Retiring in Mexico: What You Need to Know

Older Americans who’ve moved south of the border say it’s not too difficult, as long as you plan carefully, spend some time picking a location that’s right for you and take into account the cultural and economic adjustments you’ll need to make. Here are some of the practical things you’ll need to know.

View of Playa del Carmen, Mexico

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Establishing residency

For retirees who want to live in Mexico, the first stop is to visit the nearest Mexican consulate and apply for a permanent resident visa. You’ll be required to:

• Fill out a visa application form and pay a $48 application fee.
• Provide a valid U.S. passport and a color picture.
• Provide proof of economic solvency — documentation that you have maintained bank or investment accounts with a monthly balance of $181,968 for at least the past year or that you have monthly income from work, Social Security or a pension of at least $4,549 after taxes over the past six months.

Buying property

Americans can buy property in most of Mexico in much the same way as they do in the U.S., says Stephanie Pepper of Coastal Properties of Cabo, a Mexican real estate brokerage.

The process is a bit more complicated in areas along the coasts and near the border. In these zones, non-Mexican nationals must go to an authorized bank and set up a special trust called a fideicomiso, in which the bank holds legal title to the property as trustee but the buyer has complete ownership rights.

View of Mazatlan, Mexico

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As in the U.S., you’ll need to have an agent representing you in any property deal. It’s advisable to find an English-speaking attorney to represent you as well.

Finding the right place

Before you buy, it’s a good idea to explore Mexico and see different areas. “Dip your toe in the water for a minimum of six months,” says Denis Larsen, 84, a longtime American resident of Valladolid who for years owned and operated a bed-and-breakfast there. “Make sure the city fits.”

Mexico has a range of places that provide different scenery, climate, lifestyles and cultural experiences (see “7 Mexican Cities Retirees Love,” below). Several have large communities of English-speaking expats, notably the resort meccas of Puerto Vallarta on the Pacific Coast, the Riviera Maya on the Caribbean and the area around Lake Chapala, Mexico’s largest lake.

View of Puerto Vallarta, Mexico

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But even if you live in an area where you can get by on English, it’s advisable, not to mention polite, to learn at least some Spanish.

“If you don’t speak Spanish, your experience here is just not nearly as multidimensional or as rich,” Kimsey says.

Health care

American retirees with legal residency can sign up for public health insurance offered through the Instituto Mexicano del Seguro Social (IMSS), the national social security system, and pay a small premium. But they often buy private insurance coverage or pay out of pocket for routine care, which Rich says is relatively inexpensive.

Though Medicare doesn’t cover most care in Mexico (or anywhere abroad), Peddicord advises retirees to keep their Medicare coverage as a backup in the event of serious illness or injury, since it’s relatively easy to travel back to the U.S. for treatment.

Taxes

Even if you’re retired and living in Mexico, you need to file a U.S. tax return every year — federal taxation is based on citizenship, not place of residence.

View of Puerto Aventuras, Mexico

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You must report any income you get from renting out property you own in Mexico and file disclosure forms if you have $10,000 or more in Mexican bank accounts or $200,000 or more in foreign assets.

You also have to pay Mexican real estate taxes on your home, though typically these only amount to a few hundred dollars a year, according to Pepper.