Maintain, Raise Your Standard of Living in Mexico
Maintain a Real Middle Class Lifestyle
Do you consider yourself middle-class? In 2017, a friend sent me the cover story from Atlantic magazine, an article by Neal Gabler called “The Secret Shame of Middle Class Americans.” A key point in this widely referenced article was that most people in the US, even those who consider themselves a middle-class wage earner, couldn’t come up with $400 immediately if an emergency struck.
Today, between 42-58% of people in America don’t have an emergency fund at all and use credit cards as a de facto emergency fund. Average credit card debt is $6,700. To pay it off will take 43 months paying $200 a month. At 14% interest rate, you will pay $1,847 in fees.
By most social scientists’ definition, the middle-class has been decimated in America. Past benchmarks used by sociologists to define the middle class historically included having enough to buy a home, a car, health care, provide a college education for your children and take an annual vacation. To achieve those benchmarks today would require an estimated $120,000-180,00 a year.
A level of economic cognitive dissonance infects all of us. Anyone who makes half that amount will stubbornly tell you they are middle-class. Do you make $120,000 a year? In 2025, only 16.3% of Americans make $100,000 a year. Leading to the question related to the purpose of this website. What will your income be in the future and in retirement? Will you remain middle class?
The one thing no one anticipated in planning their retirement 20 years ago
Perhaps you don’t believe you will need the amount financial planners estimate you’ll need to retire. After all, our parents seemed to do fine with social security, a pension and perhaps a house that is paid for. Why won’t that be enough for you?
The big difference between us and our parents is that a 65 year-old couple will need the estimated $285,000 savings beyond the income they live on to pay for ridiculously inflated health care costs not covered by Medicare. That’s a development no one was expecting when they began planning for retirement decades ago. Today only 15% of employers offer a defined benefit program (ie guaranteed monthly income)
In light of those statistics, one has to wonder why so many people think that the idea of moving to Mexico is fringe. Living as an expat today is nothing like 25 years ago. Uber, Amazon.mx, increased global trade, entertainment streaming, and online banking has drastically cut the inconvenience of living in a cheaper country. The cost of a very good private health insurance policy here if you get on the plan while you're still healthy and under 64 is less than $2,400 a year.
My Experience
From a budgeting standpoint, I’ve found Mexico one big sigh of satisfaction. Almost all the costs are cut substantially. As an older person, I remember what things used to cost so it feels like in Mexico, things cost what they should cost.
However, But most cheap places to live in the US, in Mexico social security and a small pension will provide access you great restaurants, excellent weather, a stimulating culture and a wildly more interesting life than a cheap town in the US. In Mexico, On about $36,000 a year, I’ve been able to always secure lovely two bed room apartment/condos with ocean views, good fresh food, evenings out and a couple trips back home a year, barely touching retirement savings (enabling investments to continue to grow). I shudder to think of what my life would be like if I tried to live on that income in the US. Couples with beautiful homes in the city’s center often remark how they’d never be able to have such a home in the US
Understandably, friendships and relationships back home are important, as usually cited as the chief reason people decide to stay where they are. My argument has always been how much more awkward friendships are to maintain when you’re financially struggling (unless everyone around you is broke too. A sorry situation.) Perversely, a key reason I can keep up financially with friends at home, being able to go out and do things, is owed to the money I save the months I live in Mexico.
I live in the US 4 months a year and am not certain I’d see my friends any more times a year if I lived there permanently. Knowing I’m not always here, there seems to be a little incentive to get together more often.
Several years ago, the L.A. Times interviewed me and four other career victims of the Great Recession about how they had dealt with the crisis and thrived. I described my move to Mazatlán and the logic behind it. Reaction to my story were comments such as, “Let’s get real. Who’s going to move to Mexico?” as if my solution was nuts. But moving to Mexico is a move millions have made. I socialize with them in my expat breakfast clubs, the pickleball courts, and at live music venues. People from all walks of life with nothing in common other than a sense of adventure and independent reasoning skills.
In addition to greater conveniences offered today and active expat communities to bond with, traveling to Mexico’s top expat cities from Canada and the USs has become almost as easy as flying across the country to see family members and grandchildren. Some expats say they even see them more because grandchildren would much rather visit them in Puerto Vallarta or San Miguel de Allende than Topeka.
Overlooked by Financial Planners
Regardless of how much sense it might make, financial planners and traditional advisors give little thought to living in a cheaper country as an option for clients. Fluffy magazine articles and online resources give nothing to create a practical game plan out of.
Many existing books overwhelm those who might otherwise be interested with overwhelmingly detailed solutions to issues a new expat doesn’t need to think about for a year or two, perhaps never. That’s why I wrote “The Mexico Solution: Saving your money, sanity and quality of life by living in Mexico part-time.” It breaks down a plan for your first year or 18 months - all you should concern yourself with. After a year, you’ve absorbed the solutions to subsequent challenges simply conversing with the expat community.
Visit Mexico First.
Setting it all up to live in any less expensive country can take a year or two. The time to chart it all out (and learn some Spanish) for a move to Mexico is earlier than you think. Plan an extended trip or two to any of the top expat areas in Mexico (or any foreign country you’re considering). Adjust to the dissonance between what you expected and the reality of Mexico today.
Talk to the people doing it in the context of being there with them. The worst that can happen is an interesting vacation and your curiosity satisfied. The best might be exhuming your dream of retiring while you’re still young enough to enjoy it.
About the author:
Kerry Baker is the author of various books promoting life in Mexico. If Only I Had a Place is a guide to fruitful renting in Mexico.
The Mexico Solution: Saving your money, sanity, and quality of life through part-time life in Mexico was released in 2020 and will tell you exactly how to set yourself up for expat life in a way sure to both inform and entertain.
Her most recent book is The Lazy Expat: Healthy Recipes That Translate in Mexico” a cookbook for travelers, expats and snowbirds who wish to maintain a healthy diet in Mexico (You must cook.)