“How much in retirement savings do I need?” is the one question that dogs people as they plan for life after work. The real answer is impossible to know, but you can make retirement plans based on the cost of living in your area, your current expenses and the savings you have amassed.

While I was researching this question, I saw an interesting example that neatly illustrates a point – just not the one the author was trying to make! The hypothetical example involved a person who made $80,000 annually for retirement and had a retirement savings account worth $500,000. Assuming a four percent annual draw-down (the maximum amount most investment advisors recommend withdrawing), that would leave our hypothetical retiree with an annual income (before taxes) of $20,000.

I’m not you and you’re not me, but I wouldn’t want to try to downsize my lifestyle by 75%, retired or not! (Would you?) One-third of workers plan no major spending changes after retirement – much less a 75% drop in income! Even if you supplement that $20K with Social Security payments – the current average is about $1,100 monthly – you’d have a maximum annual gross income of $33,200. Depending upon where you live, your health coverage and your expenses, that might work for you or it might not.

Some experts estimate that a person over 65 can expect to spend as much as $250,000 during the remainder of his or her lifetime on unpaid or uninsured medical expenses. If our hypothetical retiree needs to reserve half of that nest egg for medical expenses, s/he just took a 50% pay cut on top of the 75% pay cut s/he received upon retirement.

For me, that hypothetical example illustrates the need to live cost-effectively. Rather than downsize your lifestyle by 75%, wouldn’t it make sense to move someplace where things cost 75% less than they do here? To me, it makes more sense to make your dollars go as far as possible than squeeze into an uncomfortable retirement lifestyle and risk running out of retirement savings when you’re too old to go back to work.

Think such a place doesn’t exist? Wrong. The cost of living in Mexico is 50% to 75% less than it is in the US. Major expenses – housing, food, medical and dental care, prescription drugs, transportation and energy are all highly affordable here. The weather is beautiful and prime real estate is a bargain. Before you dismiss a Puerto Vallarta retirement, ask yourself this: how much of a pay cut are you willing to take when you retire?

Photo Credit: Sophie

There’s a lot of building going on in the Puerto Vallarta real estate market these days. Hotels, resorts, and condominiums are all being constructed in anticipation of the flock of retirees from all over the world who will be taking steps to call Puerto Vallarta “home.” With the sheer amount of building in Puerto Vallarta, one has to ask whether Puerto Vallarta is being “overbuilt” and if so, what will be the effect on the market?

It’s entirely possible that Puerto Vallarta is being overbuilt. These condo projects will be finished in a short amount of time. By itself, that should lead the casual observer to conclude that the price of Puerto Vallarta real estate will stagnate or decline as developers try to sell off a massive oversupply of housing.

In reality, the population of Puerto Vallarta, which now stands at 350,000, will grow to about 600,000 in the next seven years. The increase will consist of many retirees from all over the world who are looking to retire and beat the high cost of living at the same time. Additionally, Mexican citizens will also move to Puerto Vallarta and the surrounding areas to take advantage of the steady labor demands, jobs that support the tourist economy, construction jobs and jobs created as the result of the increase in population.

If Puerto Vallarta is overbuilt, it won’t stay that way. What will happen, however, is that the availability of land on which new homes can be built will decrease. Resorts, hotels and condominiums will occupy coastal properties in Puerto Vallarta, so residential property that overlooks the ocean will be in special demand. Investors will be forced to look farther up the coast for property on which to build luxury real estate and the price of existing real estate will skyrocket.

If anything, the time to buy land around Puerto Vallarta is right now. Investors can take advantage of this temporary oversupply to get the best price on coastal real estate. Buy building a new home instead of buying existing properties, investors can take advantage of the large anticipated jump in real estate prices along the Pacific Coast.

Photo Credit: Petr Kovar

Retirement is on many peoples’ minds these days. Baby boomers are planning for their imminent retirements. Younger people are wondering whether or not they’ll have enough money to retire with. People who have already retired are wondering how they’re going to make ends meet. Puerto Vallarta offers a wonderful opportunity for people who are looking for fresh retirement strategies.

Puerto Vallarta is really a two-way strategy. First, the appreciation of property down here is phenomenal – ten percent returns for the past ten years. You won’t find that in any market in the US! Second, the cost of living down here is absolutely manageable for people who have already retired, or are about to retire and are concerned that their savings won’t carry them far enough.

Conventional retirement strategies say that you don’t retire in a recession. Guess what? There’s no recession in Mexico. Mexico is so close to the US, and the quality of living is so high – especially in a place like Puerto Vallarta – that you’d be foolish to overlook such an opportunity.

The name of the game in successful retirement strategies is to save enough to provide 80% of your working income, or to reduce your cost of living significantly enough to get by on lower overall savings. Living in Puerto Vallarta can help you do just that without reducing your quality of living.

In Puerto Vallarta, you’ll be able to afford to hire household help with meals and the laundry. You can also afford to hire groundskeeping and maintenance assistance. There’s no reason to give up your dream of retiring in luxury, as long as a Puerto Vallarta home is one of your retirement strategies!

There are several stellar opportunities to acquire gorgeous property and build a luxury home here in Puerto Vallarta. Do your research, and while you’re looking, be sure to check out Select Mexico Properties.