How To Retire In Luxury

CanadianBusiness.com has some really good articles that are worth reading. Here's another one.

How we retired in luxury — on $2,000 a month
Herman Heynen as told to Camilla Cornell
From the May 2006 issue of MoneySense magazine

Seven years ago, when I was 60 I took early retirement from my job in the customer service department at CP Rail. The company was reorganizing and I didn't want to start another job, but the result was that I took a cut in my retirement pension. My wife, Anne, who is a year younger than me, wasn't ready to retire yet, so she continued to work until 65 as a legal assistant and I just sat at home, on our acreage outside of Calgary, dreading the winters and watching the snow fall.

Every winter we would go down to Mazatlan, Mexico, where we owned a timeshare. We loved the warm weather (usually 25° to 29°C during the day in the winter months) and the long sandy beaches and the very Mexican feel of the place. We started off visiting for two weeks a year, then it became three. At first, we stuck to the tourist areas. But Mazatlan is a good-sized city of about 600,000 people and after a while we discovered what's known as El Centro — the city centre — and we really liked it. The houses are old there — some go back to the late-1800s — and they're very affordable. As well, there is lots of local culture, great shopping, an open-air marketplace and plenty of restaurants and cafes.

Four years ago, we decided to buy our own little place there. It was the year before Anne retired, and we bought a small two-bedroom house that was completely restored. It cost us only $45,000, which we put on our line of credit. Our home is in a traditional Mexican style, painted a salmon color, with pretty ironwork out front, cool ceramic floors and a shady little patio with a nice garden, about a 10-minute walk from the beach. Everything was in there, including furniture, appliances, linens, towels, dishes, cutlery and even a TV, because the owner's original intention had been to rent it out.



When Anne retired, we sold our house outside of Calgary, which had 10.5 acres of land. With the proceeds from the sale, we paid off the house in Mexico and bought a 14 x 44-ft mobile home in a beautiful RV park south of Calgary. Now we spend November to April in Mexico and the summer months in Canada.

Overall, I'd say living expenses in Mexico are between a third and half of what they are in Canada. The two of us can live very well on about $2,000 a month. When we worked out our monthly expenses, we were paying about $135 a month for shelter, including utilities, property taxes, Internet and telephone.

Some costs seem absurdly low to Canadian eyes. Our property tax, for example, is just 381 pesos per year ($40), although we pay an additional bank trust fee of $422 annually because our house is within 50 km of the ocean. Even with air conditioning in the hot months, our electricity costs have averaged $16 a month. Of course, we never have any heating costs. If it gets chilly at night, you just throw on an extra blanket. Fire insurance is not necessary except for contents because all the houses are built of concrete.

Food is cheap. You might pay $2 for a 1.9-litre bottle of milk, 43 cents for a kilo of tomatoes and $2.50 for enough large fresh shrimp for a meal. Services cost even less. You can visit the dentist for $20 to $30, hire a cleaning lady for the day for $10, have your hair cut for $4, and get your laundry done for about $4.50 for three kilos.

We don't need a car — the bus system is great and the local bus costs 4 pesos (41 cents Cdn.), or you can pay 8 pesos for the air-conditioned bus, which is mostly for tourists. That means we can afford to dine out often. On Valentine's Day we went all out and had dinner at a Mexican-Greek restaurant. We had a large margarita, a bottle of wine, a delicious meal, a dessert flambé and cappuccino for about $50 including tip. Normally, we don't spend that much. There are many places where the two of us can get a simple meal for $10.

Another advantage to being in Mexico, as opposed to, say Thailand or Costa Rica, or some of the other places where Canadians can live cheaply during retirement, is that it's fairly close to home. The flight to Calgary costs us about $700 so if we need to go back to see the kids, it's not a problem.

I would advise those considering retiring here to be realistic about what you're used to. We eventually decided that the original layout of our little home was too small, given the amount of time we are spending down here, so we are building another floor onto the house with a large bedroom, an extra bathroom, a large balcony, and a back deck. It'll cost us about $20,000, which is still very cheap.

You have to budget a little extra for health care. We have an FM-3, which is a special visa allowing us to live here for one year. It also allows us to buy into the IMSS, the state-sponsored medical plan, at a cost of about $580 a year for the two of us because we're over 65. We have that plan just in case we get run over or have a heart attack, which would be costly without insurance. For the most part, if we go to our family doctor — who is well-educated and speaks perfect English — we pay directly. It's only about $20 a visit, and if you need an X-ray or ultrasound, you'll pay another $20, but you'll get the results immediately and the care is top-notch.

We've been very happy with our decision to move to Mexico for half the year. Right now the skies are blue and its 29°C, yet at night it cools down and you sleep well. People ask us what we do down here. They'll say, "You can't sit on the beach for six months. Aren't you bored?" The short answer is, no. We can go to the Angela Peralta Theatre, which is beautifully restored, and see a flamenco performance for less than $14. Movies are released at the same time as in Canada, but in English with Spanish subtitles, and cost $3 a ticket. And we have an endless round of barbecues, fundraisers and get-togethers, mostly with other Canadians and Americans, but also with locals.

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