The baby boomer generation faces a "longer, more expensive, and less protected" retirement, according to EAE Business School.

Sara Herrero, director of the Business and Talent department at EAE Business School, believes that "the baby boom generation faces a longer, more expensive, and less protected retirement than many imagine," and therefore believes that "the system needs a thorough overhaul" and maintains that it is "urgent" to promote financial education so that citizens can make informed decisions about their financial future.

This was stated by this expert, who is also the author of the report "Baby Boomer Pensions: A Guarantee of Financial Independence?" , published by EAE Business School, part of the higher education network Planeta Formación y Universidades.

This study, also prepared by EAE Business School Executive MBA professor Alexis Ortega, concludes that the pensions received by the baby boomer generation, born in the 1960s and 1970s, will not be enough to make ends meet. It highlights that the Spanish pension system has gone from being a funder of the state to one of the most significant consumers of financial resources.

The document addresses the challenges facing the baby boom generation, which began retiring in 2023 and is one of the largest in recent Spanish history. With more than 10 million pensioners , these individuals will receive retirement benefits for longer than previous generations, due to increased life expectancy. This context will determine the future of the pension system, since, as those born in the 1960s and 1970s retire, the financial situation will become more complicated, and therefore, so will the sustainability of the system.

In addition to the increase in the number of people who will receive a pension , the business school report reveals that it is important to take into account the characteristics and needs of the baby boomer generation. Thus, in addition to healthcare costs, we must also consider their lifestyle, where leisure activities—travel, dining out, and entertainment—are part of this generation's habits and routines.

Added to this is the changing family dynamics , as older people increasingly live alone and independent of their children, which increases the individual and family economic burden in terms of care.

Furthermore, it argues that current worker contributions do not cover pension payments in Spain . In this regard, pensions have gone from representing 7.9% of GDP in 2000 to 12.1% in 2023, confirming an upward trend that will continue in the future.

This situation is exacerbated by Spain's economic productivity , measured in terms of per capita income, whose annual growth rate of 0.4% between 2013 and 2022 is "well below" the European Union average (0.8%).

"It's important to understand that contributions are not ultimately intended to finance pension payments, but rather are a type of general tax that contributes to the financing of state priorities, such as infrastructure, healthcare, and defense. Therefore, the key is not only the viability of the pension system, but the overall solvency of the state to meet its obligations," explains Alexis Ortega.

One of the factors that will determine the purchasing power of baby boomers will be whether they have managed to access their own home, since this wealth will make a significant difference in their ability to comfortably face retirement, even if they receive a public pension, according to the EAE Business School study, which warns: "Without owning a property, many pensioners will see their disposable income reduced, having to cope with, among other things, high rental costs ."