A typical street in historical districts throughout Mexico
When you read about people moving or retiring to Mexico, you already know one of the reasons is going to be Mexico’s less expensive cost of living.
All but a few people will read a quick article on retiring to Mexico, sigh and say “ sounds nice,” and move on to the entertainment section. Apart from a quick memory of a trip to Cancún 10 years ago, the odds are he or she won’t likely give it another thought, even if facing the prospect of never retiring. More and more financial planners are actually offering that as advice. Never retire (As if we can always choose the day).
After living in Mexico for awhile, I sometimes I wonder if people really fathom the implications of the (under)statement, “It’s less expensive to live in Mexico.”
Every month that I live in Mexico, I reduce my monthly expenses by half from what they are in the United States.
The first year, I shared a house on the ocean. The second year I lived in a spacious furnished two bedroom apartment also on the ocean with a small gym, pool and 24-hour front desk security. As an old hotel, it hosted an impressive marble entrance and abundant landscaping.
The following year, I had a two-level condo, again on the water. Most recently, I rented an apartment with an ocean view and semi-private pool only a few blocks from the city's historic district. The rent for all of these apartments was a little over half of what I pay for a 640 square foot apartment in Denver.
My food budget, if not for the gallons of wine and extra food that I buy for twice monthly soirees with my girlfriends, would be about half of what I pay for groceries in the U.S. I prefer to cook my own meals, but if I want a nice dinner out, I probably wouldn’t pay more that $20. Every form of entertainment and service (haircuts, spa treatments, movies) costs at least 50% less too.
For health insurance, I anticipate paying $1,400 when I get on with a Mexican private carrier. I could pay much less if I was satisfied with IMSS insurance (Mexico's national healthcare system). The couple medications I take cost a fraction in Mexico of what they would in the States. One of them that costs over $150 a month in the U.S., I can get for $27 in Mexico. Dental work is a fraction of what it costs at home.
For middle-class people in the U.S., things are not going well. By almost all indicators, people are losing ground. Health care premiums are rising faster than incomes (and don’t get me started about the price of drugs in our country). In many cities in the U.S. rents are increasing at roughly twice the rate of family incomes.
Home prices are surging 13 times the rate of wages. Food prices are increasing, albeit less dramatically in the last few years. The affordable housing crisis is already becoming a middle class housing crisis in most major cities.
In 2017, consumer prices rose at the highest rate since 2013. Gasoline led the way, followed by increases in car prices are up as is the cost of apparel, especially men's apparel.
Why stop there? How about this? Sixty-two percent of Americans have less than $1,000 in their savings accounts. Forty-two percent have less than $10,000 saved for retirement. The median retirement savings of a fifty-five year old is $117,000, less than a third of what it’s estimated they’d need at a salary of $60,000.
I wish I could find any good news that the healthcare crisis and the housing squeeze. Throughout America, the middle class is dying and poverty increasing. It's up to you to decide if you want to hang around to watch.
My estimated monthly budget for a month living in Mexico
Rent: $850 (I could pay $500 if I didn’t want to live on the water)
Electric and Internet: $60
(I only stream movies so don’t have cable)
Transportation: $150 (I take cabs and use Uber)
Entertainment (and all that wine) - $200
Misc: $150 (clothes)
[Health Insurance (monthly premium coverage): $120
Total: $1,810 (with insurance, 1,930)
But let’s say you couldn’t bear not owning your home. For those who feel that way, here is an estimate of the budget to live in Lake Chapala, one of the most popular expat areas in the Mexico. Courtesy of a great website there, Focus on Mexico. Don’t forget to note the housekeeping and gardening.
Property Tax: $15
Propane Gas: $20
Telephone + Internet: $55
Satellite TV: $60
Healthcare: $25 (cost of IMSS insurance per month) , what many expats opt for
Gasoline and Car Maintenance: $185
Dining and Entertainment: $250 (restaurants, movies, social events)
Misc expenses: $200
TOTAL: 1,300 USD (if you own your own home)
While you would have the initial outlay of home purchase, your property taxes and maintenance costs would be much lower. If you rent, add another $600, bringing the total to $1,900.
To put it another way, if I were to move from Denver, Colorado to my old hometown of Altus in rural Oklahoma (population 20,000), I would reduce my expenses by 31% according to a website that does these comparisons for you.
By moving to Mexico instead of moving to any of the hundreds featureless towns offering nothing more than a lower cost of living, I have created a more interesting life and reduced my expenses by an average of 38% based on the following indices.
Indices Difference (provided by Numeo)
Consumer Prices in Mexico are 55.10% lower than in United States
Consumer Prices Including Rent in Mexico are 61.92% lower than in United States
Rent Prices in Mexico are 75.77% lower than in United States
Restaurant Prices in Mexico are 58.35% lower than in United States
Groceries Prices in Mexico are 58.43% lower than in United States
Local Purchasing Power in Mexico is 46.42% lower than in United States
It’s hard to fight off nausea when you think of the direction life is taking for so many people. While my life is not yet worry-free, the numbers are beginning to at least make sense as I look at the American economy from a rear-view mirror.
Paradoxically, in Mexico you might be able to keep your "American" middle class dream alive…..some might even say surpass it.
Related link: How much do you need for healthcare costs even after you get Medicare? Hold on to your hat.
Next up: Want that screening a year ahead of when your insurance company will pay for it? Living in Mexico good news for hypochondriacs.
Most recent: The Retirement Crisis, will it be yours?
About the author:
Hola - My name is Kerry Baker. I am partner with Ventanas Mexico which provides insight and resources to people considering full or part-time expat life in Mexico. Most recently I released "If Only I Had a Place" on renting in Mexico. The book will show you how to avoid the mistakes and take advantage of the opportunities for expats in Mexico.
I am also author of the "Interactive Guide to Learning Spanish Free Online," a curation of the best Spanish language tools on the web. Don't be an expat who doesn't speak Spanish! The book's interactive links takes you straight to the fabulous tools Google Ads doesn't want you to know about.