Retire in Mexico: Taxes, Visas, and Healthcare 

Retire in Mexico: Taxes, Visas, and Healthcare 

Are you thinking of retiring in Mexico? You wouldn’t be alone! Some sources estimate that more than one million Americans are currently living in Mexico. And with Mexico’s warm climate, laid-back lifestyle, and lively culture, that should come as no surprise. 

Are you ready to start your new life abroad? If so, this guide is for you. Here’s what you should know if you’re planning to retire in Mexico. 

Average Cost to Retire in Mexico 

The cost of retiring in Mexico can vary widely based on your lifestyle and where you choose to live. Coastal cities and tourist areas tend to be more expensive, while smaller towns and inland cities offer a lower cost of living. 

On average, a couple can live comfortably in Mexico for about $2,000 to $3,000 per month. In 2024, the average Social Security check for a retired worker is $1,907 per month

While it might be possible for some retirees to live in Mexico using only their Social Security income, it does require a tight budget. Having some retirement savings (or an additional source of income) will help make your golden years comfortable. 

Beyond this, you will likely need to show a higher income than that to qualify for a visa to stay in Mexico. 

Mexico Retirement Visas 

Mexico doesn’t offer a retirement visa. However, the Temporary Resident Visa works perfectly for most retirees. This visa is valid for up to four years. After that, you can renew it or apply for a Permanent Resident Visa

Temporary Resident Visa Eligibility 

To apply for a Temporary Resident Visa, you will need to meet the minimum income threshold or show that you have enough money saved up to support yourself. The number for these requirements varies depending on where you apply. 

If you meet either of these requirements, you will likely qualify for a Temporary Resident Visa. 

Applying for a Temporary Resident Visa 

You can apply for a Temporary Resident Visa at a Mexican consulate outside of Mexico. You cannot apply from inside the country. 

The main requirement is to prove that you meet the minimum financial requirements for a visa. Other than that, the process is simple. 

Once your temporary resident visa is approved, you will receive a visa sticker in your passport, allowing you to travel to Mexico. Within 30 days of arriving, you must register with the local immigration office and exchange your visa sticker for a resident card. 

Where Are the Best Locations to Retire in Mexico? 

Mexico offers a variety of great locations to settle down, from tranquil beach towns to buzzing cities. Here are some of the top locations where retirees can enjoy a high quality of life. 

San Miguel de Allende 

This colonial-era city in the heart of Mexico is a UNESCO World Heritage site known for its stunning architecture, vibrant arts scene, and expat-friendly community. The climate is mild, and the city is renowned for its cultural festivals, art schools, and a high quality of life. 

Lake Chapala 

Home to Mexico’s largest expatriate community, Lake Chapala is popular among retirees for its scenic beauty, temperate weather, and lower cost of living. The area offers a peaceful, small-town feel with all the necessary amenities close at hand, including good healthcare facilities. 

Puerto Vallarta 

For those who prefer coastal living, Puerto Vallarta offers beautiful beaches, a vibrant cultural scene, and excellent dining options. It combines the charm of a traditional Mexican town with the conveniences of a modern city, including hospitals, shopping centers, and entertainment. 

Mérida 

Located on the Yucatán Peninsula, Mérida is known for its colonial history, warm climate, and safety. It’s one of the safest cities in Mexico and is close to famous archaeological sites and beautiful Gulf of Mexico beaches. 

Playa del Carmen 

A popular tourist destination on the Caribbean coast, Playa del Carmen has a more relaxed atmosphere compared to Cancún. It offers a mix of natural beauty with its stunning beaches and access to coral reefs, along with a bustling Fifth Avenue that’s lined with shops, restaurants, and bars. 

Ajijic 

Nestled on the north shore of Lake Chapala, Ajijic has a longstanding reputation as a retirement haven due to its mild climate, picturesque surroundings, and tight-knit expat community. It’s known for its artistic vibe and lively cultural calendar that includes music, theater, and festivals. 

Todos Santos 

For those looking for a quieter, more secluded retreat, Todos Santos offers a tranquil desert backdrop combined with close proximity to the Pacific Ocean. This small town is also a cultural hub, known for its art galleries, organic farms, and the annual music festival. 

Healthcare Options for Retirees in Mexico 

Mexico’s public healthcare system is available to all residents, including expatriates who hold a temporary or permanent resident visa. The system includes hospitals and clinics operated by the Mexican Social Security Institute and the Institute for Health and Social Security for State Workers

While public healthcare is very affordable, it may not always meet the standards that some expatriates are accustomed to, and the facilities may be crowded. Because of this, many American retirees opt for private healthcare as well. 

Private healthcare in Mexico is high quality and still generally more affordable compared to the US and Canada. There are state-of-the-art hospitals and clinics in larger cities and popular expat areas, staffed by well-trained doctors, many of whom speak English. Private health insurance is recommended if you choose this route, as it covers the higher costs associated with private care. 

Health insurance options for expatriates in Mexico include international health insurance plans or local health insurance policies. 

  • International plans are typically more expensive but offer the flexibility to seek treatment in other countries, including the United States. 
  • Local plans are cheaper but are limited to services within Mexico. 

Some retirees also choose to maintain their Medicare coverage in the US while having a local plan in Mexico for minor healthcare needs. 

Safety in Mexico 

Safety is a common concern for anyone considering a move to a new country, and Mexico is no exception. While certain areas in Mexico face challenges related to crime, many of the popular retirement destinations are generally safe and have thriving expat communities. 

It’s essential to research and choose locations known for their safety and popularity among expatriates. Places like San Miguel de Allende, Lake Chapala, and Mérida are known for their low crime rates and established expat communities, which can provide a support network and better security. 

What Happens to My Retirement Benefits if I Retire in Mexico? 

Social Security 

US Social Security benefits are available while living in Mexico. The US Social Security Administration can send payments to most countries, and Mexico is no exception. You can have your benefits deposited directly into a US bank account, or in some cases, into a Mexican bank account. It’s important to notify the SSA about your move to ensure there are no interruptions in your payments. 

Pension Plans 

If you receive a pension from a private company or a government job, you need to check with your pension administrator to understand the specific rules that apply to international payments. Most pensions can be received abroad, but the process and fees involved can vary. Like Social Security, these payments can typically be deposited into a US or Mexican bank account. 

401(k) and IRA Withdrawals 

Withdrawals from retirement accounts like 401(k)s and IRAs can be made while living in Mexico—but remember that standard US tax obligations apply to these distributions. Managing withdrawals efficiently is crucial to minimize tax liabilities and currency conversion losses. 

Medicare 

Medicare does not provide coverage in Mexico, which means you will need to consider alternative health insurance options if you relocate. Some retirees choose to maintain their Medicare coverage by returning to the US for medical care, or they might opt for a combination of private Mexican health insurance and medical services out of pocket. 

Taxes for Americans Living in Mexico 

Mexican Taxes 

As a resident of Mexico, you will likely be subject to Mexican taxes on your worldwide income. Residents are taxed on worldwide income, while non-residents are taxed only on income sourced from Mexico. 

Mexico has a progressive tax system with rates similar to those in the US. To learn more, check out this guide: Ultimate Tax Guide for US Expats Living in Mexico 

US Taxes 

As an American citizen, you are required to file US taxes on your global income regardless of where you live. This includes any income generated within Mexico, such as rental income from properties or any job you might take there. You’ll need to file an annual return just as you would if you were still living in the US. 

Because you will be taxed by both the US and Mexico, you could be at risk for double taxation. Fortunately, the IRS provides several tax  benefits to help avoid this, including: 

Using these benefits, most expats can reduce their US tax bill to zero. 

It is important to know that if you own a property held in a Mexican corporation or other type of legal entity, you may have additional annual reporting requirements to the IRS. Generally, additional taxes will not be owed, but penalties for not reporting ownership of a foreign corporation or other entity generally start at $10,000 per year and can quickly increase. It is highly recommended to speak to a tax professional that specializes in international tax issues before creating or owing any type of foreign legal entity. 

Other US Tax Forms 

You will likely also have to file additional expat tax forms. This may include the Foreign Bank Account Report (FBAR) and a FATCA report. The good news is that both are merely informational returns, and filing either won’t mean that you have to pay any extra taxes. 

Greenback Can Help You Retire in Mexico with Full Confidence! 

If you’re planning to retire in Mexico, we can help. 

Greenback Expat Tax Services is an American company founded by expats and for expats. We specialize in overseas taxes and always have. Many of our CPAs and Enrolled Agents live abroad themselves. In fact, our team is spread out over 14 time zones! 

We’ve helped over 18,000 expats file over 60,000 returns while maintaining a 4.9-star average on TrustPilot. Now, we’re ready to help you too. 

Contact us, and we’ll be happy to answer all your questions. Let’s talk! 

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