How much should I save for my retirement and why should I start saving now? 

Some hard facts about how mexicans prepare for retirement...

Today, in Mexico there are 128.9 million people, of which 57.7 million are economically active, and 60% of them do not have a retirement plan. This means that, around 34.6 million mexicans who are part of the economically active population do not have savings or a defined plan for when they are older.

According to results from a survey carried out by the AMAFORE, 72% of those interviewed have not made plans to retire from work. Another survey carried out by this same institution also indicated that 48% of mexicans do not feel responsible for thei retirement (that is, they plan to rely on their children or they think that the government aid they will receive will be enough to survive), 9% believes that saving will facilitate their retirement, and only 1% recognizes that saving is necessary to have a decent life upon retirement. 

How do I prepare for a good retirement? 

There are many factors that can influence a good retirement, for example: good medical insurance, savings, being debt-free, etc. But without a doubt, a retirement plan is a fundamental tool to help us be prepared and to have financial freedom without being tied to a job.

What is a retirement plan?

A retirement plan consists of regular savings in long-term diversified investments. Its purpose is to create enough assets to cover all retirement expenses. You start this savings plan when you're young for a stipulated period, that is, from the start date of the plan, until reaching the age at which you want to retire.

Contributions are normally made on a monthly basis, they are invested in formal savings instruments that offer annual growth on the investment and the retirement plan is calculated in such a way that at the end of the investment period, whoever owns it can generate income from life from accumulated assets. This is with the purpose that, once you reach old age, you can replace the monthly income you would usually get from working a job and to maintain the same standard of living without any type of concern. 

What is the first thing I should know if I am thinking of starting a retirement plan?

1. If you want to start a retirement plan, we recommend you set a goal of making a monthly contribution to this plan. The contribution will vary according to your specific saving abilities, that is, according to your income, expenses and specific objectives, there vary depending on each client: for this reason the plan must be tailor-made for you, covering your and your family's needs.
2. It is very important to establish a goal at the beginning to be able to measure and adjust that contribution during the saving period. You don't want to fall short and not have the time to make up for it! 
3. At KNG, we always recommend that before investing in any instrument you contact your financial advisor. If you do not have one, KNG's main service is to offer you a free consultation to ensure that the investments you make are in line with your investor profile (avoiding any type of future decapitalization).

It is a reality that the cost of retirement is getting higher and higher and the numbers do not lie. If we put it in perspective, our retirement costs are much more than our house mortgage...

Neil Emberson – CEO of KNG International Advisors

How do I benefit from a retirement plan? 

• Compound growth: It is a long-term savings in which all profits are reinvested, so the longer you leave your money working, the more exponential your growth will be.   
• When the savings period ends, we recommend withdrawing the net income from inflation and leaving the capital invested. For example, if inflation is on average 2% per year and our growth is 8%, we will withdraw the difference, 6%. This allows that the 2% that we are leaving in our retirement plan helps our capital and assets to continue to grow in parallel with inflation. If we do this, our annual income will grow proportional to inflation. 
• You will enjoy your retirement the way that you want, without having to worry, depend on relatives or government aid, among others. 

How do I start my retirement plan? 

You have to take into consideration certain factors that will help you choose the plan that best suits your needs: 

• Age at which you wish to retire - The sooner the better in order to maximize the effect of compound growth. 
• Your life expectancy -Along with a realistic estimate of the amount you need monthly to cover all your expenses.  
• Consider the inflation -And have an idea of where you plan to spend your retirement, since depending on the place you choose to live, your money will last differently. 

Below, we will show you a savings projection of $500 USD per month assuming an average annual growth of 8% in different terms, in a globally diversified portfolio. The strategy and risk profile of the investment is according with your age and your preference. As you can see, profits are more considerable if the savings term is longer. 

This table shows projections, they are not guaranteed amounts. Assuming that the investment portfolio grows 8% annually during the savings term and then during retirement.

Now that you have a better idea of what retirement plans are and how they work, the first step towards starting a fundamental financial project for your future is to take professional advice.

 

 

Try our KNG Retirement Calculator

Our retirement fund calculator will give you esstimates based on the information you provide and will help you get an estimate of the capital you must accumulate in order to retire comfortably. (You can access it by clicking the button below)

Retirement Calculator