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One of the principle reasons why Mexico is so attractive to retirees from the United States is the cost of living. A person on Social Security can live much more comfortably down here than in the States.
Mexico City is more expensive than most parts of the Mexico, just as New York City is more expensive than my hometown of Cleveland. I had no idea what rent prices are in the Cleveland area, so I did a little checking on the internet. The price I am paying for a 3 bedroom / 2 bathroom apartment in a very nice neighborhood would be a good bargain back home. In New York City it would be an incredible steal.
I have previously written that a three course "menu of the day" in many restaurants here will cost 70 pesos or around $4 US. The other day when I went to an upscale supermarket, I spent around $40 US for two very full grocery bags (probably less than I would have paid at the discount store where I shop at home).
The lower cost of living was very apparent when some of the utility bills arrived. The water bill is sent every two months. The latest water bill for the apartment was 240 pesos or around $14. Admittedly almost all of the water consumption occurred in the one month that I was staying here. But even so, $14 per month is a far cry from the $100 or more I pay each quarter at home. The monthly telephone / internet bill (no cable) was 389 pesos or about $23... far less than I pay for just my phone at home.
I just did a little more research on the internet and found a website which compares the cost of living in cities around the world. The cost of living in Mexico City is 36% less than in Cleveland, and 62% less than in New York City. I also did a comparison between Mérida, one of my favorite cities in Mexico, with Cleveland. The cost of living in Mérida is 52% cheaper.
Of course you have to remember that these prices which seem so cheap to "gringos" are not so great for Mexicans whose salaries are far lower than in the United States.