Adverts
Retirement is an essential stage in the life of any worker. Traditionally, this process requires many years of contribution, and in Brazil, a minimum of 15 years of contribution is required for the worker to retire through the INSS.
However, faced with a scenario of constant change and alternative investment possibilities, many are looking for ways to achieve the much-desired retirement in a shorter period of time.
The idea of retiring in a shorter period of time than usual may seem daunting or even unattainable to many. However, with the right tools and strategies, it can be a viable reality.
Understanding the current retirement rules
Retirement rules in Brazil, under the auspices of the National Social Security Institute (INSS), have changed over the years to adapt to demographic and economic changes. Since the Pension Reform, the rules have become stricter.
Retirement based on contribution time was replaced by retirement based on points. Contribution time is still considered to be 15 and 20 years for women and men respectively.
Disability retirement is granted to those who are considered incapable of working and who cannot be rehabilitated in another profession. The rules for this modality are different and depend on medical evaluation.
There are some job categories that allow special retirement due to exposure to conditions harmful to the worker's health or physical integrity. Contribution times vary between 15, 20 and 25 years, depending on the degree of exposure to such conditions.
The need for strategic financial planning
Firstly, it is essential to define clear goals and objectives. How much money will you need to live comfortably in retirement? How soon do you want to retire? These are some questions that must be answered to establish an effective plan.
Strict budget control is another fundamental aspect of strategic financial planning. This involves tracking your income and expenses to understand where your money is going and identify areas where you can save.
Saving and investing are two of the most important strategies for those seeking early retirement. Saving allows you to accumulate capital, while investing allows that capital to grow over time.
Diversification is an investment strategy that involves spreading investments across different types of assets to minimize risk. This strategy can be crucial for the security of your assets.
Mixed retirement as an alternative to retiring before the 15-year rule
Mixed retirement, also known as hybrid retirement, is an alternative that allows workers to combine contribution time and retirement age. This modality was established in Brazil in 2015, by Law 13,183, and can be an interesting option for those looking to retire before completing 15 years of contribution.
It considers both the contribution time and the worker's age, being particularly useful for those who entered the formal job market later.
Even with age, the 85/95 rule must be taken into consideration. This number, however, is progressive, increasing one point every two years, until reaching 90 points for women and 100 for men in 2027.
For example, if a 55-year-old woman has 30 years of contribution, in theory, she can retire using the mixed rule, as the sum of her age and contribution time is already 85 points. This could allow her to retire even without reaching the minimum 15 years of contributions, if she started contributing later in life.
However, it is important to note that although mixed retirement may allow retirement before 15 years of contribution, it still requires considerable work and contribution time.
Therefore, for those looking to retire on an even shorter timeline, you may need to consider other strategies such as investing and aggressive saving.
Strategies to increase income and accelerate retirement
The first step to increasing your income is to seek improvements in your main source of income. This may involve seeking a promotion at your current job, moving to a higher-paying job, or acquiring additional skills that could increase your value in the job market.
Passive income is money you earn without having to actively work for it. This can come from investments such as stock dividends or rental income from property.
While it may take a while to develop a significant source of passive income, it can be an excellent way to increase income and accelerate retirement.
Remember, however, that increasing your income and accelerating retirement are tasks that require planning and dedication. It's always a good idea to seek professional financial advice when planning your retirement strategy.