When you read about people moving or retiring to Mexico, you already know one of the reasons to be Mexico’s “less expensive cost of living.”
All but a few middle-class people might read a quick article on retiring to Mexico, sigh and say “ sounds nice,” and move on to the entertainment section. Even if a person in his/her 50’s is planning retirement, apart from a quick memory of a trip to Cancun 10 years ago, he won’t likely give it another thought.
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 there.”
I am here to help.
Every month that I live in Mexico, I reduce my monthly expenses by half. I lived my second year on the ocean in a spacious furnished two bedroom apartment with a small gym, pool and 24-hour front desk security. As an old hotel, it hosted an impressive marble entrance and landscaping. This year, I have a two-level condo, again on the water.
My food budget, if not for the gallons of wine and 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 wanted a nice dinner out, I probably wouldn’t pay more that $20.
My electric bill is roughly the same as I paid for my smaller apartment in Denver, as is internet. You do need to understand how Mexico bills for electricity though to make that work.
For private Mexican insurance, I pay $1,400 a year. 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 of what they would in the States.
My estimated monthly budget for a month
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) - $250
Health Insurance (premium coverage) $120
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%. By moving to Mexico instead of moving to any of the hundreds featureless towns offering nothing more than a lower cost of living, I will reduce 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
While it’s true that you have to make apple-to-oranges comparisons on quality of life, at the end of the day, you likely will cut your expenses by at least a third by moving to a small town in a cheaper state. Moving to a larger, more beautiful area in Mexico from Denver, I cut them in half.
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) according to Forbes. 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 some 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.
I wish I could find any good news that the healthcare crisis and housing squeeze are even being addressed seriously - too many special interests at play. Throughout America, the middle class is dying and poverty increasing. It's up to you to decide if you want to watch.
Why stop there, how about this? Sixty-two percent of Americans have less than $1,000 in their savings accounts. 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.
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 from Mexico.
Here, paradoxically, 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.
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Most recent: The Retirement Crisis, will it be yours?
Hola, 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.
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! Get started today!