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Choose Mexico for Retirement

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By yttire
June 22, 2005

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This is in part a book review, a coverage of my best magic trick ever performed, and also a gedanken (a thought experiment in a foreign language). There was some guy posting on the boards here who said he had $90,000 bucks saved up and couldn't tolerate working any more, and wanted to drop out. This note will hopefully find its way to you. The book we are reviewing here is:

"Choose Mexico for Retirement" by John Howells and Don Merwin

The premise here is: You can retire in Mexico for very little money, and improve your standard of living.

Now most people's knee jerk reaction to this is: what? No way!! Part of this is, I believe, racism against the Mexican people, which is prevalent in the United States in this era. The other part of it is that they are afraid they will end up ordering leg of lama when they were trying to order leg of lamb.

I admit I am somewhat biased. In the random room lotteries of college, I was placed with a great guy named Alejandro from Guadalajara. I married a women who speaks fluent Spanish and has many relatives living in South America, and one of my good friends just moved South of the Border (to Venezuela actually) to telecommute and raise his standard of living. I correspond with him regularly. Further, my cousin in early retirement (after winning a law suit) moved South of the Border (to Guatemala) and married a woman down there and had a kid . Thus, I am not intimately familiar with the concept of expatriation, but am loosely familiar with it. I'll say that it is a mixed bag- but for someone cut off from economic opportunity or on their last legs of psychological tolerance for the institutions they are navigating now- it is your ticket out of here- if you have at least a couple hundred thousand bucks or a pension worth 800 bucks a month you can retire pretty well.

It is difficult to know what the median salary is in Mexico, partly because much of it is underground, and partly because the stats are not easily found. However, it is clear that many middle class people live on $300 bucks a month, including health insurance. Thus, if you were "safely" drafting off an account of $90,000 with 4%- you could retire right now!

If you have $90,000 bucks you could retire right now and be free of da man! However, you would be living as many Mexicans who earn $300 a month- in a small 2 bedroom house you might consider a shack, with intermittent electricity and possibly poor plumbing and no air conditioning. You would be better off than many Mexicans earning far less than $300 bucks/ month. You also would be able to eat, drink, and be merry, find a nice spouse to settle down with (albeit possibly less educated than you)- and perhaps discover things which you didn't know about yourself. I am not advocating you run out and do this- but I think every person should ask themselves why they are not doing it. If you don't have $90,000 yet, you could work towards it. You basically would be sending yourself back to 1920 standard of living- were those people happy? Yes. Would you be happy? If you took on the right attitude- probably yes. However, slaving away to da man may allow you to be happy as well with the right attitude. So whichever way we slice it, it comes down to an attitude of approach on happiness. Why do people work longer than they have to? Normally- fear.

So you can see, if you have more savings than this, or a higher pension, then you can raise your standard of living in Mexico. The numbers vary depending on who you talk to, but it sounds like you need $800 /month to live comfortably in lightly gringo settled territories, $1,200 a month in areas with lots of expatriates who have driven up prices, $1,500 a month in more scenic areas, and $15,000 a month if you want to live in Cancun right on the beach in a penthouse apartment. If you purchase your own place you can cut the rent out of your budget, but typically rents run about 50% of the equivalent mortgage (which you can't get because they don't offer mortgages) but it goes to show you that renting is a cheaper option typically.

"Choose Mexico for Retirement" is definitely a book you should read if you are thinking of retiring in Mexico- but I would recommend reading "The People's Guide to Mexico" first- it is funnier and has more details. There are a ton of resources on the web, some of them linked below, if you are considering the move.

"Choose Mexico" covers many details you should know, such as: it is nearly impossible to find work down there both due to laws and unemployment- no one drinks the water from the tap, you store potable water in a big container, and you shouldn't drive at night because people put huge rocks on the road which you can run into. (People who break down put big rocks to prevent themselves from getting hit while they work on their car, but these hazards do not magically vanish) If you retire young in an expatriate community, you may find yourself surrounded by old people.

The Mexican people are in general more open and friendly, although difficult to make into close friends. The culture is different, and you may encounter subtle racism against native American Indians (a gringo may find themselves subjected to preferential treatment because of this, as I have found on occasion, which is cloying). The native Americans were not exterminated as they were in North America- they were enslaved to work mines and fields. The Mexican culture, is in my mind, vastly preferable to US culture with its emphasis on friendship, conversation, and taking time to do things.

Lets get back to the money. If you have $200,000 in assets, and draft off 4% a year you are up to $660 bucks a month, and double it to $400,000 and you are up to $1,300 bucks a month. Your standard of living is doubling each time- giving you greater and greater amenities, such as private schooling for your children ($250 bucks a month per kid) an ISP connection ($19 bucks a month) and a gardener to protect your house from break ins while you travel ($10 a day part time). Also a maid who cooks your meals ($20 a day full time)

Most people who retire in Mexico pick either San Miguel de Allenda, Mazatlan, Oaxaca, Guadalajara or Lake Chapala. In many of these areas- the temperature hovers around 74 degrees, like California. The crime is in general lower throughout Mexico as reported by many expatriates, but the big cities are extremely crime ridden, and in general it is wise to have someone watch your place when you leave for an extended period.

Some more about the money. The peso fluctuates in relation to the American dollar. For brief periods, it has been more expensive to live in Mexico and people actually crossed the border north to buy less expensive American goods. Subsequently, the peso crashed. In recent years the peso has been more stable and is considered one of the stronger Latin American currencies- however things can change, as demonstrated by Argentina and by Mexico itself when it defaulted on its debt in 1982. However, this creates a real risk for a retiree- what if the peso adjusts so violently that it puts one out of the standard of living one is aiming for? In all probability, it is more likely that one's investment base would fall apart due to worldwide (or domestic) economic turmoil, but it remains a real risk yet small that must be considered by anyone thinking of moving south of the border for decades. At this moment it is 10.818 pesos per dollar, you can see its 5 year history here: One would not want to keep majority of their dollar invested in Mexican investments due to the volatility of the economy- so you would regularly draft USDA into pesos on a monthly basis for living costs.

If you were thinking of moving somewhere else to live on the cheap- definitely visit there first, then try a temporary life there for six months to a year before you sell off all of your old belongings back in the states. You never know when you might want to return. Every person who lives in the United States has a relative, possibly a recent one, who gave up everything for a better life- for more opportunity- for a dream of better living conditions. Most of our relatives who took this plunge entered a new language, a new culture- and had no expectation of being able to retire straight off the bat- although some did certainly. Now we find ourselves, here today, on this chat board and I am telling you that you may be able to pursue the same dream which your relatives pursued- and the risks are lower- the distances smaller- and the payoff bigger. You have genes which tell you that you should do it- but of course you may not have the fear or threat which your relatives lived under which caused them to flee. (Even the native Americans came here from another continent seeking better opportunity)

As for my family who lives South of the Border- they are encountering political turmoil in Argentina, and thinking of leaving, but truly desire to stay. My cousin came back to the states from Guatemala after some health problems, but now is headed back South after recuperating, and my friend recently expatriated to Venezuela most recently wrote to me about how expensive things are getting. Personally, I still only know the Spanish which Alejandro taught me- a lot of swearing and sass talk, which I am not sure how far it would carry me through foreign negotiations.

Now it is time for me to relate the best magic trick I ever performed. First, I woke up earlier than my Mexican room mate Alejandro. Then, I took a seven of clubs out of my deck of cards and slipped it into his garish jeans- which he always hung on a drawer the night before in preparation for the next day. Then I went back to sleep. If you do card tricks a lot (as I hate to admit, but did, for a brief period) there is a thing called "forcing" a card. Basically, you numb your adversary (the person doing the card pulling) with a few tricks, then place the card you want them to take in a certain position where they will likely take it. No worries- after a few tricks they will take it. So on the second card trick I placed my duplicate seven of clubs where he would take it- and voila- he pulled it out. He still spoke little English, and me little Spanish, but he got the idea of card tricks. So I made a big deal of having him hide the card in the deck, shuffling it, and saying all sorts of mumbo jumbo. Then I told him I couldn't find it, and that he should look in his pants pocket- I thought it might be in there. It was! He couldn't believe it, the look on his face was truly one of the things I cherish in my memory now.$/1costsindex.html

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