Start to saving for retirement from an early age is essential to ensure a peaceful and financially stable old age, financial planning experts stress. retirement savingsone of the most important financial decisions in the life of any worker, is often postponed, putting at risk the quality of life and social well-being in the golden years.
The importance of anticipation in this regard cannot be underestimated, especially considering the power of compound interest and the tools available to maximize savings, such as Retirement Fund Administrators (Afores) and voluntary savings. The compound interest It plays a very decisive role in the growth of retirement savings, since it allows the invested money to generate interest, which in turn is reinvested to generate more interest.
This multiplier effect is optimized when savings start early.providing more time for investments to grow, resulting in a significant accumulation of funds over the years that generate greater social welfare at the time of retirementEven small amounts, if saved consistently, can add up to significant sums thanks to this effect. In addition, it is essential to understand concepts such as the reference rate and the replacement rate when planning for retirement.
The reference rate indicates the expected performance of an investment over a given period, influenced by market conditions and the broader economy. Understanding this indicator is key to making informed decisions about where to invest your retirement money.
How do you get a pension of 35 thousand pesos a month?
Using the Consar calculator, By modifying the savings amounts for different periods according to the age at which savings begin until retirement, the following approximate results are obtained at age 60:
Example 1: Voluntarily saving $2,250 pesos per month since the age of 25, You could reach a pension of $35 thousand pesos. If you reduce the amount of savings to $1,500 pesos you would have $31,500 at the time of your retirement. If in those 25 years the savings are $800 pesos, the approximate pension would be $28,000 pesos.
Example 2: Voluntarily saving $3,600 pesos per month, starting from age 35you would achieve a pension of approximately $35,000, while if you reduce your savings to $2,500 your amount at the time of retirement would be $31,500. For a pension of $28,000 you would need monthly savings of approximately $1,350 pesos.
Example 3: If you start saving voluntarily since the age of 45you would need monthly savings of $6,700 per month for a pension of $35,000. If you reduce your monthly savings to $4,600, the pension would be $31,500 and $28,000 if your voluntary monthly savings are $2,450 pesos.
As you see, The later you start saving, the higher the monthly amount you would have to inject into your Afore to improve your pension.Correctly calculating this percentage is key to determining how much you will need to save to maintain an adequate lifestyle once you retire.
It is clear that the Retirement Fund Administrators (Afores) in Mexico play a very important role in the management of the retirement funds.
These institutions invest workers’ contributions in various financial instruments with the aim of maximize returns and ensure a comfortable and secure retirement in terms of social welfare.
Additionally, the voluntary savings within the Afores It allows workers to increase their savings beyond mandatory contributions, which can potentially increase the replacement rate and substantially improve future pensions.
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