Are you thinking about retiring in Mexico? It's a beautiful, affordable country with a rich history and warm culture.
First of all, when you think of Mexico what comes into your mind? I think of hot summers, tequila, mouth watering salsa, and friendly people to name a few.
Retiring In Mexico? Exploring Baja California Sur
I just got back from a 10 day business trip to Mexico to better understand the lifestyle as I might want to live there one day. In addition, 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.
Prior to my trip, 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. After all, I was curious about what retiring in Mexico would be like in small, sleepy beach town. Would they feel too small? Too unplugged?
Loreto's population has grown quickly percentage-wise. But their total population is still only 7,000. In other words, it's only 1/3rd the size of UC Berkeley's student body.
Welcome To Loreto, Mexico
What struck me most about Loreto, Mexico was its beauty. When I daydream of retiring in Mexico, I envision beautiful water, warm sands, plentiful wildlife and lush foliage.
The first thing I did was charter a private boat to take me across the Sea of Cortez to Coronado Island. Once there, dive master Lupe led me 100 feet down to explore the deep blue.
Talk about an unbelievable experience. Over 80 feet of perfectly clear visibility allowed us to see sting rays, lobsters, turtles, moray eels, and numerous varieties of tropical fish. We even found an underwater cave with a large air pocket so I was able to take my mask off for a short bit.
The water was an incredible 85 degrees. That's a full 32 degrees warmer than the water in Monterey Bay, California where I last dove. Let me tell you, diving without a wet suit is like striking gold!
What It's Like To Live In Loreto, Mexico
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 take visitors out kayaking.
And 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 packed 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 And Retiring 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.”
Foreigners Drive Up Prices
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.
And once I stop working completely, retiring in Mexico in a sleepy spot like Loreto sure sounds relaxing. It's a beautiful place to unplug if you want to escape the buzz of city living.
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 retiring in Mexico.
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 can choose to 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,” i.e. 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, retiring in Mexico might just be the ticket!
Start An Online Business
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I never thought I’d be able to quit my job in 2012 just three years after starting Financial Samurai. But by starting one financial crisis day in 2009, Financial Samurai actually makes more than my entire passive income total that took 15 years to build.
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Resources For Life
Negotiate A Severance Package
Never quit your job, get laid off instead if you want to move on. Negotiating a severance package provided me with six years worth of living expenses to help me focus on my online media business.
Check out my book, How To Engineer Your Layoff: Make A Small Fortune By Saying Good-bye. The book provides solid strategies for how you too, can escape a job you hate with money in your pocket.
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Updated for 2023 and beyond.