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Financial education Updated: 05 Apr 2018

José Antonio Herce: “Saving for retirement shouldn’t cause any more stress than being alive”

Saving for retirement is a challenge, particularly when it’s far off. However it’s in your interest to plan for it to avoid stress and assure yourself adequate income when the time comes.


The increase in life expectancy means that people need to plan their retirement far in advance in times of uncertainty and instability. Despite this, saving for retirement remains a pending task for many people and planning for it can involve an element of stress. How can you avoid this? “Saving for retirement should not be a source of stress any more than the mere fact of being alive, which is already stressful enough,” says José Antonio Herce, a partner at AFI, chairman of the Forum of Experts of the BBVA Institute of Pensions and a member of the Advisory Board of the BBVA Center for Financial Education and Capability. “Social Security and all saving for retirement systems were invented over the course of centuries to cushion us from but not eliminate stress. The tools have been available for a long time, but they require a makeover”.

Changing ways of thinking

The tools are not only financial but also cognitive. The brain can put tricks in the way of saving: “Stress may come from resistance to extending one’s working life in the line with the increasing longevity that makes balancing resources and needs throughout one’s life cycle increasingly more complicated”, says José Antonio Herce.

The environment and cultural restraints have a big say in how people plan their financial existence. “The basis of everything is cognitive. We are much more responsible when it comes to insuring our car or our family (in terms of health, for example) than securing our retirement. One powerful factor behind this dichotomy is the culture of total security" in which we have been immersed by the Welfare State”, says José Antonio Herce. According to this expert, the increase in life expectancy is “undermining the foundations of this idea without society reacting to the need for a radical adjustment in the retirement age. Instead, there is this call for endless resources that are not available to the extent required. There has to be a switchover in this debilitating culture”.

To bring about this change of view, the first step lies in “adequate financial literacy”. Such education will help people grasp why it is so important to save for retirement. From that, Herce says “all the nudges and nuggets that bring us toward adequately plan our finance in all situations in our life can flow”.

Technology can be the chief ally in this shift in financial culture. José Antonio Herce is in no doubt about this as evident in his description of this technology. “A human technology at the service of people to support them in understanding these problems”. Who should be the motor behind this new market? “Consumers and those who provide solutions for retirement”.

Outside help apart, saving for retirement is a step-by-step process. “The habit needs to be inculcated from the start of one’s working life. Saving as much as one can and when one can is needed for whatever goal (a trip, advanced studies, a property and, of course, retirement). The key is to have a contingency pot. Later over time, we can adjust the end to which the savings we have built up go, tailoring and safeguarding them toward retirement”, Herce says.

Young people and retirement

Current concerns about the pension system in Spain could see new instruments and regulation put in place, but according to Herce these doubts are not founded on the facts. “The Spanish contributory pension system will always be in a situation to pay workers a pension when they retire, but not as generous as we

would like it to be. The fact that many young people in surveys come out with “I will never receive a pension” quite simply lacks credibility. “Is it that no one has explained to them that this won’t be the case?”

Despite this conviction, young people are the most reluctant to save for retirement.  How to persuade them otherwise? “I would tell them that saving for contingencies is the best way to spread out revenues throughout the course of our lives, both to invest in ourselves as well as lock in income when we are retired”. With these keys in mind, it becomes simpler to reduce the burden of saving. “If planning for retirement is stressful, then we are not doing things in the right way.”