Is it worth depositing voluntary savings in your Afore in times of inflation, economic crisis and disabilities? The experts are convinced that it is, and they give you four good reasons to keep doing it.
Inflation above 8%, fears of recession in the United States and losses in Afores accounts undermine Mexican workers’ desire to save. Those who wonder what is the point of continuing to save if everything is rising in price.
Afores outperform inflation
Although inflation does reduce the ability to save, this should not be a reason to stop trying. Since the Afores, in their 25 years of existence, have yielded 5 percentage points above inflation, so saving on them is a good option,” said Jorge Sánchez Tello, from the Technological Institute’s Foundation for Financial Studies. Autonomous of Mexico (ITAM).
handicaps are temporary
On the other hand, although the Afores have presented losses in the first months of the year, these are usually temporary.
“Most of the time, very attractive returns are generated. Occasionally, likewise, there are cycles of volatility in which, due to generally external reasons, savings fluctuate temporarily. Therefore, the key to understanding how the SAR works and obtaining the best results with your AFORE is not to lose sight of the long-term horizon” indicates the National Commission of the Retirement Savings System (CONSAR).
Proof that capital losses are usually temporary is the fact that, in July, the Afores had the largest capital gains so far this year, close to 127.309 million pesos.
How much does my pension increase with voluntary savings?
Voluntary savings is an extraordinary contribution that workers can make to increase the amount of their pension at the end of their working lives. But what impact does it have in reality? Well, it could almost double your pension, according to this example from the National Commission of the Retirement Savings System:
“A woman who starts contributing today, who has a monthly salary of 21,538 pesos, is 25 years old and who plans to retire at 65, would receive a pension of 10,865 pesos, but with voluntary savings she could reach a pension of 21,538 pesos. pesos”, indicates the CONSAR.
This is assuming that this woman continues to earn the same throughout her career, discounting inflation, and that she contributes 1,698 pesos per month in voluntary savings. And, even if he could only allocate 670 pesos of voluntary savings, he would obtain a pension of 15,077 pesos; almost 5,000 pesos more than if he did not save.
Calculate how much your pension will be if you earn 12,000 pesos a month?
Only 11% of Mexicans consider that they will be able to support themselves financially with their savings after retiring, according to a recent study by the Public Opinion Center of the Universidad del Valle de México.
To find out, just calculate the amount of your pension through .
For example, if you earn a base salary of 12,000 pesos per month and have a balance in your Afore account of 25,000 pesos, you are 33 years old and have been contributing for 25 weeks, then your pension will be around 6,305.64 pesos per month.
This is also assuming a real yield of 4% per year, in the Citibanamex Afore. This is almost half of the current salary of 12,000 pesos per month. And this is also one more reason to make voluntary savings for your Afore.
