Guest Contributor: Elena (Lena) Perepelova

This article was written by Elena Perepelova, a Moscow-born financial educator, coach, and founder of the Women Investors Club and FunFinance® Virtual Business School for Kids. With a wealth of international experience and a deep commitment to helping women gain financial confidence, Lena offers an essential perspective on how to navigate retirement planning as a foreigner in Spain.

Her reflections begin with a powerful personal story—of leaving Russia at 18, building a life across borders, and realising just how few expats are prepared for their financial futures.

If you’re an international living in Spain (or anywhere abroad), this is a must-read breakdown of the Spanish pension system, the risks of relying on outdated models, and how to take back control through smart, values-driven financial planning.

In September 1994, 18-year-old me was leaving Moscow for a university exchange. I still remember that day vividly.

Saying goodbye to my family at the airport and trying not to cry — I didn’t want to make my mum cry either.
Feeling excited and terrified at the same time.
Seeing the perfectly organized Dutch landscape from the plane window and being amazed by how clean and neat everything looked.
Dragging a huge suitcase (without wheels!) over the wobbly streets of Arnhem. I never used that suitcase again. 
Meeting my Polish roommate.
Looking for something familiar to eat at the supermarket — and finding nothing.

Back then, during my first days as a student in the Netherlands, I had no idea I would never live in Moscow again.
And in my wildest dreams, I couldn’t have imagined raising a family in the suburbs of Madrid or building a life across multiple countries and cultures.

That’s the beauty of being an expat.
You never really know where life will take you.
Once you move abroad, you gain incredible freedom — but you also give up a certain amount of predictability and control.

And if it’s hard to predict what your life will look like in 5 or 10 years, it’s even harder to imagine what it might look like when you retire.

That’s why so many expats find themselves unprepared when it comes to long-term financial planning.

Retirement often feels like a distant concept — something we’ll “figure out later.”
But later has a way of sneaking up on us.

So let’s talk about pensions, retirement, and what you need to know if you’re living and working in Spain.

As a foreigner, your expectations about retirement may differ from how things work here in Spain. That’s why it’s important to understand the local structure and terminology — and what kind of support you can realistically count on.

Right now, Spain still offers generous public pension support to current retirees, especially those who in worked the public sector. On top of that, many older Spaniards benefit from real estate wealth — having purchased property decades ago that has significantly increased in value and provides passive income.

This creates a false sense of comfort for future generations. It paints a picture of a happy, stable retirement that may no longer be realistic.

The truth is, just like in the rest of Europe, the Spanish pension system is under growing financial pressure. Gradual reforms are already in motion — and they’ll likely mean lower public pensions, later retirement ages, and more personal responsibility in the years to come.

The Three Layers of the Pension System in Spain

The pension system in Spain consists of three main layers:

1. The state (public) pension, managed by Social Security
2. Pension support offered by your employer (if available)
3. A private pension plan you set up and fund yourself

What Do You Need to Get a Full Public Pension in Spain?

To qualify for full retirement benefits in Spain (as of 2027):

• You must be 65 years old if you’ve contributed at least 38 years and 6 months
• Otherwise, the retirement age rises to 67 years
• You must have contributed at least 15 years, with 2 of them within the last 15 years before retirement

For your reference, the current pension ranges are from €874 for minimum pensions to €1,441 for average pensions, and up to €3,267 per month for the maximum pension.

Why the Public Pension System in Europe Is Under Pressure – And What It Means for You

The basic principle behind any public pension system is simple: those who are working today pay for the pensions of those who have already retired.

But here’s the problem:

• Younger generations are earning less, working under more precarious conditions, and often contributing less.
• At the same time, people are living longer — so there are more retirees, and they’re collecting pensions for more years.

As a result, the number of workers paying into the system is no longer enough to cover what’s being paid out. Simply put, more money is going out than coming in.

That’s why experts say the system is not sustainable long-term and why it’s likely we’ll all need to work longer and receive lower pensions in the future.

Employer-Sponsored Pension Plans (Planes de Empleo)

If your employer offers a retirement plan, this is a good way to complement your public pension. However, only about 10% of employees in Spain have access to such plans.

If your company doesn’t offer a plan, this is something worth bringing up during salary negotiations — especially if you’re in a long-term role.

But even if you’re among the 10% of the “lucky ones” with access to an employer-sponsored pension plan, here’s what you need to know:

• Contributions — combining both yours and your employer’s — are capped at €10,000 per year, or 30% of your salary, whichever is lower. However, in practice, many plans operate well below these limits.
• Many of these plans offer limited or no real growth, which means the amount you’ll receive at retirement may be far less “generous” than you expect.

That’s why it’s essential to understand the specific terms of your current plan and to have a clear sense of what you can realistically count on in the future.

Individual Private Pension Plans:

What Can You Contribute?

If you’re saving on your own, here’s what the rules look like now:

• Employees can contribute up to €1,500/year (you may already be contributing through your employer’s pension plan)
• Self-employed (autónomos) can contribute up to €5,750/year by combining plans

How does a private pension plan work?

• A private pension plan is a long-term financial product designed to help you save for retirement.
• You won’t have access to the funds unti until you reach legal retirement age
• The money is invested in a combination of stocks and bonds to allow for some potential growth.
• The product may offer some tax advantages.

Are All Pension Plans the Same?

Not at all — and this is important.

The majority of banks offer pension plans with high fees and poor returns. These are not always in your best interest. The initial tax advantage won’t matter if your money doesn’t grow over time.

So what should you do?

Creating a system of automatic saving and investing for the future should be the number one priority for everyone and especially for every woman

Here are a few easy steps to follow:

1. Understand your current pension plan provisions and what they will amount to in the future
2. Make sure to allocate the maximum amount allowed for you in an index-based pension plan (Look for low-cost alternatives. Platforms like Indexa Capital offer index-based pension plans with low fees and long-term performance.)
3. Have an automatic saving system of 10-30% of your income destined for retirement
4. Make sure to invest a big part of these savings in index funds or ETFs to secure long-term growth

I am too old to invest!

This is a topic for another article! But let me say the following

There are advantages to building this system early in life, but there is no age when it is TOO LATE to save and invest for your retirement.

Planning for retirement may feel distant or even overwhelming — especially if the system around you seems confusing or uncertain. But taking small, intentional steps today can make a big difference later. Whether you’re an employee, an autónoma, or just beginning to explore your options, building your own system of saving and investing is one of the best financial decisions you can make. And if a private pension plan fits into that system — great. If not, there are still many other ways to invest in your future. The key is: don’t leave it for “someday.” Your future self will thank you.

Living abroad brings freedom—but it also comes with uncertainty. If thoughts about the future and your finances are leaving you feeling anxious, overwhelmed, or stuck, you’re not alone. At Therapy in Barcelona, our international team of therapists understands the unique mental load of life abroad. Whether you’re navigating financial fears, identity shifts, or long-term decisions, we’re here to help.

Book a free 15-minute discovery call today and take one intentional step toward clarity and emotional well-being.

www.therapyinbarcelona.com  

Elena (Lena) Perepelova (below), was born in Moscow in 1975, moved to the Netherlands in 1994, and has been living in Spain since 2008. She is a passionate financial educator and coach, certified by the National Financial Educators Council (NFEC).

Lena is the founder of two personal initiatives: the “Women Investors Club” , which empowers women to build financial confidence and independence, and FunFinance® Virtual Business School for Kids, which brings financial literacy to the next generation.

Lena offers private consultations and full one-on-one coaching programs to help individuals understand where they stand financially and take actionable steps toward long-term security.

Lena is also available for speaking engagements and can design tailor-made financial well-being programs for companies, groups of friends, and community organizations.