Plan your retirement in Mexico: options for a full-time retreat

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Careful planning for your retirement is essential to ensure a peaceful old age free of financial worries. 

In Mexico, there are various alternatives for saving for retirement, each with its own particular advantages and challenges.

Afore (Retirement Fund Manager) 

Humberto Barragán Professor at the business school at the Universidad Panamericana Campus Guadalajara explains that Afores are a mandatory savings system for all salaried workers in Mexico.

“Your employer contributes a part of your salary to your individual Afore account. You can choose between different Afores, which compete with each other to offer you the best performance,” he added.

To use the money from the Afores, you will have to be 60 years old and have contributed a thousand weeks, for it to be taken into account in the pension scheme.

It also explains that you can use the money saved in advance, however, they are under special circumstances such as unemployment or marriage, and the weeks of contributions will be reduced depending on the amount you have withdrawn, which implies a replacement of that reduction in weeks.

In Mexico, there are various alternatives for saving for retirement. (Photo: Canva)

What benefits does an Afore have?

  • Security: Afores are regulated by the Mexican government, which means that workers’ money is safe.
  • Profitability: Afores have had good historical performance, which means that workers’ money has grown over time.
  • Flexibility: Workers can choose between different Afores and can make voluntary contributions to their accounts.

Endowment Insurance 

It is insurance that offers you long-term savings with additional benefits. You can choose between different coverage options and premiums.

At the end of the insurance term, you receive the money saved plus interest and benefits. In case of death, your beneficiaries receive the insurance money.

“Endowment insurance, the idea is to ensure survival, where you will generate savings where the given amount will be returned to you, plus a return, and it serves for short and medium-term objectives since most insurance endowments for the minimum time The term is 15 years,” explained Barragán.

Advantages of Endowment insurance:

  • Guaranteed savings: Helps you achieve your long-term financial goals.
  • Protection for your family: Provide peace of mind to your loved ones in case you are missing.
  • Tax benefits: In some cases, premiums paid may be tax deductible.
  • Flexibility: You can choose the term, the sum insured, and the type of coverage that best suits your needs.

Disadvantages of Endowment Insurance:

  • Profitability: Profitability is not guaranteed and may be lower than other investments.
  • Costs: Premiums can be higher than traditional life insurance.
  • Liquidity: You cannot access the accumulated capital before the expiration of the term.

Review your savings plan regularly and make sure it is still suitable for your needs. (Photo: Canva)

Voluntary Savings Scheme 

It is a way to complement your retirement savings. You can make voluntary contributions to an individual savings account.

You can choose between different investment instruments, such as investment funds or shares. You have the flexibility to withdraw your money whenever you need it.

Benefits of having a personal retirement savings scheme:

  • It allows you to have an extra income when you retire and not depend solely on the government pension.
  • It helps you maintain your standard of living after you retire.
  • It gives you financial peace of mind knowing that you have money for your future.

Tips to save for retirement according to Humberto Barragan: 

  • Start saving as soon as possible. The sooner you start saving, the more time your money will have to grow.
  • Saving a fixed amount each month, even if it is a small amount, will help you reach your goal.
  • Invest your money intelligently and choose investment instruments that allow you to obtain a good return in the long term.

Review your savings plan regularly and make sure it is still suitable for your needs.

Live your old age peacefully and without worries.

Source: Reforma 

The Nayarit Post