Sam Speaks

Mexico's Baby Boomer Boom

August 2007  

During the 20 years following the end of the Second World War (1945-1965), approximately 78 million Americans were born. According to Wikipedia, they currently make up 20% of the U.S. population.

This makes it the largest demographic group in the United States and the first generation to have lived all of their lives in conditions of relative material abundance. In 2005 the first members of this generation turned 60, beginning a trend that is projected to take the number of retirees into record territory.

Mexico is said to be a favored destination for this so-called “Me” generation when they reach their retirement years. The reasons so often cited are the following:

• Nearby sun and sand for less. Unlike the G.I. generation that came before them, U.S. coastal property in the most temperate beach climes of California and Florida is no longer affordable, so Mexico’s year-round warmth beckons.
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• Cheap and plentiful air travel makes Mexican destinations accessible. For those in California, New Mexico and Arizona, Mexico’s beaches are accessible by car.
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• Hospitality and service. For many, Mexico is still the “amigo country” of yore, with affordable help and friendly locals who often speak English and like Americans (especially compared with much of the rest of the world).
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• Financing and investment. As a consequence of Mexico’s financial stability, credit-worthy Americans can now get dollar-based financing on Mexican properties. This makes a second home an investment opportunity.
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The consensus among the many publications that have touched on the subject is that approximately 1 million Americans are “living” in Mexico at any given time. Seventy percent of these never change their “tourist” status, so the exact figure is impossible to know. The recently-launched English-language publication Inside Mexico estimates that 10 million Americans could be living in Mexico by 2020. Most estimates limit themselves to about 3 million.

According to FONATUR, Mexico’s tourism investment agency, the second-home buyer market consists of up to 2 million Americans and 1 million Canadians. This same agency estimates that 30% are retirees. The whole market currently represents US$1.5 billion annually.

They’re All Over

At SolutionsAbroad, we have listed 65 separate locations all over Mexico for which we have key information. This list was compiled based on our users’ queries, not on our own predilections, so it is safe to say that this is a national phenomenon.

In a nutshell, English-speaking foreigners interested in retiring in Mexico visit and buy property in:

• Cancún/Riviera Maya. For those who want modernity, a bit of Maya mystique, and turquoise ocean.
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• Puerto Vallarta. Colonial village and mega-resort with excellent air connections.
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• Mazatlán. An up-and-coming Sinaloan alternative to Puerto Vallarta.
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• San Miguel de Allende. A colonial highland getaway that is charming, safe, and has over 15,000 U.S. residents with a more affluent profile.
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• Ajijic/Chapala (lake). Purportedly the largest group of Americans outside the United States (although we think that’s probably more Mexico City’s title). Near convenient Guadalajara, on a lake, and warmer than SMA.
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• Tijuana/Rosarito/Ensenada. Californians’ beach get-away in Lower (“Baja”) California.
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• Puerto Peñasco. “Arizona’s beach,” reachable by highway, and set to grow 700% in the next 5 years.
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• Baja California Sur. Los Cabos, La Paz, the Sea of Cortez – enough said.

I Paid, So Where’s My Medicare?

According to a study by the Lyndon B. Johnson School of Public Affairs in Austin in 1999, a majority of the Americans who had retired in Mexico had incomes below US$25,000 a year. Most still paid all of their taxes and felt they were entitled to the medical benefits they had paid for all of their lives.

Ultimately, the difference between there being 1 million Americans in Mexico, or 10 will probably depend on the availability of these subsidies to Americans here. The 1964 Social Security Act prohibits payments abroad, but the Mexican government is standardizing its certification procedures and the Centers for Medicare and Medicaid Services are looking into extending coverage into Mexico.

Many insurers in the United States now offer plans with coverage in Mexico, including Blue Cross/Blue Shield of California’s Access Baja. These policies are generally substantially cheaper than coverage in the US.

Nevertheless, for some even these discounted plans are too expensive, so they turn to what’s available to working-class Mexicans. In the 2005 book The Plain Truth About Living in Mexico, authors Doug and Cindi Bower decide to sign up for Mexico’s state run medical insurance, a part of the Mexican Institute for Social Security (IMSS).

Mexico’s government allows foreign residents to sign up for approximately US$350 a year, which includes medicines. If you don’t mind the waiting times, these two Guanajuato residents swear by its cost-benefit ratio.

Gringos in Paradise

Books such as Gringos in Paradise and The Plain Truth About Living in Mexico tell the story of Americans who decide to spend most of their golden years in Mexico. There is a long tradition of this going back to heiress Barbara Hutton Woolworth (Cuernavaca) and eccentric Howard Hughes (Acapulco). More recently, Americans of more limited means have been the ones who have comes south-of-the-border to maximize their savings.

Sam’s hunch is that Mexico will attract more and more “residential tourists” from all walks of life, not just retirees. It is possible that the U.S. government will outsource part of its health care crisis to Mexico by extending Medicare to Americans here. Nevertheless, Mexico is becoming relatively more expensive than other destinations (Central America, etc.), as the peso’s stability becomes a liability to bargain-hunters.

For these, more solidly middle-class Americans and Canadians, better land and air transport links will probably mean that those with leisure will probably travel back and forth more frequently. Whatever the reason, those of us who have chosen to live in Mexico know that it’s a great place for both the “Me” and “You” generations. 

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