Retiring In Mexico Or Abroad Might Not Be A Bad Idea
When you think of Mexico what do you think of? I think of hot summers, tequila, salsa, and friendly people to name a few. I just got back from a 10 day business trip to Mexico to better understand their lifestyle as I might want to live there one day. I also wanted to learn more about US / Mexican relations from a local’s perspective. We hear a lot of rhetoric about immigration control from our politicians and I wanted to hear for myself why someone would want to risk so much to come to the United States illegally.
Until this year, I had only been to Cancun and Playa Del Carmen for vacation. This time I visited two very sleepy towns called Loreto and La Paz on the east coast of the Baja California Sur peninsula. The idea was to visit places that were not built up for tourists like Cabo or Puerto Vallarta. Loreto’s population has grown quickly percentage-wise, but their total population is still only 7,000, or 1/3rd the size of UC Berkeley’s student body.
WELCOME TO LORETO, MEXICO
What struck me most about Loreto was its beauty. I chartered a private boat to take me across the Sea of Cortez to Coronado Island where dive master Lupe led me 100 feet down to explore the deep blue. Over 80 feet of visibility allowed us to see sting rays, lobsters, turtles, moray eels, and numerous varieties of tropical fish. The water was 85 degrees, a full 32 degrees warmer than the water in Monterrey Bay, California where I dove last month. Diving without a wet suit is like striking gold!
During the 30 minute boat ride to Coronado, I asked Lupe about his background. He said he came to Loreto 15 years ago from the Pacific side of Baja California Sur. He’s married to an American woman who shares his love for the ocean. When they are not leading diving excursions, they are taking visitors out kayaking. When they aren’t diving or kayaking, they’re going deep sea fishing. Lupe was full of life and told me he loved every minute living in Loreto.
I asked him how often he visits his wife’s side of the family. “Never,” he said. Perplexed, I asked him why not.
“It’s impossible to get a visa,” Lupe responded. “I’ve got to first apply at the visa center far away in Tijuana. Then I’ve got to pray the immigration officer is not in a grumpy mood. If by some miracle I get approved, I’ve got to then drive to Tijuana, park the car, and fly to Seattle. Forget it.”
“So even though your wife is American, they still make it difficult for you to come in?” I asked.
“Yes, that’s the way it is,” Lupe responded.
Up until then, I never fully understood the asymmetric rules of moving across borders between the United States and Mexico. There’s no need for Americans to get a visa to go to Mexico. I just brought my passport and went. Meanwhile, Mexicans have to jump through so many hurdles just to have a chance to come to our country. My appreciation for living in the United States went up several notches after this exchange.
THE ECONOMICS OF LIVING IN MEXICO
I asked Lupe whether he and other Mexicans resented American tourists for their freedom to move about so freely. “No, we don’t resent Americans. We welcome their dollars into our sleepy town,” Lupe replied.
“What we do resent is Americans buying up nice properties and making things expensive for the rest of us. When I arrived 15 years ago, the piece of property I wanted to buy cost $3,000. I had no money so I just rented. 15 years later, the same piece of property now sells for $50,000-$80,000! I hope to one day save enough money to buy a home that I can leave to my daughters.”
It’s hard to believe real estate values went up 20X in such a short period. But it’s also hard to believe that one could buy a humble home for just $3,000 in the first place as well. I went on to ask him how much one needs to make to have a great life supporting a family of four.
“You can live a wonderful life raising two kids and taking care of your spouse on $2,000 a month. $2,000 a month is actually more than enough. I know this because I take visitors diving three times a week on average, earning $150-$200 per trip after expenses. Rent is about $700 a month for a three bedroom apartment. Food is maybe $300 a month. The ocean is free. Health care is cheap. I’ve got more than enough left over to care for my family.”
My mind immediately started making plans for getting an apartment down in Loreto for a couple months a year during maximum visibility diving season. Being able to live and work from anywhere in the world is the biggest benefit of having an online business.
Lupe explained the reason why so many Mexicans want to move to America is so they can earn US wages and send money back home to their families. The problem is that wages for such immigrants tend to border on minimum wage territory. Meanwhile, the work usually isn’t very pleasant either.
Lupe and I looked around the beauty of our dive spot and he said, “Why be a slave in America when you can live free here?”
DREAMS OF A BETTER LIFE
It’s easy to take our lives for granted. We always seem to want more than we have. Why else do hoards of Americans visit Mexico for vacation every year? There are an estimated 1 million Americans currently living in Mexico as retirees. At the same time, why do over 140,000 Mexicans legally immigrate to the US every year? There’s an estimated 6 million illegal Mexican immigrants in the US as well.
The one common denominator is money. Americans who don’t have enough to retire comfortably in the US go to Mexico. Mexicans who want to make more come to America to send money back home to loved ones or try striking it rich on their own. These are very simplistic assumptions, but there’s no denying the importance of money in people’s decisions to change their surroundings.
It’s very tempting to become a “snowbird,” an American who comes to Mexico in the fall and leaves in the Spring to retain American retirement benefits. Flights are cheap and under two hours away. My biggest concerns are feeling isolated and bored after a while since these sleepy towns have very little going on. I’m holding off on the potential of living abroad for several more years because my preferred retirement destination is Hawaii. A Hawaiian lifestyle equivalent to a $2,000/month Mexican lifestyle will probably cost anywhere from $10,000 – $20,000 a month. If I fail to achieve my passive income goals within the next five years, Mexico might just be the ticket!
Readers, have you ever considered retiring in Mexico or anywhere abroad? What are your main concerns about retiring abroad? Lupe the dive master loves Loreto and would never dream of losing his freedom to try and make more money in the United States. Is the ability to make a reasonable wage just too difficult in Mexico to have a wonderful life? I’m going to be writing a new post about the best places to retire in America. If you have any input, I’d love to hear it.