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HEALTH

Reader question: Can I move into a Spanish care home as a foreigner?

Many people move to Spain to enjoy the retirement dream in the sun, but what happens if you become ill and can no longer live independently?

Spanish care home
What happens if you need to go into a care home in Spain? Photo: OSCAR DEL POZO / AFP

Reader question: What happens if someone moves to Spain and then needs to go into a care home because of old age or illness? Who pays? Does it make a difference if you worked in Spain and paid into the Spanish system, or if you moved here after retirement?

This is a common question for people who retired in Spain from abroad and those who worked here and want to retire in Spain too.

According to a new survey from YourOverseasHome.com, four in ten respondents named Spain as their dream retirement location.

Per the latest statistics from Spain’s National Statistics Institute (INE) from 2022, there are 415,517 foreign residents aged 65 and over in Spain. 

This means that as well as having to provide services for the elderly Spanish population it is necessary to provide them for the foreign population too.

According to real estate giant Knight Frank in its latest European care homes report, by 2040, 15 percent of the population of Spain will be over 75.

So what happens when you can no longer take care of yourself – what rights do you have to access Spanish care homes and will you have to pay for it all?

The good news is that there are no specific rules preventing foreign nationals from living in a Spanish care home – provided they have the legal right to reside in Spain. This means being from an EU country, protected under the Withdrawal Agreement if you are British and moved before Brexit, or have the appropriate visa for third-country nationals. 

Traditionally, the care of the elderly in Spain has been taken over by family members who become full-time caregivers so Spain has a less developed care home market than other countries such as the UK.

According to Knight Frank’s European care homes report, Spain and Italy only spend 0.9 percent of GDP on long-term care provision. 

That being said, there are several different care home options in Spain, some of which even have specifically been set up by foreigners. For example, the Norwegian government has created several care homes in Spain for its citizens who have retired abroad.

There are several different types of care homes for the elderly in Spain, depending on the type of level of care that you need. These include: 

Residental care home – Residencia para personas mayors/ancianos

Nursing home – Residencia con servicos de asistencia médica

Hospice – Centro de cuidados paliativos

Retirement housing – Viviendas aptas para jubilados

Who pays?

According to Info Residencias, the website for geriatric assistance in Spain, if you need to enter a care home in Spain, you should go to the social services of your town hall (ayuntamiento).

They will consider your health, economic and social situation and will decide if you are eligible to be sent to a care home or if you should be provided with care at home instead.

If you are deemed eligible, they will assign you either a place in a public or private residence, depending on your financial situation.  

If you recently retired to Spain and have not worked or paid into the social security system, however, it is unlikely that you will be placed in a public care home and will probably have to pay for a place in a private care home.  

Info Residencias says that “a private residence for the elderly in a large city ranges from approximately €1,400 to more than €2,500 per month. Outside of the big cities, the prices may be somewhat lower, but not much more”. 

While Knight Franks writes in its report that Spanish care home fees range from €1,800 to €2,200 a month, depending on the region and quality of accommodation.

READ ALSO: How Americans can retire in Spain

How can you pay?

Pension

If your pension plan is enough to cover the cost of the care home fees, then they will usually be paid for that way.

There are however several other ways of paying for care homes suggested by the Spanish authorities. These include:

Reverse Mortgage

The Reverse Mortgage (hipotecas revertidas) is a loan for people over 65 who own a home in Spain. Financial entities or insurance companies will typically pay you a monthly income which is secured against your home. 

However, one downside to this is that if more costs and debts rack up, then you could lose your home and won’t be able to pass it on to your children.

Programa Pensium

Another way that your home can be used to help pay for a care home is through the Programa Pensium. If you sign up for the programme, your home will be rented out, and contributions made for you on top of that towards your care. The management of the rental of your property will also be taken care of so that your family doesn’t have to worry about this as well. 

This way you get to keep your home and your family can do with it what they want when you pass away. It also gives you flexibility, allowing to you cancel the program at any time. 

Britons

Certain benefits that cover care costs are not available to non-EU citizens who have never worked or paid social security in Spain.

The UK Government does not have any reciprocal arrangements to cover overseas residential or nursing care for Brits living in Spain, so you will not be able to rely on help from back home, but will be able to use your pension from the UK if you receive it in Spain. 

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For members

PENSIONS

Will there be no public pensions in Spain in the future?

With a falling birth rate, ageing population, and the baby boomer generation only just starting to retire, Spain's public pension pot is set to take more and more money from the public coffers. Many worry that it's now at risk.

Will there be no public pensions in Spain in the future?

A perfect storm of factors could be putting Spain’s public pensions at risk. The concern is such that a common refrain among Spaniards (particularly the younger ones) when discussing the future of their pensions is simply that ‘there won’t be any’ or ‘we’re not going to have one’.

Long-term demographic change, slowing birth rates among Spaniards, plus the looming prospect of a larger than usual cohort of retirees and the types of pensions they usually claim mean that, if Spain is to avoid pensions payouts swallowing up more and more of its economy, then changes will be needed — sooner rather than later.

In 2023, Spain spent over €170 billion on pensions, €15.8 billion more than in 2022, and an amount that has been increasing in recent years. Because Spain’s pension payouts are growing in both absolute terms (new retirees have higher pensions) and in relative terms (as a percentage of GDP and the government’s budget) some in Spain are questioning how sustainable the model is.

READ ALSO: Older and more diverse: What Spain’s population will be like in 50 years

But why is public spending on pensions going up so significantly, and are they at risk?

A combination of an ageing population, declining birth rate and rapidly approaching generation of baby boomers due for retirement, plus the fact that Spaniards tend to go for public pensions as opposed to private, means that some in the Spanish media worry Spain’s pensions are in danger.

The ageing baby boomers

Much of the concern comes from Spain’s demographic trends. Put simply: in a few years Spain will be disproportionately older and lacking in working age people.

By 2035 around one in four (26.0 percent) of Spaniards are expected to be 65 or older. That figure is currently just 20.1 percent of the total population, and by 2050 it could rise to 30.4 percent.

On top of that, there’s the looming prospect of the baby boomer population beginning to retire. By 2030, almost 4 million baby boomers will already be enjoying their retirement, a figure that will exceed 11 million in 2040. The baby boomer generation is much larger than previous generations, and spent their working lives earning better salaries than their predecessors, something that will be reflected in their pensions.

Birth rate

In order to compensate for its ageing population, Spaniards would need to have more children in order to be able to offset this building demographic pressure on its pension system. However, that’s far from the case.

The birth rate in Spain has been declining for around a century. Last year, Spain registered 322,075 births, which represented “a 2.0 percent fall on the previous year”, an INE statement said, with a spokesman confirming it was the lowest figure since records began in 1941.

Spain’s fertility rate is the second lowest in the European Union, with the latest figures from Eurostat showing there were 1.19 births per woman in 2021, compared with 1.13 in Malta and 1.25 in Italy.

READ ALSO: In 2023 Spain logged lowest birthrate in 8 decades

Spaniards not investing in private pensions

Another factor heaping more pressure on Spain’s public pension systems is the fact that very few Spaniards invest in private pension plans.

The latest OECD report on assets deposited in private and funded pension funds shows that Spaniards pay in considerably less than other OECD countries. In fact, the weight (in terms of GDP) allocated to private pensions products in Spain is seven times lower than the OECD average.

Spain’s total assets amount to 14.3 percent of GDP, a far cry from the OECD average, which is slightly above 105 percent. Spain ranks 25th out of 38 countries in the report, well below the average. For comparison, in Denmark total assets in pension funds and plans represent 233.2 percent of GDP, followed by Iceland (218.6 percent), the Netherlands (213.3 percent) and the US (174.1 percent).

Estimates suggest that just 16.4 percent of Spaniards have at least part of their retirement savings deposited in private plans, meaning that the vast majority of payouts come from the public coffers.

What’s the solution?

It seems clear that the Spanish pension system is facing a number of challenges in the medium-term future. An ageing population, combined with a disproportionately large (baby boomer) generation due for retirement, low birth rates, and scarce investment in private pension schemes all mean that Spain’s public pensions will continue to cost more and take up more and more of its state spending.

So, what’s the solution?

As the debate picks up strength (and urgency) in Spanish politics and society, a few possible ideas have been floated. One would be to delay the retirement age. Spaniards who want to retire in 2024 with 100 percent of their pension will now have to be at least 66 years and 6 months old, but some experts have suggested delaying the statutory age to as late as 74 in some cases.

Of course, in order to do this, the older workforce would likely need significant retraining and cooperation between the public and private sectors not only to find work for these people but also arrange their pension pots in a way that doesn’t place a further burden on the public coffers. Many also point to the creation of more flexible and accessible semi-retirement schemes, in order to allow older people to work less without claiming their full pension.

READ ALSO: How many years do I have to work in Spain to get a pension?

Another longer-term option would be to do something to stimulate the birth rate in Spain, though that solution would only help in a minimum of 18 years. However, some kind of tax-based incentive scheme to encourage Spaniards to have more children, such as in Hungary, could be useful in providing part of the solution at least.

In reality, many in Spain have already accepted that the most immediate and easiest way to try and ease the burden of public pensions is for mass immigration into the country. Though this may ruffle some feathers within more conservative elements of Spanish society, the reality is that Spain needs to offset its massive public expenditure on pensions and it won’t be able to do this without a young workforce ready to pay into the system.

Spain’s Minister of Inclusion, Social Security and Migration, Elma Saiz, has estimated that Spain needs at least 250,000 immigrants a year to support pensions. If demographic modelling from Spain’s INE is accurate, current migratory trends could help in this regard because the Spanish-born population will see a steady decline and fall from 84.5 percent, the proportion of the population currently, to 63.5 percent within 50 years.

To put that statistic in other words, by 2072 36.5 percent of people resident in Spain, a little over one in three, will be born in another country.

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