How much should I save for retirement?
There's no magic number, but there is a simple method to figure out where to start. I'll walk you through it in four questions.
How much do you want to receive each month?
Think about your expenses today and which ones will continue once you retire: housing, food, health, travel. Many people realize they need a good part of their current income.
How much will you get from your Afore or pension?
Check your projection in the AforeMóvil app (the Afore is Mexico's mandatory retirement savings account). The gap between what you want and what you'll receive is what your savings need to cover.
How much time do you have?
This is the most powerful factor. With more years ahead, small, steady contributions go a long way. With less time, your contribution has to be larger or your goal more modest.
How much can you keep up?
A plan you abandon halfway doesn't help. A comfortable contribution you can keep up every month is better than a high one you drop after a year.
Three habits that help
- Start now, even if it's with a little. Time does more than the amount.
- Automate your contribution so you don't have to remember it.
- Review your plan every year and increase it as your income grows.
Important
Any retirement calculation is an estimate: it depends on the plan, the time frame, the insurance company's terms and inflation. Be wary of anyone who promises you an exact figure.