Photo by Olga Bast on Unsplash

The early retirement movement is a powerful driving force for many. “FIRE,” Financial Independence, Retire Early, is the most popular discipline, but all early retirement methods rely on a foundation of highly aggressive savings rates, sometimes as much as 60%-80% of one’s income.

In a nutshell, the premise is to cut living expenses to the bone and save like a maniac for a decade or two until you have enough savings and investments to sustain that lifestyle, freeing you to pursue your passions.

The fine print hides the fact that a common outcome is a lifetime of austerity. It’s a worthwhile tradeoff for some, but not for all of us. We may be willing to make superhuman sacrifices for our get-out-of-work-early card, but that sacrifice shouldn’t result in a perpetually monastic lifestyle.

We admit: “Some passions cost money.“

What if you could have it both ways – retire early AND live large? What if your retirement investments supported a simple life in your hometown, but in a different place you could live like a king?

Well, you can…

El Lago de Chapala

One hour from Guadalajara and five hours from Puerto Vallarta you’ll find Lake Chapala, Mexico’s largest freshwater lake. It is 50 miles long, 11 miles wide, and straddles the border between the states of Jalisco and Michoacán. It lies high in the mountains, about a mile above sea level, offering pleasant year-round temperatures.

More than a dozen communities peppered with as many as 20,000 foreigners ring the mountain lake. Two of the villages are particularly well known to the expatriate community: Chapala and Ajijic – sister towns separated by a few miles.

Life on a mountain lake

On a recent trip to Mexico, scouting locations for part-time retirement living, my wife and I booked a few days in the town of Chapala. We had heard great stories about the region and had to experience it for ourselves.

We started our tour along the boardwalk, astonished by the beauty of the lake and surrounding mountains. The waterfront was busy with activity. Tourists and locals alike marveled at the acrobats while tipping back Coca Colas and snacking on churros and tacos. Children licked the drips off their ice cream cones and kicked rubber balls while their parents watched from the shade. It was as heartwarming as a Norman Rockwell painting.

Brightly colored fishing boats bobbed on their anchors as we passed. A $5 taxi took us to Ajijic where we found a waterfront bar serving ceviche and margaritas. We made friends with a small group of locals relocated from Montana who gushed about the area.

They talked about the amazing cost of living and the satisfying, slow pace of their laid-back lifestyle. Locals, foreigners, passing travelers, expatriates, and tourists all get along nicely. “If you’re willing to relax and take life at a slower pace, you’ll fit right in,” they said.

Guadalajara, an hour away, has one of the top-rated medical universities in Mexico. It’s also a prime destination for high-quality medical care that rivals the best in the world. Every Mexican citizen is afforded free care, and non-citizen residents can buy insurance at low rates. Many expatriates pay out of pocket for procedures that are one-half to one-fifth the cost in the US.

Fresh octopus and a $1,400 monthly cost of living

Dinner at a nearby seafood house was delicious and as surprisingly inexpensive as everything else in this town. We paid just $20 for two glasses of wine, a tender garlic-grilled octopus meal, and a delicate sea bass fillet. Our waiter explained that fresh seafood from Puerto Vallarta is brought in each day.

We met Randall and Pat, a local expatriate couple, at an adjoining table. They shared their fascinating story with us:

Two years ago they sold their Virginia home, banked the equity, and retired to a life on Social Security income alone. They pay $700 a month for a small cabin in a gated community on the lake and average $25 a day for everything else. They dine out often, hike, swim, watch movies, socialize, go boating, and frequent the local clubs for great live music. Both dress nicely, are educated, and well-spoken. Best of all, they’re as happy and carefree a couple as I’ve ever seen.

Better than FIRE

Suppose you’re 30 years old, take home $48,000 a year and you’re a big fan of the FIRE movement. You bank 50% of your income – $2,000 a month – and expect to retire in 17 years at the tender age of 47.

If you do it right, earning 7%, you’ll have created a diverse investment portfolio worth more than $750,000. Then, you could quit your job and live on about $2,200 a month (after taxes). You could supplement that with your income-generating passions if you like. Regardless, you’re free to chase your dreams!

Now you have a choice: Which lifestyle would you prefer?

Living in the United States:

You can live on $2,200 in the US – you’ve been doing it for 17 years. Do you want to keep doing that for the rest of your life? And how will you pay for healthcare?

Living by Lake Chapala:

Like Randall and Pat, you could live a comfortable lifestyle by the lake for $1,450, and have $750 left over for travel, toys, jewelry, and whatever passions float your boat. Basic healthcare will cost you about $30 a month. You could even buy a beautiful home there for $200,000 US.

A life you can afford

Life around the lake is enriching and diverse. We saw no judgment and no flaunting of class hierarchy. It was a relief to be in an environment without the caustic showmanship, subtle innuendo, and passive aggression that we see so often in our work-a-day lives. To be included in a community of people who are simple and humble is a priceless gift.

It’s worth noting that there are plenty of other places in Mexico that are similar. This one is well populated by expatriates and you’ll find plenty of English speakers. You could also look to other low-cost countries such as Portugal, Spain, Panama, Costa Rica, Czech Republic, Malaysia, and more.

Regardless, the benefits of financial independence and early retirement are compelling and achievable. And with a little out-of-the-box thinking, you can stop worrying about money and explore your dreams by a lovely lake in Mexico.