Wednesday, Aug. 6, 2008
A reader wrote to Glynna Prentice, editor of our Mexico Insider publication, asking:
“Can a couple really live on $1,500 a month? Tell me you’re not kidding…”
Here is what Glynna had to say:
We at Mexico Insider get a small but steady stream of questions about this from readers. Not everyone, they say, can afford to buy a $200,000-plus house in Mexico—or indeed, can afford to buy at all. But can you truly afford to live in Mexico if you’re on a fixed budget?
Yes, you can—including rent. But you need to choose carefully where you want to live, and you’ll need to make some trade-offs on how you spend your money. (But of course, you’re already doing that now, aren’t you? And trust me: Your money will go farther in Mexico.)
So let’s take a typical couple in their 60s. Our limit: $1,500 a month—which is how much Mexico’s immigration department requires them to have to get residence visas (the rule is $1,000 per person plus $500 for each dependent).
What could this couple afford on $1,500 a month? What trade-offs would they need to make?
Here’s how I broke it down:
Housing and medical care are two fixed expenses we can’t do without. Housing is usually the single largest expense, by a wide margin. Medical care can run second, especially in the U.S., though not, fortunately, in Mexico. Still, these are necessities that our couple will budget for first.
In reasonably priced expat areas like Mérida, in the Yucatán, rent for a decent, three-to-four-bedroom furnished house with patio and pool runs $1,000 to $1,500 a month—far too pricey for our budget. Unfurnished houses command lower prices, as do those with fewer luxury amenities like extensive garden areas, patios, and swimming pools. A friend in Campeche, where I live, rented an unfurnished three-bedroom, two-bath modern house last year in a prosperous urban neighborhood for $550 a month—about the right price point for our budget. And I’ve seen small, 900-square-foot homes in Mexican neighborhoods that rent unfurnished for $300 to $350 a month. These vary in quality, so you’ll want to check them out thoroughly, but they do exist. In some cities you can also find apartments, which offer less space but also can cost less.
Our housing cost: let’s say $500, one-third of our total budget.
For medical care, private health insurance in Mexico is half or less than what it costs in the U.S. But for a couple it can still cost $200 or more a month. If you’re living on a budget, this premium can be a big chunk of your monthly cash. In addition, private plans usually exclude pre-existing conditions and won’t take new clients who are more than 64 years old.
In Mexico, fortunately, as I mentioned in a recent Postcard, there’s IMSS ( Instituto Mexicano del Seguro Social, or Mexican Social Security Institute), Mexico’s national health insurance. Once they have their residence visas, our couple can get health insurance coverage—including their prescription medicines—through IMSS for a cool $300 each per year.
That puts their combined monthly medical insurance at $50 a month. IMSS facilities vary in quality, however. Checking out the caliber of a city’s health facilities should be as high on your list as checking the rents. If you must depend on IMSS for health care and don’t like a city’s IMSS facilities, look elsewhere. Plus—as with insurance plans everywhere—most pre-existing conditions aren’t covered. If you have several serious health conditions, you’ll need to pay for their treatment—medications as well as doctor’s visits—out of pocket, so be sure to add that to your budget.
Also, foreigners buying an IMSS policy must pay the entire year’s premium upfront—so that’s a cash outlay of $600 in the first month.
Our housing and medical care come to at least $550 per month.
Rent and medical care aren’t the only basic costs, of course. You need gas and electricity for the house and communications to stay in touch with folks back home.
Natural gas for household use is cheap and widely available. Electricity and telephone service are expensive, however, so it pays to strategize—thinking carefully about what you’ll need—when you set these up.
For my complete, detailed budget, including money-saving tips and the trade-offs for different budget options, subscribers to Mexico Insider can access the complete article here.
Your Mexico Insider, International Living
Editor’s Note: Glynna Prentice will be speaking about living in Mexico at the Live and Invest in Mexico Seminar in Merida, Mexico, Nov. 6–8. If you are considering making the move the Mexico, you should pencil this event into your calendar right now and sign up here to get our early bird discount offer.
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