Over 2 million Americans have chosen Mexico as their retirement destination, making it the most popular country for U.S. citizens living abroad. The appeal lies not only in the country’s vibrant culture and natural beauty but also in its significantly lower cost of living compared to the United States.
Let’s break down the expenses associated with retiring in Mexico and explore how much the average retiree there typically has in savings.
Cost of Living in Retirement
- Overall Cost: The cost of living in Mexico averages around $656 per month for a single person, according to Numbeo. For a couple retiring together, this doubles to approximately $1,312. Importantly, this is about 42.5% less than the average cost of living in the United States.
- Rent: While the overall cost doesn’t include rent, it’s worth noting that rental prices in Mexico are on average 62.5% lower than in the United States.
- Housing: In Mexico City, you can find one-bedroom apartments ranging from $442 to $652 (11,951 to 8,114 Mexican pesos). Three-bedroom apartments are still significantly more affordable than their U.S. counterparts.
- Food and Groceries: Dining out costs around $10 per person for an inexpensive meal. Grocery costs are comparable to U.S. prices. On average, American households spend $475 per month on food at home.
- Healthcare: Healthcare costs in Mexico are roughly half of what they are in the U.S. For retirees, monthly healthcare expenses range from about $63 to $93 per person.
- Transportation: A monthly public transit pass costs approximately $20, while a new car (e.g., a Toyota Corolla sedan) is priced around $23,000.
- Utilities: Basic utilities (heating, cooling, electricity, water, and garbage) for a 915-square-foot apartment amount to $48 per month.
- Miscellaneous Expenses: These can vary widely based on your lifestyle preferences. Entertainment, leisure, clothing, and personal items may add to your monthly spending, but overall, it’s likely to be less than in the U.S.
Numbeo estimates that an individual spends about $720 per month (excluding rent) in Mexico City. With rent included, the range extends from $1,327 to $2,720 per month.
Average Retiree Savings in Mexico
According to International Living, a retired couple can comfortably live in Mexico on $2,500 or less per month, which translates to approximately $30,000 annually.
Considering that the average American spends about 20 years in retirement, retirees aiming for a comfortable lifestyle in Mexico would need approximately $600,000 in retirement savings.
Let’s break down the requirements for residing in Mexico long-term and explore the average retiree’s savings:
1. Temporary Resident Visa:
– Valid for up to four years.
– To qualify, you need either:
– An average balance of $45,000 over the past 12 months.
– A net income of $2,400 to $2,600 per month for the past six months.
2. Permanent Resident Visa (for retirees):
– Available for those who want to extend their retirement in Mexico.
– If you’re 65 or older:
– You’ll need at least $293,000 in your bank account over the past 12 months.
– Alternatively, a net income of $7,300 per month for the past six months.
Now, let’s consider an average retiree scenario:
– Assume they meet the baseline funds needed for residency.
– They receive an average Social Security paycheck of $1,907 per month.
Depending on their residency type, they’ll have:
– Temporary Resident: Between $45,000 and $293,000 plus their Social Security income.
– Prepared Permanent Resident: Closer to $600,000 in savings and investments.
Source: Yahoo Finances
