Retiring Abroad – Could We Do It?
We are in the middle of our seven week adventure in Mexico right now. Although we traveled to Mexico just for fun, I’m also viewing the trip as an opportunity to explore a few places where we might spend prolonged periods of time in the future. That might mean spending a year or more living abroad or spending summers or winters chasing nice weather.
Mexico tends to top the lists of places to retire abroad. I think I know why: inexpensive living, good weather, and close proximity to the US. But it’s not all rainbows and unicorns south of the border.
Throughout the decade of building my retirement stash, I was always intrigued by the early retirees that chose to live overseas. Jeremy and Winnie, who blog at Go Curry Cracker retired in their 30’s and have traveled or lived in various locales in Latin America and Asia since then. Billy and Akaisha Kaderli also retired in their 30’s and have been traveling the world for the past 25 years. The maybe-retired Jed at Bucking the Trend is living in Granada, Spain at the moment with his wife and two kids. The folks at Bumfuzzle, though not likely to self-describe as “early retired”, have trotted the globe by van and by boat for around a decade now (and are currently in Mexico not far from us). They also had a couple of kids along the way. Others are doing it, so I know it’s not impossible.
Moving to a low cost of living destination overseas that many people visit on vacation sounds exciting. It’s not currently our Plan A but might be a decent Plan B or Plan C.
Here’s my take on the pros and cons of retiring abroad:
Living in Mexico is cheap. Virtually everything is the same price as in the US or less. Sometimes much less. Fruits and vegetables are half the price of what we pay in Raleigh. There are amazing bakeries all over called “panaderias” that serve up hot and fresh breads and pastries for well under a buck each. Sit down restaurants run roughly 30-50% less than Raleigh, while incredible street food can be 50-75% less than something similar back home. Check out our $12 USD lunch of steak tacos, soup, fish, and french fries.
Beyond the price of food, there’s also the freshness of the fruits and vegetables. Because the climate allows year round growing seasons, there are lots of somewhat locally grown fresh produce all the time. Many tropical fruits like mangoes, pineapples, and avocados are hard to find at peak ripeness in Raleigh at any price. But that’s not a problem here where fruit stands are plentiful.
As far as access to US goods, it’s pretty easy to find almost anything you want here. There are Walmarts, Sam’s Clubs, Costcos, and a variety of other similar warehouse and big box stores offering any grocery product, electronic item, household good, or clothing article you want. The styles and varieties might be different than what you are used to, but overall it’s not hard to find what you want.
Housing can be cheaper than many parts of the US, though maybe not by much if we were to stay in an expat area or a decent part of Mexico City. Our current rental apartment of about 700 square feet in Mexico City costs $135,000 USD, similar to our 1,800 square foot house in Raleigh.
Transportation is about $0.30-0.35 USD (5-6 pesos) for local buses or the subway. Mostly clean, generally fast, and with a more respectable clientele than what I’ve experienced on public transit in the US. Taxis are incredibly cheap, with fares starting around $2 USD for a short trip and usually no more than $3-4 for most places around town. Cheap and convenient buses, subways, and taxis make it easy to skip car ownership, unlike where we live in Raleigh.
Some public areas like parks and playgrounds are very nice but it’s highly variable.
Services like housecleaning and repairs are very affordable. Essentially any labor-intensive service won’t cost a lot compared to US prices. In Mexico City, 4-5 hours of housekeeping runs about $20 USD (300 pesos). In San Miguel de Allende, we were asked to pay the maid an extra $2.67 USD (40 pesos) per hour if we have her cook for us or render additional services.
Saving money isn’t the only good thing about Mexico. The weather is incredible. This summer the temperatures have been in the 70’s and low 80’s during the day then dipping into the 50’s at night. Air conditioning isn’t necessary at all at these temps. Back home in Raleigh it’s been a steady 90-100 degrees almost every day. Some folks winter in Mexico, but we are tempted to summer in Mexico. The weather stats I’m throwing out pertain to the central highland area in and around Mexico City. It’s crazy hot and humid in many coastal locations similar to the southeastern US during summer.
We’re also enjoying the novelty of new parks, museums, food, music, customs, and culture. A trip to the grocery store or market is an adventure, whereas at home it’s just a chore. I imagine the novelty would wear off after a certain point though.
Some costs are higher, such as imported foodstuffs or items that aren’t very common in Mexico. Spaghetti sauce, for example is $1.50-$2.00 per not very tasty can here (or $3 for a jar of Prego), whereas back home I can get decent pasta sauce for $1.00 per jar or can. Italian deli meats are crazy expensive and you’re mostly stuck with expensive cooked and pressed ham or uninspired turkey meat if you want sliced meat for a sandwich. It’s obviously smart to live like the locals when imported goods are expensive.
“Don’t drink the tap water”, they say. As a result, you have to buy bottled water ($.50 for a small bottle or a few bucks for five gallons) and can’t simply quench your thirst at water fountains scattered around town at parks and in stores and museums. Brushing teeth and washing produce require extra effort compared to using tap water.
It’s easy to save money on almost everything down in Mexico, but flying back to the US to visit friends and family would eat into any cost savings (particularly for our family of five). We could partially offset the flight costs by travel hacking credit cards (which is how we got free flights to Mexico this year!) but I’m not sure if we could get free flights indefinitely through travel hacking. Eventually the kids would be out of the house and at that point, buying two round trip tickets is much more affordable for the occasional trip back home.
As foreigners not quite fluent in the language, we are occasionally subjected to the “tourist tax”. Cashiers and shopkeepers sometimes “forget” to give us the correct change. Taxi drivers know we don’t know exactly what a trip should cost, so we end up paying a little extra. We have been fairly vigilant about not getting ripped off but it will happen. No point in getting mad. It’s just a cost of doing business. The longer you are here and the more fluency you have in the language, the less likely you are to pay tourist rates for anything.
On the subject of language, it’s a big deal. Unless you’re staying in an expat area that caters to English-speaking Americans and Canadians, not knowing the local language will make life a lot more difficult. On the flip side, living here forces you to learn more Spanish since you can’t avoid it. “Language” could be a positive aspect of life abroad if you are interested in learning the language (which we are).
Culture shock can be challenging. Clothing choices, for example, vary between the US and Mexico. No one here wears shorts. Trash is pretty common on the streets in Mexico, whereas the US does a better job of providing (and emptying) trash receptacles and enforcing litter laws. Dog poop on the sidewalks is another common sight here, whereas in the US it’s mostly picked up by the dog’s owner. Otherwise, our societies share a lot of common characteristics given our western European cultural origins.
For long term residents, immigration issues can be an issue. In Mexico, everyone gets a 180 day tourist visa no questions asked. Without filing for residency, you’ll have to make a border run every six months to reset the clock on your tourist visa. I’m not up to date on Mexico’s take on “permanent tourists” that make visa runs every six months, but they might catch on and deny you entry (at least in theory). And leaving the country every six months could grow tiresome pretty quickly if you just want to relax and enjoy life at home. Plus it’s not cheap to buy plane tickets for a family of five twice per year (though travel hacking credit cards helps), nor do we enjoy quick weekend trips like making border runs to renew visas since we have young children.
The Kids’ Perspective
Since we have three kids between age three and ten, we have to keep them in mind when deciding whether we want to live overseas in retirement.
After three weeks of living in Mexico, the kids have developed a routine. Plenty of down time, some time at the park, some time on chores (they are the official Root of Good dishwashers!), and some touristy stuff like visiting pyramids and museums.
When I asked the kids what they thought about living in Mexico, they say they don’t want to live here (yet). The tap water isn’t clean and according to them, “you could die from it”. I’m not certain you could actually die from ingesting Mexican water, but you can get a stomach ache.
On the upside, the kids realize that their money goes further here in Mexico as measured by ice cream. Prices range from $0.25 USD for a popsicle up to a buck or two for a large cup or cone of hand made ice cream in tons of different flavors.
They are able to keep in touch with family and friends through video chats on Skype and Google Hangouts, so they aren’t socially isolated while we’re on the road. If we lived here on a more permanent basis, they would eventually make new friends and learn enough of the language to get by.
The final concern with living abroad with kids is schooling. We could always home school, and incur minimal costs for a curriculum and materials. If we wanted to go the traditional schooling route, there might be substantial costs for a private school if the public schools near where we live are not adequate (though we are no strangers to less than perfect schools).
A rough estimate of costs for tuition at a private school range from $2,000 to $5,000 USD per year per kid. If we went the traditional schooling route and wanted an education similar to what we can get in the US, it will be very expensive. In fact, paying for private education would likely offset any cost of living savings from housing, food, and transportation costs. Homeschool might be our best option if lowering our cost of living is the primary objective of living in Mexico.
Why Retire Abroad?
Why would we want to retire abroad? Lower cost of living is a prime motivation. Or phrased a different way, we could stretch our dollars further and live a nicer lifestyle than we can afford in the US on the same budget.
We are able to get by on a retirement budget of about $33,000 per year including a paid off house. We could rent our house in the US and net $800-900 per month which might be enough to allow us to rent a decent furnished house or apartment in Mexico. Almost all of our costs would drop, but we would have to use part of our $5,300 vacation budget for visits back to the US. Food, transportation, and entertainment costs would drop. Electronics and appliances tend to cost the same or more down here, so we might see an increase in these expense categories. Overall, I imagine we could live a slightly more luxurious lifestyle on a little less money.
But should we move 2,000 miles away just to save a little money? That’s the tough part of the equation. I don’t think it’s necessarily better or worse in Mexico assuming you have adequate funds to live on. Just different in some aspects. There’s a vibe here that’s hard to explain. The parks seem to attract more people having fun. There’s always a festival or parade or protest going down. Running errands can be a cultural and language adventure.
So far, we aren’t committed to retiring overseas, but I’m still taking notes on the three cities we are visiting for extended periods of time. Our next step in pursuing overseas living would be to spend an entire summer in a longer term rental to see how we like it. Although we miss a few things about home, no one has broken down in tears crying to return to Raleigh just yet. We’ll see how the next month of travel treats us.
Could you retire overseas? What would it take to motivate you to leave your home country and live abroad?