The survey “Savings and the future: How do young people live in retirement?”, Presented last year by the Mexican Association of Afores (Amafore), estimates that in our country 60% of men and 70% of women in the age range between 18 and 40 have the expectation that their children or relatives will support them financially when they retire.
And, in fact, only two out of ten of these young (and not so young) Mexicans save for retirement. Yes, encouraging the culture of savings is still one of the pending tasks, but more than sermons or catastrophic visions of the future, this generation needs to understand the subject from a more motivating and less obligatory perspective.
Becoming aware and, above all, getting involved in what they are going to do the day they retire is not so complicated, they just have to take actions that are within their reach:
Accept that retirement will come
No one should work to save all their salary for fear of a sad old age, so we will not tell you not to live as if there was no tomorrow, on the contrary: what is needed is just a twist in the perception of the future to realize that you can live to the fullest today, but also commit to maintaining, as far as possible, that lifestyle even after retirement.
Because, apparently, young people are clear that they want to enjoy life now and feel that way, free to choose what suits them best, even after their retirement from work: when asked whether, if they had the economic possibilities, they would send a elderly to a nursing home, 84% of those surveyed by Amafore answered no, an indication that it is something they do not want for them either.
Finding a balance between enjoying today and doing what you can to enjoy tomorrow could be that mental “disruptive” factor to start working in a retirement with a greater chance of success.
Know the tools to achieve it
According to “Savings and the future: How do young people live in retirement?”, 8 out of 10 of the people surveyed affirm that they have heard about the Afores, however, only 38% have an account of this type. Furthermore, 40% of them believe that the Afores are controlled by the government.
It seems that some points need clarification. Currently there are 10 Retirement Fund Administrators and although the majority are part of banking institutions, this does not mean that the money is “exploited” by individuals or the government, it is rather financial entities dedicated exclusively and professionally to managing individual savings accounts for workers’ retirement.
After 23 years of existence, the Afores have proven to be one of the best alternatives to save money, when the working days are over: these instruments will have offered savers historical annual returns of 11.17% nominal and 5.37% real, according to data of the National Commission of the Retirement Savings System (Consar).
Just take a glimpse into the world of the afores to realize the advantages and benefits of one of the most practical paths to retirement.
Understand that the afore will not do everything alone
In Mexico there are 67 million accounts managed by the Afore, but only 7.4 million of them register voluntary contributions, which means that the vast majority of workers lose the opportunity to make their contribution to obtain a better pension amount.
There is a strong reason to understand that this point is crucial: the Organization for Economic Cooperation and Development (OECD) indicates that it is desirable that workers can retire with a replacement rate of at least 70% of their salary, something that in our country it will not happen without the support of voluntary contributions, since the replacement rate is barely around 40%. That is, just knowing that you have an afore and that your employer contributes is not enough.
The institutions in charge of encouraging voluntary savings for retirement offer increasingly practical and friendly options to make these contributions, such as electronic debit, deposits in convenience stores and GanAhorro, a program that even allows saving for retirement through consumption. of products and services, at the customary price and without spending another peso.
It is never too late to expand the mind and understand that living fully today and retiring to follow the adventure of life is something possible. Do not stop trying.
Digsmak is a news publisher with over 12 years of reporting experiance; and have published in many industry leading publications and news sites.