How & Why to Retire South of the Border (at least Part-Time)
Jubilación! It means “retirement” South of the border.
I have to tell you, I’ve started thinking very differently about retirement than I ever did in the past. I used to think about retiring in places like Hawaii, Arizona and Florida, but lately I’ve been thinking… “Al sur de la frontera es el lugar para mí,” which means: “South of the border is the place for me.”
Why? Well, the obvious answer is money. All the articles I’ve been writing lately about retirement and how retirees can use reverse mortgages have got me thinking just how difficult decades of retirement is going to be, and it’s no secret that the cost of living in Mexico is significantly less than in this country.
So, I’ve been doing quite a bit of reading on the topic and it turns out Mexico actually has an enormous amount to offer retirees… hundreds of thousands of American retirees are already retiring down there… and thinking about doing it feels pretty good, like there is still hope for a long happy retirement.
First of all, there’s the weather. You have a choice of climates in Mexico, ranging from year-round spring-like weather to warmer and more humid seaside locales… or there’s the dry heat of the desert, if that’s how you roll. In the developed areas, the infrastructure is very good and the places I’d be likely to choose from are as safe as any city in the U.S.A.
In fact, statistically speaking, you are three times more likely to be a crime victim in the US than you are in Mexico and that is a fact.
I also like Mexico because it clearly runs at a slower pace, especially when compared with the pace in most of this country. It’s a laid back kind of place where everyone seems to be living a cool, calm and collected existence. One website I was reading said: “Mexico’s pace of life is ideal for retirement—you can relax, and still lead an active retirement. Stress levels are insignificant here.”
I like the sound of that, right?
Today, there are also gated ‘expatriate’ communities that tens of thousands of Americans are already calling home, and many offer all of the amenities you’d expect to find here: supermarkets, shops, restaurants, entertainment, nightlife and anything else you could possibly want. If you’re planning to golf your retirement years away, Mexico has three of the world’s top ten golf courses, and of course, plenty more besides.
Nowadays, communications via the Internet will keep you up-to-date on more than you’ll probably care to know, and all major US television networks (CNN, Fox, BBC World, Bloomberg, Disney, Discovery, etc.) are available in Mexico via cable or satellite TV. And if that’s not enough television for you, you can install your own satellite dish to get even more channels of nothing on.
American magazines such as Newsweek, Time and Business Week can be bought in most towns and cities in Mexico, and many will deliver to Mexico by regular mail if you subscribe.
The food is unquestionably wonderful…
Mexican markets are overflowing with fresh fruit and vegetables, meats and fish are all plentiful at local markets, and all of it comes at prices we never see here. I don’t know why, but it always seems like the huge variety of tropical fruits you get in Mexico are sweeter and juicier than what we get in this country, and as it turns out I was right. The fruit south of the border is sweeter and jucier than what gets shipped north.
The variety of vegetables is unrivaled and lest you forget that Mexico is the home of the avocado, the place that grows more of the little green gems, and let me tell you… they know their way around an avocado down there.
Health care is very good…
Concerns about health care should not be a deterrent to retiring to Mexico, because quality medical care is widely available. Mexico has very good doctors, dentists, hospitals and other medical specialists. In fact, many Mexican physicians and dentists trained in the USA, and the reverse is also true… Guadalajara has a medical School with many American medical students.
Prescription drugs cost half what they do in this country, and there are also a wide range of insurance products that you can buy to protect you from the cost of medical bills. In fact, you can buy health insurance in Mexico for $270 a year.
Did you fall off your chair? You should have… I said medical insurance for $270 per year.
And get this… physicians including specialists in Mexico still make house calls for around $30, which is about the same amount you’d be charged for an office visit. Oh, and should you require hospitalization, a private room costs $50 a day… and that includes your meals.
I live in Southern California and I can’t stay home for $50 a day including my meals.
You don’t need a calculator to figure out that your retirement income will go a lot further in Mexico. Eating out or at home is generally less expensive, property taxes and maintenance costs are very low compared to what they are here, and it’s possible to structure things in such a way that your retirement income is, shall we say, tax efficient. (But, please… consult your CPA before doing anything I suggest related to paying taxes.)
You can live very well for $1,000 to $2,000 per month or less for a couple. This includes rent and utilities of $400 to $800 a month. Here are some sample costs of what a couple might pay
- Dinner out with wine at a nice restaurant: $30
- Housekeeper for 4-6 hours: $12 to $24
- Phone/internet/cable/per month: $95
- Bottled water/per month: $12
- Lunch with a cold beer: $9
- Car insurance per year: $540
The Mexican economy is now the 12th largest in the world, recently surpassing Canada (like that’s such a major accomplishment.) And unlike what’s going on in this country, the middle class in Mexico is growing fast. As of today, there are 98 Wal-Marts and 31 Costcos in Mexico. And the Mexican government recently launched a $250 billion program to improve infrastructure that includes roads, airports and seaports.
The US Embassy estimates the number of Americans living in Mexico to be 600,000, but I’ve also heard estimates that peg the number at 1,000,000, and there’s also something like 300,000 Canadians too, so it’s not like retiring in Mexico is retiring without plenty of people to be annoyed by. And by the time I retire, which at this point will be roughly 11 years past my life expectancy, I’m guessing those numbers will be even larger.
I actually think that if Canada were located where Mexico is… half the U.S. would have already moved down there.
How’s this for interesting trivia… The largest group of American retirees in the world lives in a place called, “Lakeside,” which is 25 miles south of Guadalajara… the second largest city in Mexico. It’s called Lakeside because it’s on the shores of Lake Chapala, and roughly 40,000 Norte Americanos live there. So, if being around other Americans is a big deal for you… problem solved.
And let me tell you something about Lakeside… it’s borderline gorgeous. How gorgeous? Well, all of the photos below are of homes for sale in the $300,00 – $450,000 range, Take a look… then tell me again why you couldn’t possibly consider retiring (at least part time) in Mexico.
I also figure that there’s no better time to learn to speak Spanish than during one’s retirement years, and there’s no better place to learn than in Mexico. And I must be right about those things, because I looked it up and there are language classes are available everywhere. However, if you’re worried about not speaking Spanish, move to Lake Chapala and you won’t have to.
The fact is that hundreds of thousands of Americans now living in Mexico have moved there to enjoy their retirement years. They enjoy better weather, a more relaxed lifestyle, and a host of other benefits—including affordable top-quality health care and a much lower overall cost of living.
There’s great cellular coverage and high-speed Internet is widely available, Mexico also has a large number of international airports with regularly scheduled flights from all over the world, and its proximity to the United States means you can probably even drive back to the U.S. to spend holidays with your friends and family, assuming that’s something you’d even want to.
As a result, Mexico is increasingly attracting professionals and business people who semi-retire in Mexico, continuing to conduct business and even manage companies… while sitting on a beach with a laptop. And it’s not only Mexico, by the way… there’s also Costa Rica
I’m thinking of Mexico as somewhere warm and exotic, but with all of life’s conveniences, which I’m sure is why the country consistently appears on International Living’s list of the top five countries to live in.
How to Go About It?
I’m not naïve about retiring outside this country, and I don’t think anyone else should be either. I mean, maybe I’ll love it so much that I never want to come home, but maybe that won’t be the case. I think that probably keeps quite a few people from ever actually making such a move.
In 1994, my wife and I spent an entire month in Italy with my parents. It was a fabulous trip, and Italy is a fabulous place in so many ways. My father was attending a conference, so we got to spend two weeks in Rome, before renting a car and driving up to Florence to spend the better part of a week before driving north again to Bologna and finally ending up in Venice. After four days on the canals, we took a train back to Rome, and a few days later flew home.
But I have to admit something that I’m not particularly proud of… by day 28 I was tired of Italian food, no matter how incredible it truly was. I told my wife I wanted to find a McDonalds, which I did… there’s one right by the Spanish Steps, in case you ever have a similar need. I was craving American crap.
A cab driver dropped me off right out in front and when I walked in, I felt like I had entered an American embassy.
There were Italians and all sorts of other foreigners clogging up the line as they questioned what came on the Big Mac, and I felt like calling the whole place to attention in order to offer to hold a class for the amateurs.
“Okay, stand back and everyone and pay attention… I’ll show you how this is properly done. Don’t be afraid, I’m a professional.” Were McDonalds a sport, I’d be a gold medal winner for sure.
The point is that although Italy remains one of my favorite places on the planet, after spending a month there… I was ready to go home. Maybe it was staying in hotels, or maybe it was the pressure of going everywhere with my parents, but the point is the same.
The perfect use for a reverse mortgage…
I talked to a Miami couple last year that was planning to spend their retirement years as ex-pats in Costa Rica. They were about to list their home for sale, and I suggested they consider using a reverse mortgage in order to keep their South Florida home, but still have enough money to buy a place on the coast in Costa Rica.
In six months, if they were happy living full time in CR, I explained, they could simply fly back, sell the home, and do whatever they wanted with the rest of the money, but that way… if they decided for whatever reason that they didn’t want to live outside the country full-time, they’d still have their home to which they could return for half the year if that’s what they wanted to do.
They explained that they had been planning this move for over 10 years, however, and had made many trips to CR for vacations a week or two at a time over those years, so they felt confident that they were making the right decision to jump in with both feet and sell their home.
Plus, like so many seniors, they didn’t really understand reverse mortgages and had heard some negative things somewhere, and they were so excited about making the move that they just weren’t willing to slow down long enough to give the idea of using a reverse mortgage to finance their place in CR serious consideration.
However, as it turned out they were right… sort of… they did in fact love living in Costa Rica. It wasn’t any sort of distaste for living outside the U.S. that brought them back to Miami a year later… it was something far more insidious and problematic to resist that caused their plans for retirement living to change.
In Mexico, I think it would be referred to as a “scutoque” or possibly a “neptis,” but we’d call it a “grandchild.”
And so now they’re renting a place in Ft. Lauderdale. They’d like to buy a place, but since both have stopped working they were told they would be unlikely to qualify for a mortgage and would have to pay cash, which they are understandably hesitant to do at this point in their lives.
I spoke to the husband a few months ago, and offered my congratulations at hearing the news of the new addition to their extended family. There was no point in bringing up what they didn’t take advantage of when making the move and how much better their situation would be now, had they listened to and acted on my idea to use the reverse mortgage.
Now, they’re paying rent and it’s not cheap. Had they used the reverse mortgage, depending on their specific plans, they’d still have their house and there would be no requirement that they make any payments on the mortgage until they sold the home, or after the death of the second spouse.
Two ideas whose times have come…
It occurs to me that with ten thousand baby boomers turning 62 every day for the next 16 years or so, and with that fact that such a small percentage are financially prepared for costs of retiring here, and it’s not hard to imagine that more and more people are going to be considering making a move to a more cost effective retirement setting south of the border.
And for all of those considering such a retirement living strategy, by using a reverse mortgage, they can literally have their cake and eat it too… keep the primary residence and use the proceeds from the reverse to buy the place in Mexico… or Costa Rica, Nicaragua, Panama, Belize, or wherever else one wanted to go for that matter.
If you’ve been reading what I’ve been writing about reverse mortgages over this past year, it should be becoming clear that they are incredibly flexible and can be used for many purposes… from protecting a home from foreclosure in the future, to making it easy to live part of the year in another country where your dollars go a lot further… to just using it as a credit line/safety net, just in case.
I’ve come to understand that the reason so many people think of reverse mortgages the way they do, has nothing to do with the reverse mortgage itself, it’s because the industry only marketed them one way… to the lowest income seniors who needed to cash out some equity to provide them with much needed income right away… no one else.
But, with the reverse mortgages unmatched flexibility, as times, demographics and wants and needs shared by the population change, the reverse mortgage is uniquely able to change to meet the new wants and needs of tomorrow’s retirees. That means it’s a product that’s here to stay, and thank goodness for that, because without it, older Americans would increasingly find themselves in a world of hurt, financially speaking.
Of course, you don’t need to use a reverse mortgage to retire in Mexico, but it sure would make things a whole lot easier, right? You wouldn’t have to jump in with both feet, you could keep your primary residence here in the good old U.S.A. and get a place down there where the water’s warm and you can still go out to dinner for $30… with wine… or live in the homes pictured above for $400k or less.
I guess my overriding point is that just because we’ve lost trillions in equity, our economy still largely sucks and the middle class is getting consistently clobbered in this country… the middle class is growing south of the border… and we do have choices… we can change our strategies for enjoying our retirement years.
And if you don’t like the idea of going south, there are plenty of less expensive places to retire right here in this country too. We just need to let go of what was… and start embracing what can be… adopt a new paradigm, as the suits in corporate boardrooms like to say.
Think about it like this… what makes retirement better is having choices. And having choices is what reverse mortgages are all about.
Want to see what Lake Chapala, Mexico looks like? Here’s a video that shows you exactly that.
Why are there 40,000 Americans retiring there? Click play and you’ll see.