Editor’s note: “Retire in Mexico” is part of an ongoing series on retiring abroad. To see all the articles in the series, jump to the end of this article.
You might be tempted to retire in Mexico, especially given rising U.S. economic uncertainty. Mexico is no stranger to people north of the border living in the country — 1.6 million U.S. citizens do, according to the U.S. State Department. With 2,000 miles of shared borders, it’s no secret why so many Americans call Mexico home. But should U.S. retirees make a similar move?
Yes, travel and lifestyle experts say, but you’ll need to balance out the warm climate, scenic aquamarine beaches, and lower cost of living with some more complex realities before heading to popular landing spots like Playa del Carmen, Puerto Vallarta, and San Miguel de Allende, among others.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.
Profit and prosper with the best of expert advice – straight to your e-mail.
“Mexico is the most popular international destination for U.S. retirees by a wide margin,” said Tim Leffel, editor at travel publications company Al Centro Media, who’s lived in Guanajuato, Mexico full-time since 2018. “That’s partly because of proximity and great flight connections, but also because this is a big country with a lot of different climate options and style of living choices.”
Many American ex-pats struggle with the move for the same reasons. “They make decisions too quickly without doing any kind of trial run and without investing the time to check out different locations,” Leffel said. “Others want a place that’s just like the USA but cheaper, and that’s a destructive attitude that often leads to disappointment.”
Cultural challenges can also thwart a move south of the border. “Things move slower here, work is not the top priority, and there’s a much more fluid attitude about time and punctuality that type-A personalities have trouble adjusting to,” Leffel added.
What “to do” list items do you need to check off before retiring in Mexico as a U.S. citizen? The good news is the list isn’t that long, but every step needs to be covered thoroughly. Here’s a closer look.
(Image credit: Getty Images)
Retire in Mexico for a lower cost of living
In Leffel’s hometown of Guanajuato City, you can buy a 2-bedroom home for under $150,000, but more money goes a long way.
“$250,000 is a healthier budget for a prime area in or near the historic city center,” Leffel said. “It’s hard to find anything listed for more than a million dollars still, though it’s a very different story down the road in popular San Miguel de Allende, where the 12,000 or more foreigners have driven up prices more.”
Rentals in Guanajuato City fall in the $600 to $1,400 range for a two-bedroom apartment or house.
Elsewhere, the numbers are relatively similar.
In Mazatlán, a choice spot on Mexico’s Pacific coast with over 10 miles of sandy beaches and a five-mile boardwalk, purchases and rentals are significantly lower than in beach towns in the U.S.
“Rent costs vary, but you can expect to spend anywhere from $800 to $2,000 monthly, so real estate is a great investment in Mazatlán,” said Lee Harrison, senior editor at Live and Invest Overseas, a living abroad advisory platform. “You can buy a nice, ocean-view condo for around $200,000.”
Lifestyle costs beyond home accommodations are also relatively low.
“Everything from food and entertainment to housing and utilities costs less here than in the States or Canada… but it also costs less than comparable Mexican resort cities, like Puerto Vallarta,” Harrison noted.
Figure on a monthly budget of around $2,000 for a couple living comfortably here, Harrison advised.
(Image credit: Getty Images)
The healthcare experience
Healthcare is highly affordable, too.
“You can sign up for one of Mexico’s national healthcare systems if you hold a temporary or permanent resident visa,” said I. Murat Coskun, managing partner at Get Golden Visa, a residence and citizenship advisory services firm. “The cost of joining IMSS is very affordable and covers prescription drugs; it ranges from roughly $348 per year for kids and teenagers to about $850 per year for people in their 80s or older.”
Alternatively, the national health care system, INSABI, is free if you are a lawful resident. “Depending on your plan, having private health insurance can increase your annual expenses by several thousand dollars,” Coskun said.
Even without insurance, medical care in Mexico can be very affordable. “Most hospitals are modern, well equipped, and clean,” Coskun noted. “Many medical professionals in Mexico have at least a basic understanding of English, and many of them completed all or part of their training in the United States, Canada, or Europe.”
Medical care expenses pale in comparison to those in the United States.
“You can spend between $50 and $75 to see a specialist if you decide to pay for your medical treatment privately,” he added. “Follow-up visits, if necessary, are often covered by that sum. Most pharmacies also provide a ‘consulatorio’ where you can see a doctor for less than $5 if your demands are straightforward.”
(Image credit: Getty Images)
Taxes as an expat in Mexico
Generally, foreigners are only subject to Mexican taxes on income sourced from within Mexico unless they are considered tax residents.
“This implies that a U.S. retiree residing in Mexico who doesn’t work or have an income within Mexico is exempt from taxes on their U.S. retirement income,” Coskun said. “The U.S.-Mexico tax compact, which attempts to avoid double taxation and ensures that both nations do not tax the same income simultaneously, is another contributing factor.”
However, a person will be liable for Mexican income tax if they receive local income in Mexico. “That includes earnings from a local business or rental income from a Mexican property,” Coskun noted.
Additionally, Social Security income is not taxed in Mexico.
“There are also huge discounts on property taxes for retirees if they pay their property taxes a few months early,” said Mariana Lange, owner of the Mexico Relocation Guide in Austin, Texas. “property taxes are already crazy low. Most people don’t pay more than $400 yearly on property taxes.”
Lange noted that Mexico also offers discounts to those 60 and older on medications, wills, bus passes, and sometimes airfare, depending on the airline.
Where to retire in Mexico: best places to live
(Image credit: Getty Images)
The list of potential landing spots in Mexico is long, featuring names Americans likely know and some they won’t.
“There are so many great places to retire in Mexico,” Lange said. “It just depends on whether the retiree wants a warm or temperate climate, a large or small city/town, close to an airport, and those kinds of things.”
Lange’s top destinations include Lake Chapala (Ajijic and Chapala), San Miguel de Allende, Puerto Vallarta, Mérida, Quéretaro, Guadalajara, and Mexico City, among others.
“Honestly, retirees are moving all over Mexico nowadays,” Lange said. “Sometimes, I hear about clients moving to a rural town in the middle of nowhere — and they love it.
Where you live in Mexico ultimately depends on climate preferences and the size of the foreign community you want around you.
“Mexico is about as wide as the USA and has almost as much geographical variety, so this is a very personal experience,” Leffet said. “The most popular places for foreigners are the tourist beach locations like Playa del Carmen, Puerto Vallarta, and Los Cabos, with a few smaller ones like Mazatlán, Loreto, and Zihuatanejo also having a sizable number of foreigners.”
In the interior, Mexico City (called “el D.F.,” short for “Distrito Federal”), San Miguel de Allende, and Lake Chapala are the most popular areas, but you also find plenty of expats in Oaxaca, Guanajuato, and Querétaro. “Then again, there are plenty more scattered around in smaller numbers in other cities.”
There are abundant direct flights from the U.S. to major cities in Mexico.
“Mexico has more flight connections with the USA than any other country, by a wide margin,” Leffet said. “Even from my Leon/Guanajuato airport, we can fly to the USA on six different airlines daily. If it’s not direct, the beach resort areas and Mexico City have flights to almost anywhere in the States with just one hub connection.”
Safety concerns
Lange believes that crime reports in Mexico are overblown, and safety issues in Mexico are no more risky than in other foreign locales.
“Yes, there is crime in Mexico like there is crime in any other country,” she said. “However, the cartel issues have been overly sensationalized in the media for the past 10 years.”
While the cartels exist, most people never encounter them and have never been a victim of crime by cartels in their entire lives living in Mexico.
“Having said that, it is also important for American retirees not to leave their common sense at the border,” Lange noted. “They should still practice being aware of their surroundings as they should be anywhere. It is also very important for them to understand that things work differently in Mexico, and unfortunately, there are bad apples who prey on the newcomers who don’t know what they don’t know and scam them.”
Those scams are particularly likely to target U.S. newcomers, so be prepared.
“It’s important for people to do their due diligence when hiring a realtor, hiring an immigration expert, buying a home, or making any big purchases,” Lange advised. “We give all of our customers a complete directory of vetted contacts across Mexico that can help them with their residency visas, find rentals, drive them to Mexico, move their household goods, help them with healthcare insurance, help them buy a house, give clients a private relocation tour and more.”
If crime is a big issue for retirees, head toward well-policed locales. Safe and attractive areas for retirees include Mérida (Yucatán), Lake Chapala/Ajijic (Jalisco), Puerto Vallarta (Jalisco), San Miguel de Allende (Guanajuato), Querétaro (central), La Paz (Baja California Sur).
“These regions are characterized by low crime rates and strong community structures,” Coskun said. “In addition, there are places like Ensenada (Baja California), Mazatlán (the safe coastal part of Sinaloa), and Huatulco (Oaxaca), which we are starting to hear about more and more often, and which are considered safe.”
No matter where you live, it is essential to take basic safety measures.
“Don’t carry valuables in the open, avoid deserted places at night, be careful when using ATMs, and opt for registered taxi apps (think Uber and Didi),” Coskun said. “When traveling by car, it is also advisable to use toll highways, ensure home security, and keep abreast of local safety advisories and developments.”
Finally, consider the local environment when deciding where to settle. Some areas have poor air quality or polluted bodies of water (like Lake Chapala) that may limit your enjoyment of the outdoors.
(Image credit: Getty Images)
The takeaway on retiring in Mexico
Mexico remains a leading country for retirees from the U.S. and Canada for various reasons.
“Many people have vacationed in Mexico, so they’re already familiar with some level of the culture,” Lange said. “We are next-door neighbors, which makes it easy to get back home or have family members visit easily.”
Perhaps most importantly, a U.S. retiree’s retirement savings and social security can go much further in Mexico. “Plus, the healthcare system and level of care is many times better and more affordable than anything in the U.S.,” Lange said.
Like most foreign countries, Mexico will take some getting used to.
“Due to Mexico’s ease of access, widespread use of English, and 180-day visitor stays, there aren’t many issues to tackle,” Harrison said. “If you’d rather be a resident from the start, Mexico is the only country I know of that allows you to qualify with savings, such as a 401(k), instead of retirement income.”
Although English is widely spoken in Mexico, Harrison said that lack of Spanish is one of the primary sources of expat inconvenience. “This shows up when dealing with utility workers, internet service technicians, car mechanics, or workers who typically don’t speak English,” he added.
