Many USA Americans Retiring in Latin America

The gringos are moving where the living is easy

SAN MIGUEL DE ALLENDE, Mexico (Economist) November 25, 2005 — You can't really tell you're in Mexico. The menu is in English, so is the music, and seemingly every patron in the place is American—many of them extended families come together to celebrate Thanksgiving. San Miguel, a hillside town three hours north of Mexico City, has long played host to a community of expatriates from the United States, many of whom have chosen to retire there for all or part of the year. Although neither the Mexican government nor the American one keeps statistics on the town's foreign population, anecdotal evidence suggests that it is now growing at a faster pace than ever.

Joannie Barcal of Allende Properties, an estate agent from California, who has lived in the town for 16 years, says that the number of foreigners looking for houses in San Miguel has increased hugely over the past year. It is a comfortable sort of place—one might describe it as the opposite of bohemian. Trinket shops sell silver plates embossed with the logos of Louisiana State University and the University of Texas. The houses bought by foreigners are rarely cheaper than $220,000; several go for over a million every year, Ms Barcal says.

Many of the American settlers barely speak a word of Spanish. They move south not so much in pursuit of the sun, which they could find just as easily in Florida or Arizona, but in a search for a cheaper way of life, along with the sense of community that foreign enclaves generate. Estimates for the number of Americans of non-Mexican ethnicity who have retired to Mexico, mostly in San Miguel and a handful of other towns, hover around 250,000, with at least as many Americans with Mexican roots more widely dispersed. But the house-price boom they and other foreigners, notably Canadians, have created is now driving others even farther south.

Panama, Costa Rica, Nicaragua and Honduras all offer tax breaks to foreigners seeking to retire there. Beachfront developments catering for pensioners have sprung up along both the Atlantic and Pacific coasts, with a house right on the beach often costing just half what you could expect to pay in San Miguel, smack in the middle of Mexico. Even an influx of a few tens of thousands of American “senior citizens” can have a big impact on the small economies of the Central American countries. And the numbers could grow even bigger if America agreed to change its public health-care system for those over 65.

At present, Medicare, as the system is called, cannot be claimed abroad. So American pensioners tend to travel back to the United States to get treatment. The possibility of making Medicare “portable” has been talked about for years. But, apart from the introduction of a small pilot project, it has never got much further than just an idea. Yet the advantages are clear: expatriate pensioners would find it easier to get health care; the costs for the crisis-ridden Medicare would be lessened; and Mexico and other Central American countries with American pensioners would benefit not only from a rise in their health-care expenditure, but also from the big increase in their numbers that such a change would certainly bring.