How much does Mexico pay for retirement? Unpacking the pension and welfare systems

In 2024, Mexico’s government established the Welfare Pension Fund (FPB) to provide a supplement to retirees under the modern AFORE system, ensuring a total monthly payout of up to MXN 16,777.68, or 100% of their last salary. The answer to how much does Mexico pay for retirement depends on which system a person is covered by and their individual contribution history.

Quick Summary

Mexico's retirement payments are determined by a worker's contribution history to either the Mexican Social Security Institute (IMSS) for private workers or the Institute for Social Security and Services for State Workers (ISSSTE) for public employees. The amount is based on different laws, weekly contributions, and average salary. Additionally, the government provides a universal, non-contributory welfare pension for all citizens over 65.

Key Points

• Two Primary Systems: Mexico operates a contributory pension system for formal employees (IMSS for private workers, ISSSTE for public workers) and a non-contributory, universal welfare pension (Pensión del Bienestar) for seniors.

• IMSS Law of 1997: For workers beginning after mid-1997, the pension is a defined contribution from their AFORE account. The government now provides a supplement to ensure a pension equal to 100% of their last salary, up to a cap.

• IMSS Law of 1973: For workers who began contributing before mid-1997, the pension is based on a defined benefit formula, considering the average wage of their last 250 weeks and total contributions.

• Universal Welfare Pension: All Mexican citizens over 65 receive the Pensión del Bienestar, a bimonthly payment that amounted to MXN 6,200 in 2025.

• Expat Considerations: Many foreign retirees supplement their Mexican income with international pensions, like U.S. Social Security, to afford a comfortable lifestyle due to Mexico's lower cost of living.

• Key Factors Affecting Pension: The amount of a contributory pension depends on the number of weekly contributions, the average salary throughout the career, the system under which the worker contributed, and their retirement age.

• Recent Reforms: Recent pension reforms have increased minimum pensions, raised employer contribution rates, and reduced the minimum number of weekly contributions required for some pensions.

Understanding Mexico’s Retirement Systems

Mexico's retirement framework is a combination of systems based on a worker's employment history. Private sector employees are covered by the Mexican Social Security Institute (IMSS), while federal public servants are under the Institute for Social Security and Services for State Workers (ISSSTE). Additionally, the Pensión del Bienestar is a universal welfare pension for all seniors over 65.

The Contributory System: IMSS and ISSSTE

For those with formal employment, pension amounts depend on contributions. IMSS has two main pension systems based on contribution start dates:

• Law of 1973: Workers who started contributing before July 1, 1997, receive a defined benefit pension. The amount is calculated using the average daily wage from the last 250 weeks, total weekly contributions (minimum 500), and retirement age. Dependents' supplements may also be available.
• Law of 1997: For those contributing after July 1, 1997, the system is a defined contribution model with funds in an individual retirement account (AFORE). The pension depends on the account balance, investment performance, and annuity choice. A 2024 reform ensures a supplement to reach 100% of the last salary, up to a cap.

ISSSTE covers public sector employees with a contributory model, and eligibility and calculations vary by regime. Recent reforms have impacted both systems.

The Non-Contributory System: Pensión del Bienestar

The Pensión del Bienestar is a universal benefit for all Mexican citizens aged 65 and older, funded by the federal government. The bimonthly payment is MXN 6,200 as of 2025. A special welfare pension is available for some women aged 60-64, providing MXN 3,000 bimonthly in 2025 before they become eligible for the full pension at 65.

Pension Comparison Table: IMSS (1973 vs. 1997) vs. Bienestar

Feature	IMSS Law of 1973	IMSS Law of 1997	Pensión del Bienestar
Payer	IMSS (Defined Benefit)	AFORE (Defined Contribution)	Federal Government
Eligibility	Began contributing before July 1, 1997; 500 weekly contributions.	Began contributing after July 1, 1997; minimum 1,000 weekly contributions.	All Mexicans aged 65+.
Minimum Weeks	500 weeks.	1,000 weeks (as of 2020).	N/A
Benefit Calculation	Average salary of last 250 weeks + dependents' supplements.	Accumulated balance in AFORE account + potential government supplement.	Flat rate based on current government budget.
Benefit Example	Varies widely based on earnings and years of service.	Varies widely based on contributions and investment performance.	MXN 6,200 bimonthly (2025).
Dependents' Supplements	Yes, available.	No, dependent payments come from personal account balance.	N/A

Combining Mexican Pensions with Other Income Streams

Mexican pensions alone may not be sufficient for a comfortable retirement. Many expats supplement their income with pensions from their home countries. The lower cost of living in Mexico makes it possible to live comfortably on an average U.S. Social Security check. Retirement planning often involves combining multiple income sources.

Common income streams for retirees in Mexico include:

• Private Retirement Accounts: Such as 401(k)s and IRAs, often a primary source for foreign retirees.
• International Social Security: U.S. and Canadian payments are reliable income sources. A U.S.-Mexico agreement allows combining contributions for eligibility.
• Real Estate: Rental income or profits from selling property can provide funds. More information is available from the National Institutes of Health on living longer in Mexico.
• Part-Time Work: Some retirees work part-time for extra income, though it can affect pension eligibility.

Conclusion

The amount Mexico pays for retirement varies significantly based on an individual's work history and the specific pension system. Formal workers contributing to IMSS or ISSSTE receive pensions tied to their salaries, while all older adults get the universal Pensión del Bienestar. Mexico's lower cost of living makes it appealing for foreign retirees who can stretch their international retirement funds further. Effective retirement planning in Mexico requires understanding the different pension systems and combining all potential income sources.

Frequently Asked Questions

What is the Pension del Bienestar?

The Pensión del Bienestar is a universal, non-contributory welfare pension paid by the Mexican government to all Mexican citizens aged 65 and older. In 2025, the bimonthly payment is MXN 6,200.

How is the IMSS pension calculated under the Law of 1973?

For those covered by the Law of 1973, the pension is calculated based on a defined benefit. The amount is derived from the average daily wage from the last 250 weeks of contributions, the total number of weeks contributed (minimum 500), and the age of retirement.

How is the IMSS pension calculated under the Law of 1997?

Under the 1997 law, the pension is based on a defined contribution system. Your pension depends on the balance accumulated in your individual retirement account (AFORE), the returns on that investment, and the chosen payment method. Recent reforms guarantee a supplement to match 100% of the last salary, up to a cap, for those who qualify.

Can I combine a foreign pension with a Mexican pension?

Yes. Many foreign retirees combine their foreign pension, such as U.S. or Canadian Social Security, with their Mexican pension. The lower cost of living in Mexico often allows foreign pensions to provide a comfortable lifestyle.

What factors influence the amount of my Mexican pension?

The amount is influenced by the pension law that applies to you (pre-1997 or post-1997), your total number of weekly contributions, the average salary of your working years, and your age at retirement.

Is there a pension system for public sector workers?

Yes, federal public servants are covered by the Institute for Social Security and Services for State Workers (ISSSTE). This contributory system has its own rules and calculations, separate from the IMSS.

How do recent reforms affect Mexican pension payments?

Recent reforms, particularly those in 2019 and 2020, have increased minimum pensions, raised employer contribution rates, and reduced the minimum number of weekly contributions required for some pensions.