Thinking about retirement usually generates more questions than answers. Will it be enough for me? Will I be able to maintain my standard of living? Is relying on state pension alone enough?
These doubts are neither exaggerated nor pessimistic: they are part of an increasingly widespread concern, even among people who are now of prime working age. And understanding why this happens is the first step to being able to make better decisions.
The Argentine retirement system—as happens in many countries—works under a pay-as-you-go scheme: those who work today contribute to pay the pensions of those who have already retired. The problem appears when there are fewer and fewer active workers for each retiree. Fewer contributions and more beneficiaries strain the system and force it, sooner or later, to adjust.
This adjustment usually occurs in different ways: retirements that lose purchasing power compared to inflation, changes in the update formulas, increases in the retirement age or higher taxes. The result is that, for many people, the state pension ends up being an income that is not enough to cover basic expenses.
Faced with this scenario, financial education proposes a simple but powerful idea: not relying on a single source of income in retirementbut to plan a long-term complementary retirement.
Planning does not mean guessing the future or taking unnecessary risks. It means understanding how much is needed, in what terms and what tools exist to build that capital gradually and sustainably.
A simple way to estimate it is to define how much money would be needed per year during retirement and project a capital that will cover that expense without running out quickly. From there, the focus becomes the habit: regular contributions, time and consistency. Not impossible amounts, but decisions repeated over time.
Along this path, there are instruments designed for long horizons, accessible even with low amounts, which allow accompanying the growth of the economy and protecting savings against inflation and loss of purchasing power. The key is not to look for shortcuts, but to understand the process.
What to invest in to retire. Define a target annual spending in retirement (ideally in hard currency). That is, how much money is spent per year, measured in dollars to facilitate projection.
Estimate a target capital. For this, the annual expense is multiplied by 25. This value arises from a study carried out in the United States, which suggests that an investor could withdraw around 4% annually of the invested capital without depleting it within a period of 30 years (Trinity Study).
For example, if they spend $1,420,000 per month (approximately US$1,000), the annual expense is around US$12,000. By multiplying this amount by 25, you obtain a target capital of US$300,000. The logic is to reach that figure around the age at which retirement is planned. Although it may seem unattainable, the process becomes clearer when broken down into monthly contributions sustained over time.
Then, the practical way is to maintain regular contributions. In educational terms, typical categories for long horizons are mentioned. The “default” investment for many investors thinking about their retirement is the S&P 500an index that groups the 500 largest companies in the United States. Today, the minimum access amount is around $50,000 pesos (about 35 dollars). Its historical average annual return, in the very long term, is close to the 10% in dollars.
Returning to the previous example:
● Aim: save $300,000
● Current age: 35 years (example)
● Retirement age: 65 years
● Remaining time to save: 30 years
● Expected annual return: 10%
In this scenario, with a monthly investment close to US$105 (about $150,000 pesos), the objective would be reached. In total, approximately $44,205but thanks to compound interest, the estimated final capital would be around $344,441.
Conclusion. The reality of the pension system leaves a clear message: relying solely on the state pension may not be enough. Learning to plan for the long term—saving, investing wisely, and sustaining the habit—is not a privilege, but a concrete self-care tool. Financial education does not promise absolute certainty, but it does promise something fundamental: greater autonomy to decide today and more peace of mind for the future.
*Ariel Mamani is an educator and financial advisor.
by Ariel Mamani
