Live & Retire

A Realistic Budget

by Carl Franz

I have several retirement guides to Mexico on my shelves, some dating back to the early Fifties and Sixties. Almost without exception, their authors present Mexico as a bargain hunter’s dream, a warm, inviting “paradise for peanuts.” For some retirees, however, the promise of living cheap turns out to be misleading, if not entirely false. Why? Because they innocently believed they could uproot their American life, with all of its comforts and conveniences, and transplant it to Mexican soil — with the help of a full-time gardener and maid thrown in for good measure, and all this for very few pesos.

Yes, it is possible to live in Mexico on far less than the average person spends in the US. The big question, of course, is how? In our experience, the answer to that question is to learn to live like your Mexican neighbors. To enjoy the best of Mexico, including the financial bargains it offers, you must adopt a more Mexican style of living. This might seem obvious, but when you’re in the ‘pink cloud’ planning stage this fact is easy to overlook.

Lorena and I have lived for months at a time in a number of small Mexican towns and villages. At today’s prices, I’m sure we could find a simple but quite adequate (by our standards) house or apartment for no more than $150 a month and probably even less. Add a generous $3 a day for food we’ll cook ourselves and another $2 a day for restaurant meals and beverages. Figure $100 a month for utilities, miscellaneous and local bus rides. Add this all up and I’ve got the perfect title for my next book: HOW TO LIVE LIKE ROYALTY IN MEXICO ON $400 A MONTH!. (If we wanted to squeeze, I’d find a $75 house and trim our other expenses, for a stingy total of $300 a month. Imagine the headlines!)

If this figure sounds fantastic, remember that to many Mexicans, even this modest sum would seem generous.

Before you tear up your contract to buy a beachfront condo, consider this: if you were to visit us in this hypothetical village, you’d find us sitting around a cheap pine table, eating the vegetarian dinner we’d cooked ourselves on a tiny gas stove; or lounging on lumpy beds, reading by a naked 60 watt light bulb, or washing our own dishes and laundry. In other words, we’d be enjoying a lifestyle shared by our Mexican neighbors (which is much like we live in our cabin in the US).

One of the best ways to forecast what it will cost you to live in Mexico is to first calculate how much you spend now, in familiar, comfortable circumstances at home. Using these figures, here are some very rough “ballpark” figures on the cost of living in Mexico’s popular retirement communities. Keep in mind that these figures are moderate rather than ‘budget..’

Housing: 50% of whatever you’re paying now. If you rent a small house or apartment for $800 a month, $400 should get you an equivalent place — or even better — in Mexico. For this price, however, you shouldn’t expect a lavish beachfront condo or a swimming pool in a gated community. In areas that don’t see many tourists or foreign residents — which is most of Mexico — your housing costs might go as low as 25%.

Food: Eating out becomes an important form of entertainment, so I’ll be conservative and guess-timate that you’ll trim about 25% from your current food bill. On the other hand, diligent do-it-yourself cooks and tortilla-lovers will probably at least 50%.

 Alcohol: Liquor costs less in Mexico, but it also goes down easier. I might as well warn you now: heavy partying is a major expense for many retirees, and alcoholism is a very real hazard. Cerveza costs about the same as premium US beer and middle-shelf Mexican wines and hard liquor are 50% (or less).

• Heating: Negligible unless you’ll be in the highlands above 5,000’ in winter. If so, better add $10-20 per winter month for gas and electric space heaters.

 Utilities: Mexicans gripe that la luz (lights, power) is expensive, but by US standards it is not. Figure an average of $30 a month or $50 if you must have air-conditioning. Gas for cooking and hot water will cost $10 to $30 a month. Water may be free or just a few dollars a month. Mexico is perennially short on water so if you have a green lawn fetish, get over it.

• Telephone: Basic service is affordable, but long distance international calls will be a painful drain on your checkbook. Call your long-distance phone company and get their rates to Mexico. If they seem high, expect to pay even more for international calls made from Mexico. Plan on using email and a fax machine if you make many calls or need to keep tabs on a business.

• Internet connections: $20 to $30 a month is average, not including set-up fees. Email at pay-for-messages services run $1-$2 per message and internet cafe computer use is $3 -$6 an hour.

Laundry: About double whatever it costs at your local laundromat.

Hired help: $2 or $3 an hour is probably “generous” for occasional housecleaning and yard work.

• Visits to Home: Include the cost of round-trip travel to visit your family and old home in your projected cost of living in Mexico.

These on-the-spot figures will give a much more realistic estimate of your actual cost to live comfortably in Mexico. Don’t forget inflation: in Mexico it often runs 15% or more a year. How far will your money stretch in one, two, and five years?

A few words from friends and readers living in Mexico

We regularly receive letters and email from Americans and Canadians who have successfully relocated or retired in Mexico. In sharing the details of their new lives with us, a common theme emerges: these are people with an unusual spirit of independence and self-reliance. This doesn’t mean they’re reckless — more than a few confess that it took years of visiting Mexico before they took the final plunge and moved there. Overall, however, these people have devoted serious thought and often quite a bit of study to the challenge of living in a foreign country.

Some of these people might strike you as unconventional, but they all share success and satisfaction in their new lives. You don’t have to imitate Milo’s semi-nomadic RV lifestyle, but his strategy of dividing his time between northern Mexico and the American southwest makes a lot of sense, especially on a very modest income.

• Although technically not allowed to work in Mexico, Helen got by for many years on a modest but unpredictable income as an independent clothing designer. Like many other self-supported foreigners, Helen benefited from the tolerance Mexicans have for those who work in the creative arts. Learning Spanish, hiring Mexican friends and making local contacts also helped. By the time she began collecting Social Security, Helen had pared her needs down to the essentials. Having thoroughly adopted Latin America as her home, her time is now devoted to reading, writing and bilingual tutoring.

• After dropping out of a highly paid, highly stressful career, Alan combined a modest investment income with Social Security to underwrite a comfortable, laid-back life in a popular Mexican retirement town. In spite of health problems, Alan seems very satisfied and has few, if any second thoughts about his move. On most days Alan can be found enjoying the morning sun in the town plaza, reading a newspaper or visiting with fellow retirees. If you’re a newcomer and have questions about Mexican doctors or medical insurance, or just want to know the going price of a two-bedroom apartment, Alan is your man.

• Lynne & Harold retired from well-paid civil service jobs. To their children’s horror, the couple immediately moved to Mexico. They’ve rented a very comfortable garden apartment for well over ten years and claim to be perfectly happy. Well into their 70’s, both Lynne and Harold are very active in local clubs and charities. In addition to Harold’s weekly poker game, their main entertainments are reading, cable television and visiting with friends. They also make frequent sightseeing trips around Mexico, both on their own and in organized groups.

• Jim and Rhonda took early retirement and moved to a comfortable rental house in San Miguel de Allende. A trial period of a year convinced the couple that they could be happy in Mexico. Jim and Rhonda continue to rent and although they have FM2 status, they’ve imported only their most useful household goods: stereo, computer and television. “Nothing else was worth the shipping cost or hassle,” Jim says. “Everything we need is available here, either new or at garage sales.” In addition to frequent side trips, both are involved in various classes, hobbies and civic activities. They’ve made a number of good Mexican friends who share their interests in art, music, archaeology and architecture. Their lives are busy yet they set aside personal time for painting, writing, yoga and reading. Rhonda keeps close track of their spending, which averages $800 a month (not including trips to the US).

• Hazel & Armand retired on a small disability pension, supplemented by odd jobs and a talent for turning flea market junk into salable treasures. Using Salvation Army furniture and used home appliances, they converted an old schoolbus into a wonderfully cozy motorhome and headed for Mexico. They lived half of each year on a little-known Mexican beach or parked among the papaya trees at a friend’s rancho. Replacing furniture and appliances was their major expense: every spring Hazel and Armand would give away most of their possessions before returning north. Although they lived well below the American poverty line, their generosity to friends and Mexican neighbors was legendary. They’re gone now but definitely not forgotten!

• Milo is a lean, middle-aged bachelor with a deep distrust of the government and an equally strong aversion to holding down a regular job. An athlete and dedicated outdoorsman, Milo explores Mexico in the winter and summers in the American Southwest. He has his own small service business, which he insists that I not describe. “There’s no paper on me,” Milo explains. “I don’t pay taxes or social security. Everything I own is in someone else’s name. I charge fair prices and I work hard. I also work strictly for cash.” Milo’s annual income of $12-15,000 just covers his expenses, which include a small, self-contained RV.

From The People's Guide to Mexico
25th Anniversary Edition


The People's Guide to Mexico
©1972-2000 by Carl Franz & Lorena Havens
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