Boy, that's a tough one, and I don't envy your decision. But I do understand...
You may want to try to sell him and see if you find someone that you don't think will take him to slaughter. But it can be difficult to place an older, unreliable horse. I also definitely understand your economic situation. We take in our animals believing that we'll always be able to give them a good home for as long as they live, but sometimes, that's just not realistic. Life happens, and difficult decisions are forced on us.
Last year I sold my 15 year old morab mare (I'd had her for 14 years) because I almost never rode her anymore, and I couldn't justify boarding two horses. Also, she just wasn't a good fit for me, and I don't believe in people being stuck with a horse they don't enjoy or can't work with. A horse that's a horrible fit for one person may be a great fit for someone else.
Anyway, I'd lost my job and had to move, and I decided one of the two horses had to go. I was fortunate enough that my mare went to an acquaintance, so I can keep tabs on her. The only bad thing is that she has now developed laminitis twice at her new home because the people are somewhat ignorant. They love her, but they're loving her to death--literally.
I understand you not wanting your horse to go to a Mexican slaughterhouse. Unlike Canada, where they shoot the horses in the head, Mexico stabs them in the neck with a knife until they die. If it came down to it, and I knew there was a high likelihood that my horse would end up there, I'd opt for humane euthanization.
Only you can decide, and it's not going to be easy. But just make the best decision you can for the well-being of the horse, and once it's done, you have to try to let it go knowing you did the best you could.