Mexico Remains Retirement Mecca With Biggest Bang for the U.S. Buck

Retired Americans living in Mexico find their dollars go a long way, despite soaring inflation that rapidly eats away the gains made from the steady devaluation of the peso.

Most Americans who have retired here, whether longtime residents or newcomers, caution that the going is easy only for those who can count on a steady income in dollars arriving from outside Mexico.

And they say it helps to be a bit adventurous and prepared for surprises that greet those living in a foreign land.

“The person who is willing to pull up roots is, age and all, a person with a certain amount of flexibility,” says Dasha, a psychologist who is a native New Yorker but a resident of Mexico since 1939. She uses only one name.

Dasha says that most of her clients see her to “re-evaluate” their decision to live outside the United States and that in the past few years more have come to discuss events in light of Mexico’s continuing economic upheaval.

The onset of the economic crisis in 1982 included a freeze on all dollar accounts in Mexican banks, a traumatic experience for many Americans who retired in Mexico.

Real estate values plummeted with the fall of the peso, which traded at 26 to the dollar in 1982. The rate of exchange is now more than 2,270 pesos to the dollar. Stories abound of people who bought luxury homes for $300,000 and then were lucky to get $140,000 when they sold.

“People who bought houses with dollars (before 1982) would like to get that back--and more,” says Dr. Nan Platas, a native of Gainesville, Tex., who practices in Mexico. “So some people are trapped here.”

The peso-dollar comparison is deceptive, however, because inflation has also run steadily in double-digit and triple-digit figures during the years of the crisis. Analysts say inflation probably exceeded 140% for 1987.

A study for the New York Times’ travel section found prices for visiting Americans had not changed appreciably since 1985, despite the fall of the peso.

Even so, bargains are available, especially at outside resort areas.

“If your money comes from the States, you’re better off every day,” says another longtime Cuernavaca resident, who spoke on condition of anonymity because he has business interests in Mexico.

“Nowhere in the world could they (American expatriates) live like this. . . . They live like kings.”

For example, he pays a maid $15 per week, down from the equivalent of $50 weekly before the economic crisis began.

The low cost of labor--Mexico’s minimum wage went up to about $3.50 per day as of Jan. 1--means that handicapped people and others needing personal care can do well in Mexico.

“One can employ a servant that will substitute as sort of a nurse or nursemaid,” Platas says.

The 1980 Mexican census found 417,000 U.S. citizens living in Mexico, but there is no breakdown on how many of them are retired.

Cuernavaca, in the mountains 45 miles southwest of Mexico City, is a favored spot for retired Americans. The actress Helen Hayes maintains a home in the city.

Other important American retirement colonies are found in San Miguel de Allende, Puerto Vallarta, Morelia and Acapulco. Without a doubt, the biggest such colony is in Guadalajara and the nearby Lake Chapala area.

The number of retired Americans “went down after (1982) for several years, and now it’s starting to come back up again,” says John Roney, spokesman for the U.S. Consulate in Guadalajara. “It’s more attractive now the last year and a half.”

The consulate estimates that 30,000 Americans live in the Guadalajara area.

By no means do all live well on a cocktail party circuit, with servants galore. Jean Andersen, who is in her mid-30s, works for the American Benevolent Society in Cuernavaca. She has worked with about 10 retired Americans this year, most of them “in their own little world,” with no one to visit them.

“I’m sure there are a lot more than the 10 I know about,” she says. “They keep coming up.”

Some Americans also get by without a dollar income.

Meg Donahey, 65, has lived in Mexico since 1956 and has found she is not eligible for U.S. retirement benefits through the Social Security system.

“I’m not worried about it,” she says. ‘I have lived on nothing for so long that I am the least affected by the crisis.”