Minimum Pension Supplement, How Does It Work?

The retirement pension is intended to cover the loss of income that we will experience at the end of our working life.

What are minimum add-ons?

In our country, all public benefits have a maximum and minimum limit, and retirement pensions are no exception . If you collect a contributory pension , the monthly amount of it can never be below the minimum limit legally set.

Now, it may happen that due to your quote, the amount that corresponds to you to collect is below that minimum amount. Well, that’s when the complement of the minimum pension comes into play.

The so-called minimum supplement is a supplementary amount that is added to the amount of the pension so that the amount of the same reaches the legal minimum .

How is it calculated?

If the sum of the pensioner’s economic income (income from movable or real estate capital, capital gains, etc.) and the sum of the contributory pension is below the legally established minimum amount, the complement will be the difference between these two amounts.

When can it be requested?

The request to collect this supplement can be made at the same time the pension is recognized . In the event that the request is made later , the supplement will be retroactive to a maximum of three months.

Requirements

In order to access this add-on it is necessary:

  • Have an income that is below the legally established minimum. In 2020 the minimum limit is 7,630 euros per year.
  • Receive a contributory retirement pension.
  • Reside in Spanish territory.

Is the minimum pension supplement for life?

While the retirement pension is for life, the same is not the case with the minimum supplement. If the time comes when the retiree’s income causes his income to be above the minimum limit, he will lose his right to collect the minimum supplement .

Incompatibility of the minimum pension supplement

The payment of the supplement is incompatible with the receipt of income from work, capital, economic activities and also with capital gains if they exceed the legal minimum established (it is updated every year).

The supplement to the minimum pension guarantees that all retirees will receive a minimum amount that allows them to continue with their lives. However, the amounts of the minimum pensions make it difficult to maintain a decent quality of life . Therefore, it is best to take action now and start preparing for retirement.

Our recommendation is that you contact an expert advisor in financial education and planning to help you define your goals for the future and choose the most appropriate savings and investment products . Thus, when the moment of retirement finally arrives, you will be able to enjoy it with economic well-being.

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What Does It Mean To Average Stocks And What Does It Consist of?

Both are general strategies that investors use . Each one has different meaning and methodologies, but what is each one about?

  • Averaging down is a strategy that consists of increasing stock purchases when they are falling in price .
  • Averaging higher is the complete opposite movement: it is about buying new stocks as they appreciate in financial markets .

A practical example of averaging down: imagine you invest 1,000 shares in a company, at a price of 5 euros per share. The shares go down and reach a price of 3 euros. You reinvest another 1,000 shares and you will have a total of 2,000. Your average price will be 4 euros per share.

In both steps, capital is increased , although there are also risks if these movements are not considered before making them. Here are some benefits and risks of averaging down and up . It is important to take this into account so that you decide in an ingenious way:

Advantages and Disadvantages of Down Averaging

There are two great advantages of making this move: increasing the profitability of the investments and minimizing the risk of the portfolio . In addition, it allows the investor to enjoy a considerable margin of safety .

On the other hand, the disadvantages of averaging down lie in mistrusting and overvaluing investments . This could fall into a degree of excess.

Risks of averaging higher

Averaging higher also carries its risks, such as:

  • Enter very high and that the value falls before an oversight.
  • Have a higher accumulation in your portfolio.
  • Losing the opportunity for another asset that is much more profitable.

5 investment tips

It is important to know the market you are going to face and have the expertise of an advisor to make the best investment decision. In addition, having practical advice applicable to any operation in the financial market can help you, such as:

  1. Abandon your position when you consider that your invested capital is decreasing.
  2. Have the maximum control of your savings so as not to cause negative effects on the current account balance.
  3. Advise you intelligently and consult a specialist so as not to lose money in your portfolio of stocks .
  4. It can have negative effects regarding your participation and presence in them.
  5. Determine the terms in time to invest . It is advisable to do it in the long term to take advantage of the ups and downs of the markets.

Our star recommendation is to contact a financial advisor , who will analyze your investment situation and support you to make the best decision.

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