On Saturday night I went down a fun rabbit hole of retiring as an expat to San Felipe, BC Mexico. The catalyst for my rabbit holing was a video on Instagram from a couple selling something to help people figure out how to retire to places in Italy that are just as pretty as the tourist spots but off the beaten path with no tourists. So they said, I obviously have no idea.
A couple of months ago a dog lady acquaintance of my wife's moved to La Paz, Mexico which is way down near Cabo. San Felipe is about two hours south of the Calexico/Mexicali boarder crossing. In college, we used to go to San Felipe for the first few days of spring break.
The picture is actually Rosarito Beach, that's me at the net setting the ball in 1989. It's as close as I can get to San Felipe without pulling stuff out of storage. Between the Italy video and the friend in La Paz BC, it just popped into my head, what's going on in San Felipe?
Based on pictures on the internet, the town has grown a lot which is not surprising but it still very much looks like an outpost to me. It looks like the desert, just next to a body of water, the Gulf of Baja.
That's a 4 br house for $239,000 on a 30,000 square foot lot. It's in a community that has a golf course with a lake and you can see the gulf in the background. The house needs some work the listing says but the house looks cared for as opposed to neglected. There's weirdness with the garage from the above picture. One of the pictures shows a mini-split.
There are plenty of cheaper houses there too. This one below is asking $179,000, it has 3br but is in a neighborhood. There are complexities to home ownership that are not insurmountable but do need to be worked through. Because San Felipe is on the water, there are a couple of legal residency statuses and each one has requirements for home ownership. There is also a complexity to the land the house sits on. Hawaii has something similar, the terminology in Hawaii is fee simple where you own the house and the land or leasehold where you own the house and lease the land. You'd have to dig in more but this is not unheard of.
For the internet, the best bet is probably Starlink. There is reliable cell signal in town. Many houses there have solar so that's not a problem in terms of rules, it seems like it's kind of recommended along with a generator. The water is still not safe to drink and there is not enough rain for catchment to be viable. Property tax for a $300,000 house would be $300-$750/yr plus there is another annual fee that AI described as sort of a banking/administrative fee to own a house which might tie into the residency issues.
For serious medical issues, you'd probably need to go to Mexicali which is to say you'd really need to go to San Diego or maybe Phoenix. For routine physicals and dentals, San Felipe has adequate services, likewise for injuries but not Level 1 traumas. Prescott can't accommodate Level 1 traumas either, that is common for smaller towns.
For under age 65, health insurance can be pretty cheap. Americans can go through a process to enroll in Instituto Mexicano del Seguro Social which would be $2000/yr for both ($1000 each) but doesn't cover preexisting. Paying for services out of pocket sounds cheap, a full battery of blood work would be about $80.
There is no Costco, Walmart or Home Depot in San Felipe. There are several grocery stores including one that is owned by Walmart so there are Walmart brand items in town. There is hardware store. Interestingly, Amazon delivers to San Felipe.
In terms of safety, the area is rated 3: Reconsider Travel. Highway 5 is the main corridor from Calexico to San Felipe. The suggestion is to drive during the day and stay on the pavement. The Highway is not riskless to be sure but it is in the interest of the crime organizations to keep the highway clear with traffic moving but really, stay on the pavement. The town of San Felipe is significantly safer than the road to get there.
The population has about tripled since I went there in the 80's but it still is very much an outpost sort of town. Out of 20,000 people who live there, 3000-5000 are American or Canadian.
We're not moving to Mexico.
Coincidentally, this morning there is another Barron's article about retiring to another country, primarily Canada, Mexico or the UK. That article tilted more toward people feeling like they need to leave the US for political reasons. The driver here is the financial aspect of trying to problem solve for an underfunded retirement.
My only experience with healthcare in another country is the care my father received in Spain. He lived there for about 35 years, he got cancer shortly after his 88th birthday and died about six months later. The care he received was terrible. All the years he was there and getting just normal care like annual physicals and treatment for a broken hip when he was 71, the care was perfectly adequate.
Because I think it plays a role in just about every retirement decision, someone who believes they need to retire in another country to make the numbers work will have dramatically more optionality if they have their health dialed in.
For the 20 plus years I have been blogging, I have talked about the potential for "something having to give" if the desired retirement lifestyle won't work as a function of dollars and cents. Usually that has meant figuring out how to spend less, working longer in a primary career or taking up some sort of post retirement gig. Something else that might have to give is living in the US. Many countries are considerably cheaper.
We've looked at Ecuador countless times in this context over many years. Since then, political instability and cartel activity have both increased. I've noted that and said maybe an American couple would want to leave in the face of that and maybe they would but according to Gemini, the real story is that Cuenca and other inland expat areas have been unaffected by what has transpired elsewhere in the country.
Interestingly, Gemini says that Cuenca is far cheaper than San Felipe.
Cuenca is probably safer too. I say probably because San Felipe's stats appear to be lumped in with Mexicali and Tijuana. The climate in Cuenca is quite moderate compared to Felipe being very hot.
Panama gets favorable attention as an expat destination. It is safer than San Felipe and about the same as Cuenca. For costs, it is much more than Cuenca and a little more than San Felipe. The climate in Boquette, Panama is similar to Cuenca because both are at elevation and Panama's healthcare appears to be the best of the three. One other thing going for Panama is that they use the US dollar for its currency.
Gemini suggests a 3-6 month test run before moving to an expat destination and that the test run should include the worst time of the year like a rainy season or in the case of San Felipe, the summer. That many months should allow time to get a general sense of what it is like to live there (pick an area that you'd actually live in), learn about doing general errands, understand the infrastructure constraints and get a sense of whether a social network can be built.
It seems like it is getting more difficult to accumulate enough to make retirement work. Whatever anyone wants to attribute the reasons to, it seems like that is a financial reality. Moving somewhere else can be the answer to some (probably) small slice of the population.
The information, analysis and opinions expressed herein reflect our judgment and opinions as of the date of writing and are subject to change at any time without notice. They are not intended to constitute legal, tax, securities or investment advice or a recommended course of action in any given situation.
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