Piggy bank and green leaves

Saving for Retirement in Mexico

Introduction to Afores

Saving for Retirement via Afores

When people graduate from school, the last thing on their mind might be saving for retirement. However, beginning early is the best manner to approach this kind of saving. If you need convincing, think of it this way: When we retire, our savings might be our only source or one of our main sources of income. If you want to receive money regularly after you retire, you need to have sufficient savings to schedule regular payments. The earlier you start saving, the easier it will be to acquire the habit and the earlier your retirement fund will start to generate interest rates to your advantage.

According to specialists, we should assign a percentage of our savings for retirement. That is, whatever we determine to save, should remain untouched until we do retire.

One of the best ways to save for retirement could be through an Afore account. Since 1997, the Mexican government is not allocating money for retirees. Instead, it implemented the Retirement Funds Administrators (Afores) so that the IMSS and the workers contribute small amounts of money throughout the years. Each Mexican worker registered at IMSS is assigned to an Afore. If you do not know yours, visit https://www.e-sar.com.mx/PortalEsar/public/consultaAforeInicio.do and check with your social security number or Personal ID Code Number (CURP).

It is important to check the ranking of the Afores according to: a) Return on investment; b) Commissions to the Afore; and c) Services provided by the Afore.  If you want to change to a different Afore from the one you have, follow the steps provided at https://www.gob.mx/consar/articulos/como-me-cambio-de-afore or go to the Afore of your choice and ask them to help you change with them.

The money sent by default to the Afore is a small amount. That is why the Afores recommend making additional contributions. These contributions are called “Ahorro voluntario” which means Voluntary Contributions. They usually have better interest rates than the banks, can be tax deductible and are easy to manage, you can even make voluntary contributions at some convenience stores.

For more information about Afores, go to https://www.e-sar.com.mx/PortalEsar/public/index.do, https://www.gob.mx/consar/acciones-y-programas/como-elegir-la-mejor-afore. To learn more about the voluntary contributions, go to https://www.gob.mx/consar/acciones-y-programas/todo-sobre-el-ahorro-voluntario.

At NearShore, we are interested in the well-being of our workers and that includes the health of their personal finance, so we encourage you to make the most of your Afore account.