# Need Practical Advice: Managing Retirement Savings



## 411guy (Apr 6, 2008)

I was wondering if I can share in the benefit of your wisdom and experience, folks. My wife and I are now preparing for retirement and we intend to retire in Mexico (probably in Lake Chapala) primarily because of the weather and lower living expenses versus NOB. We are planning for a quiet retirement....not too much traveling, etc. We will not be beneficiaries of company defined benefit pension plans. We will draw upon our gov't. plan (in our case CPP and OAS) one day. And we do have (albeit much reduced ones versus last year) modest retirement savings (in our case RRSPs, I guess equivalent to IRAs and/or 401Ks). 

I have been talking to a financial adviser and here is what he is recommending how I should invest our retirement savings: 

a) allocation - have at least 50% in stocks and 50% in fixed income (bonds, t-bills, etc.) and plan to have to live off these for up to 40 years (we are in our 50s and relatively good health); 

b) type of assets - exchange traded funds or index mutual funds for stocks and bonds because these have lower management expenses, and you are diversified automatically; 

c) cash - keep at least one year's worth of living expenses in cash (high rate interest accounts).....or better still, if affordable, three years worth of living expenses , as bear markets tend to last that long so you give time for your invested funds to recover when we hit the next bear market (assuming we retire after this bear market's recovery). 

Now that I have (so called) "expert" advice, I will be appreciative of practical advice from those of you who are now actually managing your retirement savings. Is the "expert" advice logical, or "voodoo". Have you followed your own plan and how have you fared? Sorry for the long post. If you don't want to post your response, please feel free to PM me. Thank you in advance!


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## RVGRINGO (May 16, 2007)

We followed all of that 'standard' "expert advice" and lost our shirts with everyone else. Having taken our losses, we have put the remainder in FDIC insured certificates of deposit laddered to mature at 90 day intervals over the next two years. As each one matures, a new two year CD is purchased. That doubles the interest we can get on savings accounts, provides frequent access to funds, if needed, and avoids the dangers of uninsured stocks and bonds, market losses, etc.
That said, your guess is as good as anyone's. We do own our home in Mexico, as well as two cars, so that offers some security. At present, we have one small retirement check and one US Social Security check each month. A second small SS check will begin in about a year.
At your age, I would suggest both private Mexican health insurance and IMSS for catastrophic coverage. It would also benefit you to consider FM2 status leading to 'Inmigrado' or naturalization. That assumes that you will become 'non-resident Canadians'.
It is also wise, living in Mexico, to have an investment account in Mexico which can be tapped in a matter of days. That would provide funds for a sudden large expense, such as hospitalization.


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## DUTCH (Mar 19, 2009)

411guy said:


> I was wondering if I can share in the benefit of your wisdom and experience, folks. My wife and I are now preparing for retirement and we intend to retire in Mexico (probably in Lake Chapala) primarily because of the weather and lower living expenses versus NOB. We are planning for a quiet retirement....not too much traveling, etc. We will not be beneficiaries of company defined benefit pension plans. We will draw upon our gov't. plan (in our case CPP and OAS) one day. And we do have (albeit much reduced ones versus last year) modest retirement savings (in our case RRSPs, I guess equivalent to IRAs and/or 401Ks).
> 
> I have been talking to a financial adviser and here is what he is recommending how I should invest our retirement savings:
> 
> ...



Hi, I have no idea about Retirement Plans in USA, since we are Dutch, but when we move from Holland to Mexico we had the same concerns, since we have a Private Building Capital Fund, we decide to cash this fund, sell our assets and move to Mexico. and now we own a shop in Down Town Merida, which carries it own cost and is slowly growing. 

Since expenses in Merida are very affordable (Just as an example) we do not spend too much on living cost. We own our house in Merida, so we do not pay rent. We bogth this brand new property for about 90,000 USD with 250m2 lot and 240m2 construction (3 bed rooms, back yard, garage, spacius, in a private residential area. We spend about 2,000 pesos a month on food, we own 2 cars, electrical bill is about 500 pesos a month (we have a lot of electrical equipment in house), water is 150 pesos a month, property tax is 1000 pesos a year, in general I can say that we live very good quality of life with 15,000 pesos a month which is about 1000 usd with the current exchange rate. 

At this moment we are paying Fideicomiso which is about 5000 pesos a year, but next year we will apply for the Mexican nationality and then we do not need the Fideicomiso any more.

We have been investing in real state since Yucatan is still very affordable, in about 3 year our assets have increase their values in more than 200%, better than the stock, now we are planing to make our biggest investment in a Beach condo in Progreso area, wich we felt in love with, we shop around first and we think this is a good option for us. 

We had help some friend here to make some real state investments, since I am very much experience in the construction bussines and my wife has good knowlege in finance. We are profiting form our professional experience, and Yucatan has been a great place for investment for us. Probably you can explore investing opportunities in Jalisco, they may offer you a better secure option.

Greetings from Merida.


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## HolyMole (Jan 3, 2009)

RVGRINGO said:


> ....................It would also benefit you to consider FM2 status leading to 'Inmigrado' or naturalization. That assumes that you will become 'non-resident Canadians'.......


I'm curious. Why FM2 instead of FM3? Income requirements for an FM2 are significantly higher, travel restrictions mean worrying about cumulative time spent outside Mexico, and FM2 or 3 status has no effect on a determination by Canada Revenue Agency of "resident or non-resident of Canada" for tax purposes.

As far as the latter is concerned, (resident or non-resident for tax purposes), unless one has fairly substantial income from Mexican sources, the status for tax purposes doesn't really change very much....it's still necessary to file a Canadian income tax return and be taxed on all sources of income. And establishing "non-residency" isn't all that easy, either....especially if all one's income is from Canadian sources, as it sounds is the case for 411guy . I've yet to come across any information that convinces me there would be much, if any advantage to establishing non-residency status for income tax purposes with Canada Revenue, even if one never intends to return to Canada.

As per Dutch's post, obtaining Inmigrado/naturalization saves maybe $50/month on annual fideicomiso trust administration charges from the Mexican bank.


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## RVGRINGO (May 16, 2007)

You are young and would pay the higher costs for an FM2 for only five years. Then, as either 'Inmigrado' or naturalized citizen, you would have no problem working, if necessary, opening a business, etc. and would have no further immigration fees or requirements for the rest of your lives. 18 months out of Mexico in any five year period is very generous. There is no fideicomiso requirement if you are not at the coast or near a border; therefore, no trust administration charges on your home or other property. 'Inmigrado' has all the rights of a citizen except the vote or holding political office.


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## HolyMole (Jan 3, 2009)

RVGRINGO said:


> You are young and would pay the higher costs for an FM2 for only five years. Then, as either 'Inmigrado' or naturalized citizen, you would have no problem working, if necessary, opening a business, etc. and would have no further immigration fees or requirements for the rest of your lives. 18 months out of Mexico in any five year period is very generous. There is no fideicomiso requirement if you are not at the coast or near a border; therefore, no trust administration charges on your home or other property. 'Inmigrado' has all the rights of a citizen except the vote or holding political office.


"Young" is relative, I suppose. I'm 64 and I gather that 411guy and his spouse are close to retirement....but I get your point, if someone plans/hopes to reside in Mexico "for the duration", as they say. 

It didn't sound like 411guy has any intention to work or open a business in Mexico, so I still wonder about the wisdom of going for Inmigrado status. 

And yes...sorry about me mentioning the fideicomiso. DUTCH lives in Merida & Progreso, and 411guy was asking about Chapala.


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## RVGRINGO (May 16, 2007)

They are in their 50s and could be living in Mexico for 25-45 years; maybe more. With that much time ahead, I would want all the options open.


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## Kviper (Mar 13, 2009)

411guy said:


> Now that I have (so called) "expert" advice, I will be appreciative of practical advice from those of you who are now actually managing your retirement savings. Is the "expert" advice logical, or "voodoo".


Being in the business I hope you are joking when you said you only went to only one advisor. Thats like my Dr. telling me I have 30 days to live and not getting a second opinion. Only you know the answers to your risk tolerance, income requirements, estate size, among other very important questions. You should consider educating yourself a bit more on products since there appears some disconnect in your post. You at 50 with say $1m is very different than another person here who is 80 yrs old with $10m. Apples and oranges my friend. Medical advances being what they are there is a good possibilty you or your wife could see 90 yrs old. Running out of money before than if you can avoid it is worth the time you invest in learning all you can now!


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## synthia (Apr 18, 2007)

Planning for fluctuations in exchange rates is critical if you assets and incomes are in US dollars. One of the appeals of Mexico used to be that the exchange rate was relatively stable. That is no longer true. Since I arrived in Mexico in mid-November, the US dollar has climbed from just over 12 pesos to 15.5, then fallen. Fortunately the change has been in a direction that is favorable to me.

The fall is what is interesting. I changed 3000 pesos at an ATM and my account was debited $198 plus the 1% foreign transaction fee. My bank pays any ATM fees. About 8 or 9 days later, I again changed 3000 pesos, and my account was debited $212 plus the 1% fee.

Now that doesn't sound like much, but if I were renting, and the rent were due, it would make a big difference. The peso has gone down close to 8 before. If that were to happen again, and you based your financial decisions and budget on an exchangre rate of around 15, that would mean an almost 50% increase in your living expenses.

It's something you have to consider.


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## Kviper (Mar 13, 2009)

Great point Synthia. The future outlook on the US dollar is troubling at the current speed the US is printing dollar bills. Last years deficit was approaching nearly 500 Billion (which was an all time record) and under the current administration that number cold see 1.8-1.9 Trillion by the end of 2009! US inflation and currency risk are something to consider as it would be no fun paying $20 US for a $5 Subway footlong as the current commercial goes.


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