Retirement & Cost of Living in Lake Chapala, Ajijic & Mexico in General
Why do so many Canadians, Americans and even Europeans decide to spend their retirement in a foreign country? The cost of living of course. Mexico is on the top of the list. The Lake Chapala area is so one of the most attractive retirement communities in Mexico, due to its year round spring like weather and inexpensive living costs. Research shows that you can live on between 40 and 50% less than in Canada or the United States. To check out how daily living here is like, click on the “Living Guide” in the navigation bar to the right, you will find several articles on events, activities and more. In this article we are going to show you some examples of common expenses, focusing on the Ajijic and Lake Chapala Mexico area.
(1) Property Tax, Maintenance, Housekeeping & More.
There are several sources online that will quote prices for groceries and other normal living expenses. But when they were last updated is questionable. And “buy” versus “rent” is a significant issue for cash flow. When you buy, the initial cash outlay is offset, at least to some degree, by low property taxes, inexpensive maintenance, the ability to hire housekeeping and gardening staff and that wonderful sense that it is yours. To research properties for sale or rent check out the “All Listings” link in the navigation menu to the top of this page, there you can search for rentals and home sales. You can also use the search bar above and type in the price ranges.
With fluctuating exchange rates, it is common to pad your budget for the differences. Rentals are in US dollars but are paid in Mexican pesos. Let’s say you are lucky enough to find a rental at $650 USD per month. During 2011 the US dollar took a hit on the international market and that $650 cost $8100 pesos rather than $6500 pesos at what had been a standard 1:10 exchange. Those who bought have not had that factor to deal with. However in 2020-2021 the exchange rate for the USD has been favorable for expats, receiving an almost 1:20 exchange.
(2) Best Climate Worldwide.
What services do you expect for a comfortable style of living? Heat and/or air conditioning? Neither is essential in the mild climate we have here, considered the best weather in the world. Construction in Mexico virtually guarantees airflow that permits hot air to rise, leaving cool breezes to maintain your comfort during hot months. During the few cold weeks of winter, a fireplace is wonderful, both for the warmth and for the scent of mesquite, or whichever wood is available. Stacks of wood run $150 pesos per stack, and the stack will last about three days, so two stacks per week.
Some people buy portable heaters that run with a propane gas tank (about 8″ long and 4″ in diameter). Others run electricity which is expensive in Mexico but not bad if run only occasionally to take the chill off.
(3) Electric, Propane Gas, Telephone & Internet.
CFE is the electric company. CFE charges for electricity by usage plus category. If you use less than a specified amount per billing period, which is two months, you are charged at a lower rate, often about $300 – $700 pesos (15-35 USD) per bi-monthly billing. This is essential for those working people with low incomes. Working Mexicans also use low wattage bulbs throughout the house and turn out lights when they leave a room. They light up the fireplace for heat and some of them use candles. Nice touch. Soft fire or candlelight and a family gathering in front of the TV, rather like the days of old when families gathered together in front of a fireplace and told stories.
It is not unusual, however, for gringos to live as they are accustomed to doing back home and then they are stunned with electric bills as high as $900 pesos ($45 USD) or substantially more. Perhaps outdoor lighting should be reserved for when company is expected. Middle class electrical use often runs more like $600 – $800 pesos in winter when nights are a little longer. That’s bi-monthly, still reasonable. Solar is now becoming very popular in mexico and for those who can afford it, you can keep those electric bills to as little as 50 pesos per month
Propane gas is used for cooking and for hot water. Every home has a tank to supply the family’s needs. Trucks circulate throughout the community calling, “g-a-s”. It takes them about five minutes to fill your tank. A reasonable monthly budget for propane is $400pesos ($20 USD), maybe more, depending on the number of guests you have to feed and provide clean bedding for, but the worst would be $600 pesos ($30 USD), and you can always specify at what amount of money you want them to stop, e.g. $300 pesos ($15 USD).
A telephone is essential, although there are households that function on just a cell phone while others not only have a land line but long distance packages with high speed internet all wrapped together for about $400 pesos ($20USD) per month. Still others include a Vonage line or other service to the US so that family, friends and business connections north of the border can contact them at no charge beyond the call to the Vonage local number. This is effective for those who reside in Mexico for their retirement or whose businesses require keeping touch even on vacation. Another popular source for calling the US/Canada is the app WhatsApp, which is used widely in Mexico. You can make a call with this application at no cost to you other than needing a wi-fi and stable Internet connection.
(4) Cable TV and Cellular Phone Service.
Cable or satellite TV service is standard in Mexico and quite good. Sky TV is a Mexican satellite service that provides some channels in English – there are about a million expatriate Americans and Canadians living in Mexico so we are well provided for. Other TV services are the American based Dish Network and the Canadian based Shaw Direct satellite service (formally Star Choice) which is very good and includes American channels like NBC, ABC, CBS, PBS and many others, but commercials are often Canadian. On the upside, their news, like the Mexican news, provides a different perspective from the usual American broadcasts, and it’s an advantage to gain all three points of view. There are also several streaming options such as Netflix, Roku and Amazon which have become the least expensive and most reliable source for TV service.
(5) House Keeping and Gardening.
Maid service and gardeners are often included as part of the cost of a rental, although not always. They work for what their experience and service can provide, usually about $50 to $70 pesos ($3 – $4 dollars) per hour. Do not stint on them or you may risk (1) losing a good service person with experience at the job or (2) an unhappy and perhaps unreliable employee. I pay my maid $5 per hour plus the required aguinaldo, which is holiday pay, and sometimes I pay her more because she has been with me a long time and I can trust her 100%. She stays to do extra work that she can squeeze in “poco a poco” (little by little), like washing windows, and she irons superbly.
Gas for your car, food, entertainment, clothing, medicines…these are all personal, and only you know what your budget permits. However, they are all more affordable out of pocket in Mexico than north of the border.
(6) What About Health Care and Hospitals?
Something we have not talked about is medical. The hospitals in Guadalajara are very good, accustomed to US insurance forms, and the service is above average. Once again, they range from modest-but-spotless to luxury hospitals that provide “medical tourism” because with or without insurance, Mexican medical services are quick, safe and affordable, using the latest techniques and at least some English speaking staff.
Pharmacies an be found on every other corner. Locally we have one of the biggest pharmacy chains in Mexico “Farmacias Guadalajara”, which is the equivalent to “Walgreens” in the USA. You can find pretty much any medication you can in the US and Canada at more than half the cost.
(7) Can I live off My Pension or Social Security?
Overall, you can live a modest but good quality life Lakeside for $1000 USD per head of household plus about $700 USD for a partner. Let’s say, a more flexible lifestyle would cost a maximum of $1900 USD per month total. Anything more is a luxurious lifestyle or one with travel.
Download our example spreadsheet Budget we have put together. One is based on renting and the other if you own a home here. It is a monthly cost calculation that has been based on a 2 PERSON living situation with basic living requirements. We have left blank fields for you to fill in if you have any additional expenses that are not contemplated in the sheet .
You can download them and work on the sheet to adjust the overall numbers:
|Download Budget if Renting
|Download Budget if Owning
We update this page regularly.
A rough example of a 2 person Cost Chart based on a monthly period if renting:
- Groceries: $151USD/month
- Electric: $35USD/month
- Propane Gas: $20 USD/month
- Telephone + Internet: $20 USD/month
- Netflix: $10 USD/month
- House Keeping: $60 USD/month
- Gardening: $50USD/month
- Healthcare: $50USD/month (cost of IMSS insurance per month)
- Doctors and Checkups: $100USD/month (basic flus, checkups etc…)
- Dental: $50USD/month (cleanings, fillings…)
- Gasoline, Car Maintenance & registration: $140USD/month
- Car insurance: $25USD/month (mid sized used car)
- Social Fund : $140USD/month (movies, get togethers…)
- Dinning and Entertainment: $150USD/month (restaurants, movies, social events)
- Misc: $99USD/month
- Home Rental: $800USD/month
TOTAL: 1,900 USD (with 800 allocated to USD for renting)
In short, you can live a better lifestyle in Mexico for less money, especially once you know your way around the differences. ?Vive Mexico!
By Kay Davis, Team Writer