Ventanas Mexico

Books and resources for life in Mexico

Provides a blog promoting living in Mexico and promotes books on learning Spanish and how to rent in Mexico.

The Retirement Crisis and Living in Mexico

 
 
middle class neighborhood in Mexico

Middle class neighborhood in Mexico

Updated 2019

A few years ago, a friend sent me the cover story from Atlantic magazine, an article called “The Secret Shame of Middle Class Americans.” a key point in his excellent article is that most people in the U.S., even those who consider themselves a middle-class wage earner, could not come up with $400 immediately if an emergency struck. 

My friend guessed accurately that the story would resonate with me and what I write about as an American who has chosen to live in Mexico, partly for financial reasons. Rather than go in the red every month supporting a middle-class American lifestyle on wages that likely will never recover from the Great Recession, I have chosen to reduce spending in a more unconventional way and work remotely.

Past benchmarks used by sociologists to define “middle class" have 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 a year.

Yet anyone who makes $70,000 a year will stubbornly tell you they are middle-class. Paradoxically, Mexico's middle class can achieve all the criteria; the home, car, healthcare and education for their children. Those things may look different in Mexico, but all the benchmarks can be met.

For writers, I.T professionals, photographers, web designers and others who can finnagle it, Mexico is a place to work, save money and live an adventure.  For others, moving to Mexico has enabled hundreds of thousands to retire at the normal age, 55 or so, when people used to be able to retire.

According to the Trinity Study, at age 25 you could save enough for retirement if you saved 20% of your salary for 37 years at a salary of $70,000.  Who wouldn’t give up before they began knowing they going to need $1,750,000 to retire based on a salary of $70,000 year to be certain of never having to work again?   By the time they took out that 20% for retirement savings, another 20% for taxes on their $70,000/year salary, they'd have to live on $41,300 for 37 years.

 Now let's say you don't believe you will really need $1,750,000 to retire. We all know people with less than $1,750,000 who seem to be doing fine in retirement, between social security, pensions and perhaps a house that is paid for.

If you read up on the anticipated rising cost of healthcare however, you will learn that a 65 year-old couple will need the estimated $317,000 savings beyond the income they live on to pay for health care costs not covered by Medicare. That is a development no one was expecting when they began planning for retirement decades ago. Social security was to provide income for living expense, not supplement Medicare.

In light of those statistics, expats in Mexico shake their head in wonder that so many people still think that the idea of cutting bait and moving to Mexico is crazy.  The cost of a very good health insurance policy here, if you get on the plan while you're still healthy and under 64 is less than $1,800 a year.

From a budgeting standpoint, moving to Mexico at its heart a matter of moving to a far less expensive place. But unlike that trailer in West Virginia, in Mexico, on your social security and pension you will still have a truly middle-class lifestyle; with nice restaurants, a stimulating culture and a wildly more interesting life.  

Admittedly, you will have cultural adjustments and language difficulties (Arguably like adjusting in West Virginia, but with better food and dentistry). You will grow personally and be enriched culturally in Mexico in a way you never could living in America’s small cities and town. If you learn the language you will probably even be mentally sharper .

Some people say they would not consider moving because of their relationships, often citing their grandchildren. Most of those living in Mexico are enterprising enough to figure out ingenious ways of spending months in the U.S. if they want to stay close to family and friends. Between long visits and Skype,  they keep those relationships alive and well - and their options open.

Understandably, our lives and relationships are important to us. To that my argument would be how much more difficult relationships are to maintain when you are poor.  People living with retirement anxiety need to know that the expat option is real, practical, and that maintaining relationships while living abroad gets easier every year through technology.

Whenever I pitch stories to retirement planning magazines or blogs about all the benefits of living in Mexico, my ideas are usually dismissed as and idea only considered by the lunatic fringe (that now numbers over 1 million American retirees in Mexico). Likely the most you’ll see will be an worthless spam by International Living, or a “Ten Best” list unless you dig for it.

The most common articles are nothing like the in-depth ones you will find on how to secure a really shitty job when you’re 60, how to avoid telephone scams and book lists for the dessicated. Magazines and on-line publications should be covering the expat option with at least the same seriousness they employ when covering cleaning tools for older teeth.

What a disservice this omission is! Becoming an expat might save a reader from aging in destitution. I know several single women in Mazatlán living very pleasant lives on their pensions alone. They could never do that in the U.S. Those women had to dig that information out and swim upstream against a current of misinformation.

housing in Mexico

Gated community in Mazatlán

Information on retiring to Mexico or another less expensive country should be presented in ways that can be taken seriously, because the retirement crisis for middle-class, middle-aged Americans is serious.

Middle-class people who are worried about their money lasting should be encouraged by these “experts” to seek truthful information on retiring to Mexico from credible sources if they are not going to provide it themselves.

Setting it all up to live in any less expensive country can take several years. The time to chart it all out (and learn some Spanish) is earlier than you think. 

Plan an extended trip to any of the top expat areas. Talk to the people doing it. You’ve got nothing to lose. The worst that can happen is a good vacation, the best might be exhuming you dream of retiring while you’re still young enough to enjoy it.

If they really care about their middle-class clients, financial planning and retirement planning publications should encourage their readers to learn the facts about Mexico as their hopes for a secure, worry-free retirement in the U.S grow ever dimmer.   

Related Links:

“America’s Looming Retirement Savings Crisis” - CNBC
"“The Retirement Crisis is Getting Truly Scary - Slate magazine
"The American Retirement Crisis in Five Charts  -  Fiscal Times
"The Retirement Crisis is Real" - Huffington Post, along with a slate of similar articles.

"The American Retirement Crisis is Real" by The Week
 

"What you don't know about America's Healthcare system now could bankrupt you later" -  Ventanas Mexico

Next up:  Once you have ducked out of the American economy, you see it from an entirely different perspective 

Most recent:   An examination of the world's most dangerous cities and our skewed concept of danger itself

Take a fun quiz on where to live in Mexico by Mexican Guru - I took it and it gave me Mazatlán

About the author:

Hola, I'm Kerry Baker and a partner with Ventanas Mexico, which provides insight and resources to those considering expat life in Mexico, most recently "If Only I Had a Place" on renting in Mexico (very different from renting in the U.S.) with all its advantages and disadvantages for the expat.

My first book, and love, was writing the "Interactive Guide to Learning Spanish Free Online," a curation of the best Spanish language tools on the web.  Create unique plans every day or use the plans in the book. The book is completely interactive, enabling you to go via interactive links to the best features.  Use it with your laptop , e-reader or tablet like I do.