Could living there save enough that I could retire early?

Travel blogs proclaim the cost of living in Mexico is “shockingly” lower than in the US or Canada. But is it really? And exactly how shocking? Enough for me to move there and retire early?

Last winter I decided to find out for myself. It was a Christmas present of sorts, from me to me. (I do that a lot; it’s a great way to get the best gifts.)

If you follow my blog, it’s no secret that I love Mexico and plan to spend a lot of time there in retirement. I’ve wondered if by living part-time in inexpensive Mexico, I could retire earlier than living full time in the US. Lots of people split their time between the two – they call them snowbirds – but does that lifestyle save any money?

Like all my visits there, the plan was simple: to enjoy the people, food, and culture. This trip was special though, with one extra goal: To calculate the cost of living – and see if I can retire early.

Christmas in Puerto Vallarta

My wife and I arrived at noon, grabbed a tasty burrito outside the airport and caught a shuttle to our hotel. The town was buzzing with people scurrying about the streets, restaurants, and boardwalk. Christmas was alive in the air, with lights in the shops, decorated trees in the squares, and even a few Santa-themed bathing suits.

Winter is “high season” in Mexico resort towns. While the addictive scent of saltwater and the rhythmic sounds of waves are free, everything else gets marked up. I briefly second-guessed my selection of this locale for benchmarking the cost of living, but it was too late, and the anticipation of discovery was calling my name.

Puerto Vallarta is a popular tourist destination on the central Pacific coast of the mainland. Sandwiched between mountain jungles and Banderas Bay, it stands proud with shimmering hotels and colorful squares. The Romantic Zone is the heart of the city and attracts expatriates and snowbirds like flies on honey.

Through our extended week, we met dozens of characters and learned about their lives, retirement plans, and expenditures. The most valuable Christmas gift I could ever imagine is a collection of heartfelt stories of the people we encountered. Here are a few that will live with me forever:

People first

We met Bob in an Italian restaurant. He was a stage designer and a snowbird from Boston who was here on his annual winter migration. He had a friendly, unhurried manner and casually invited us to The Rocky Horror Picture Show, playing in a theater up the street. He shared his story with us while we shared beers and danced the Time Warp.

Playa Los Muertos is the most popular beach in Puerto Vallarta. I noticed Jerry and Sandi leaning back in their plastic chairs, showing off their golden tans, smiling with Cheshire grins at all who walked by. I introduced myself and coaxed some retirement secrets from them with a bribe of $2 beers, although they would have gladly given it up for free. They live a self-described life of perpetual bliss on $3,000 dollars a month – a king’s ransom compared to many others in this country. They eat out for lunch and dinner every day, frequent the beaches, theaters and clubs, and sip on beers and margaritas whenever the urge strikes them.

For 21 years, Patty has owned a surfing shack and restaurant in Sayulita, a kitschy town just an hour north of Puerto Vallarta. We met her at the beach, sitting behind a folding table under a colorful sunscreen held aloft by aluminum poles. She showed a sincere interest in us as people, not just as fleeting tourists. Patty arranged a surfing lesson for my daughter and me with a local expert named Arturo, and I learned, to their everlasting amusement, that surfing is a sport for the young.

We encountered dozens of snowbirds and expats, each with a fascinating backstory of their own. They came from all over the world, from radically different cultures, classes, ideologies, and religions, and yet they all had one thing in common: Serenity.

Through the entire visit, I heard not a single word of anger or frustration uttered by an expatriate.

Yes, Virginia, there is a savings

Moving to Mexico full time will lower your cost of living – that’s indisputable. But I want to lower my costs enough to retire early, and like the snowbirds I want to split my time between countries.

Most snowbirds I’ve met own a home in the US year-round and visit Mexico for 4-6 months in the wintertime. With a permanent home base, they can’t turn off all the costs when they travel, so the savings must be greater than their residual costs for it to be a net financial gain. Many of them don’t seem to care about money, but I do.

The estimates below are based on the equivalent of a middle-class US lifestyle, but locations and options are so diverse that you can easily dial down the cost – or turn it all the way up to eleven.

Monthly living expenses for two people (in US dollars):

• Rent & Utilities: $1,000 to $1,500

These prices can get you a fully furnished 1-bedroom apartment just a short walk or taxi ride to the Downtown or Romantic zones and beaches. Renting smack dab in the heart of those zones could double that amount and moving just a bit further out will soften the blow. Often, rent includes cleaning and laundry service.

• Food & Dining: $400 to $700

I’m not going to eat out every day like Jerry and Sandi, but once a day seems enticing. There are plenty of restaurants and street vendors, and even at Christmas the prices were fine. We had delicious and filling meals for as little as $5 to $10 per person. Cooking for yourself with fresh food from the local markets saves more and adds to the fun.

• Entertainment: $200 – $500

This is a widely variable expense of course but personally, I like to kick up my heels at least once or twice a week. There are plenty of bands, shows, and culture in Puerto Vallarta, and one benefit of living in a resort town is that there are fun activities every night of the week. Of course, one can always snuggle on the beach, listen to the waves, and gaze at the stars – that’s free. And highly recommended.

• Local Travel, Miscellaneous: $250

Taxis cost less than $5 to go anywhere in town and buses are only a few pesos. We paid $1.25 to ride a bus for an hour to Sayulita. Some expatriates drive their cars here, which is a great idea if you’ll be bringing a lot of personal gear or you plan to travel to multiple cities. Don’t bring nice cars though, the roads are terrible.

You’ll need to account for a few odds and ends too, such as phone service, clothing, gifts, tequila, new sunglasses for when they’re swept away in the surf (yep, that happened to me – twice).

• Expat Insurance & Medical: $200

The price of medications and doctor visits is astonishingly cheap and can be paid out of pocket. We bought some behind-the-counter (prescription) medication for Moctezuma’s Revenge for only $8. Long-term residents say that emergency insurance is a good idea in case of catastrophe and is very reasonable. General medical insurance, Medicare, and Seguro Popular (Mexican universal care) are too complicated for this blog post – I’ll share more detail on those in the future.

Within reach?

Would you live in a tropical paradise for two thousand dollars a month? Throw in another thousand and you’re living like royalty. Well, according to my calculations, you would pay between $2,000 and $3,200 a month to live comfortably in Puerto Vallarta. Much less in other areas.

I could afford to retire today if I moved to Mexico full time. Many people do, like Patty in the Sayulita surf shop. I would gladly pick the sand out of my shorts every day rather than slog to work for another few years. But I have a strong attachment to my hometown, family, and friends, so I can’t make a permanent move.

It’s so close I can taste it though! When I’m away, my cost of food, entertainment, and travel would drop significantly, but I still have a mortgage to pay, and the savings won’t quite cover that.

Without a mortgage I could probably pull it off.

Or I could rent out my house when we’re away.

Maybe I could work remotely – everyone’s doing it these days.

I’ll find a way soon. The dream is alive and just inches from my fingertips. Soon I’ll be plopping my butt in the warm sand, the surf lapping at my toes, and a cool can of Tecate keeping me company.

I hope you’ll keep me company too.