By Mexican standards, San Miguel de Allende is an expensive place to live, as is Banderas Bay and the Mayan Riviera.

Other small communities offer rock-bottom living costs. My friend Lupe Cano built a retirement house in his home town of Capilla de Milpillas, about an hour from Guadalajara. He and his wife, Berta, treated Jean and me to dinner at a local restaurant: tacos, pozole, flautas, beans and rice with four huge cokes in returnable glass bottles. The check for the table: $6.

The Cano family sits for a formal portrait.

His elegant four-bedroom 2,400 square foot home cost about $25,000 U. S., land and construction. Note the roll-up doors on the corner—just in case Berta decides to generate a little cash with a tiendita (little store).

Lupe's house in Capilla de Milpillas.
In those days, I needed suspenders to hold up my jeans.

Most Norteamericano retirees would not feel at home in Capilla de Milpillas. Few if any gringos live there, so fluency in Spanish and love of real Mexican culture unrelieved by cappuccino and hamburger joints would be essential. Too bad, 'cause you can't beat the cost of living there.

That's why so many expatriate Americans relocate to San Miguel. Here you get the same year round gentle climate, the challenge of living in another culture and learning another language, but you get to do it with thousands of people just like yourselves.

Some people snippily refer to San Miguel as "Mexico Lite." Well, OK. I admit it's nice to have neighbors who speak my native language. But I bet that here, it's just as hard to deal with Telmex or CFE (the power company) as it is in Gomez Palacio.

Moreover, San Miguel is a beautiful city, with preserved colonial architecture and a vibrant art community. Its popularity has driven up prices, so it's not the low-cost-of-living haven it once was. Many who come here would want one of the more centrally-located homes. These cost maybe $300,000 and up, up, up.

But all is not lost. This home, which belongs to my friend Pete, cost considerably less.

Milagro, the wonder dog, deters riffraff entering the premises.

Pete's two-bedroom, two-bath home is located in a subdivision called La Luciernega, about two miles from the city center. This development of all-new homes is completely sold out; the majority of owners are people form Mexico City and other conurbations looking for vacation homes, although some are being held unoccupied for investment.

Pete demonstrates his kitchen skills with a bottle of Be-Lite.

Pete says a neighbor bought a home here not long ago for $75,000, so current values have not yet reached six figures. Tough to find a home anywhere for so little money, much less one that is within walking distance of the new Gigante supermarket, the MM Multiplex, Office Max and McDonalds; a home that's a $2 taxi or a 40¢ bus ride from the Jardín.

Milagro, taking a break from guard duty in Pete's garden. Silly dog.

Owning his house free and clear, Pete's living expenses could be amply covered by Social Security retirement benefits, with money left over for exploring Mexico.

So despite rising prices, it still can be done—retiring in San Miguel on Social Security. And what's amazing is that it can be done in a place that is repeatedly ranked among the top ten retirement cities in North America, by magazines like Forbes. Beats the hell out of a double-wide in Altus, Arkansas or a third-floor walk-up in Hackensack, NJ.