected that the number of workers per pensioner will drop to one in the coming years which will aggravate the problem.

The workers of tomorrow will pay for the pensioner of today. If there are needed 5 workers per pensioner, when those workers retire, the system will need another 5 for each one so on, increasing exponentially. This means that the current system is a Ponzi scheme.

It's a lost game

Each month, Spain’s government deduces 40% of my salary on taxes to be spent later on things like education, public health, debt, or the pension system. And with the current model, I expect taxes to be raised, more control over the economic system, and less financial freedom. It’s sad but Spain will turn into Argentina. At least, we don’t have our own currency and central bank which could make things worse.

I don’t want to play this game anymore because I know I'll lose. So, better work hard now and put my money to work for me. And this is one of the reasons why I’m here, I see a nice opportunity on cryptocurrencies and fantastic communities like this one where we can help each other on achieving financial freedom.

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