Retiring in Mexico: a complete guide for US expats

Mexico continues to top global retirement lists – and for good reason. Over 1.6 million US citizens already call it home, drawn by lower costs, warm weather, and vibrant culture. In this guide, you’ll discover why retiring in Mexico offers more than just savings – it offers a lifestyle upgrade.

Why so many retirees choose Mexico

As an American or Canadian, retiring to Mexico from the US offers the chance to upgrade your lifestyle – without breaking the bank.

1. Warm weather – vibrant culture – close to home
   Enjoy year-round sunshine and rich cultural experiences just a short flight from the US or Canada.
2. Friendly expat hubs across Mexico
   Settle into welcoming communities in places like Mérida, and San Miguel de Allende.
3. Relaxed pace – elevated lifestyle
   Life moves slower here, but with more comfort, better food, and high-quality living.

Visa pathways for American retirees

For expats, choosing between Mexico’s two main residency options is the first big step.

Temporary resident visa

This visa is a popular choice among US citizens looking to retire in Mexico with flexibility and ease. It allows expats to stay in Mexico for more than six months and up to four years without making a permanent commitment. Many start here before transitioning to permanent residency.

To qualify, you’ll need to meet income or savings thresholds. Most consulates require proof of at least $4,083 in monthly income for the past six months – or savings of $68,066 maintained over the last 12 months. Requirements vary slightly by location.

Permanent resident visa

This option suits expats ready to settle down in Mexico for the long haul. It provides unlimited stay and doesn’t require renewals – ideal for retirees looking for lasting stability.

To qualify, you’ll typically need:

• monthly income: $6,806 over the past six months
• savings: $272,270 held for the last 12 months
• pension income or age verification

Residency in Mexico – key steps to get approved

1. Start at a Mexican consulate in your home country. Schedule your appointment early, and bring all required documentation. You’ll be issued a 180-day visa once approved.
2. Travel to Mexico and report to the Instituto Nacional de Migración (INM) within 30 days. You must apply for your residency card before your visa expires.
3. Choose between temporary or permanent residency. Temporary cards are issued for one year and can be renewed for up to three additional years. After four years, you can switch to permanent residency.
4. Keep INM updated on life changes – like a new locale or marital status. Staying compliant helps avoid delays in renewals or future upgrades.
5. If you have Mexican family ties, you may be eligible to apply directly within Mexico. This includes parents, children, siblings, and stepchildren of citizens or permanent residents.
6. Pay the required government fees – about $229 for temporary and $279 for permanent residency. No need for notarized or apostilled documents, police checks, or vaccinations.

Legal pitfalls – avoid these retirement mistakes

Best places to retire in Mexico

Ajijic

A small town of 15,000 by Lake Chapala, Ajijic is beloved for its spring-like weather and thriving arts scene. It's a top pick for US expats thanks to its walkable streets and active English-speaking community.

Ajijic . PHOTO CREDIT: PIXABAY

Safety is solid in expat areas – just avoid isolated spots at night. Dress modestly, greet locals warmly, and you’ll blend right in.

Puerto Vallarta

This coastal city of 220,000 blends beach life with city comforts – hospitals, cafes, and modern condos. A longtime expat magnet, it’s easy to find English speakers, especially downtown.

Puerto Vallarta. PHOTO CREDIT: PEXELS

Crime exists but rarely targets retired citizens – stick to safe zones and be alert. Embrace local customs and avoid tourist traps to fit in.

Mérida

With nearly 1 million residents, Mérida offers culture, history, and one of the lowest crime rates in Mexico. It's less touristy but growing fast among expats drawn to safety and colonial charm.

Merida. PHOTO CREDIT: PEXELS

English is spoken in expat pockets – elsewhere, Spanish helps. Learn a few phrases and stay aware in crowded markets to stay safe.

Mexico’s cost of living advantage

With a cost of living that's 42.7% lower than the United States, Mexico stands out as a top destination for affordable retirement, offering substantial savings for United States citizens and other expats alike.

While daily expenses like groceries and utilities stay fairly even throughout Mexico, rent and lifestyle costs depend heavily on region:

→ Ajijic is 41.3% cheaper than Puerto Vallarta and 22.3% lower than Mérida (excluding rent). Groceries are also over 20% cheaper – ideal for cost-conscious expats.

→ Mérida costs 5.1% more than Ajijic when rent is included but offers 57.1% cheaper rent. It strikes a strong balance for those valuing low housing costs and city amenities.

→ Puerto Vallarta is 30.4% more expensive than Ajijic overall, with grocery costs 46.7% higher. Despite this, it’s still far more affordable than US cities like Seattle or Miami.

United States retired citizens also favor San Miguel de Allende, Mazatlán, La Paz, and Querétaro for their affordability and vibrant expat scenes.

(Cost of living data sourced from Numbeo.)

Healthcare options for US retirees in Mexico

Mexico’s public and private systems serve expats well. Public care is low-cost but can be slower with longer waits. Private clinics offer faster service, newer equipment, and English-speaking staff.

Senior USA citizens can choose from IMSS or private plans. IMSS enrollment costs vary by age – starting at about $500–$600 USD per year. Private visits are affordable, with general doctors charging $20–$25 USD.

In emergencies, expats rely on private hospitals for speed. Many also keep travel insurance or expat-focused plans for peace of mind. Top retirement destinations in Mexico offer reliable access to care.

Smart housing picks for retirees

Retirement destinations in Mexico offer expats a chance to live well on a budget – and whether you're stretching Social Security or diving into a dream lifestyle, the right home base makes all the difference.

• Rent or buy? Know your game plan: Renting offers flexibility – expect $300–$500 monthly in rural areas and $600–$1,200 in cities. Buying runs $60,000–$120,000 in rural zones and $150,000–$300,000+ in urban hotspots.
• Don’t let hidden costs surprise you
  Beyond sticker prices, watch for unpaid taxes or utility bills from previous owners. Currency swings can inflate your final price too. Annual property taxes (predial) are low but must be budgeted, and buying triggers a one-time acquisition tax (ISAI) – typically 2–4% of the sale price.
• Where expats feel at home
  From beach towns to colonial gems, top retiree favorites include Lake Chapala, Playa del Carmen, Mazatlán, and Rosarito. These spots offer community, comfort, and a taste of adventure.
• Know the rules
  Buying property in Mexico is doable – but legal nuances matter. In coastal or border areas, foreigners must use a fideicomiso (bank trust). And steer clear of ejido land unless you're fully briefed – it’s communal and tricky to convert for private use.

Taxes when retiring in Mexico

If you're planning to retire to Mexico from the US, it's essential to understand how taxes will work in your new location. This section breaks down how retiring in Mexico affects your tax responsibilities – both locally and back home.

Mexican tax rules

For retirees, the key question is whether you’re classified as a tax resident. If you spend more than 183 days per year in Mexico or establish your center of vital interests there (like a permanent home or close family ties), you’re typically seen as a tax resident.

• Tax residents pay income tax on all income – worldwide pensions, annuities, and rental income included – at progressive rates from 1.92% to 35%.
• Non-residents pay Mexican tax only on Mexican-sourced income (such as rental income from local property) at 15%–30%.
• Social Security from the US is generally not taxed in Mexico – but always confirm with a local tax advisor.
• No taxes on wealth, inheritance, or estates – helping retirees preserve their legacy.
• The annual tax return is due April 30 (or May 31 if filed electronically).

US tax obligations

Retirement doesn’t mean retiring from taxes. As a US expat living your best life abroad, your IRS ties remain strong – and your tax to-do list is very much alive. Here's how to stay compliant while maximizing your income.

File Form 1040 each year to report worldwide income – including pensions, Social Security, and retirement distributions. Use Form 2555 to exclude up to $130,000 in foreign-earned income, and Form 1116 to claim credits for taxes paid to Mexico. If you have foreign accounts over $10,000, file an FBAR, and submit Form 8398 for foreign assets above $200,000 ($300,000 at any time).

NOTE! US expats must file by June 15 (June 16 in 2025). Taxes are due by April 15 to avoid interest – even if you file later. The final extension deadline is October 15 with Form 4868, but any taxes owed are still due in April. You can request our free tax extension service if you need additional time.

Do US or Canadian retirees pay taxes in Mexico?

If you’re considered a resident or earn income in Mexico (like from renting out property), you may owe both taxes. However, many retirees don’t generate taxable Mexican income, which limits their local obligations. Nevertheless, the USA-Mexico tax treaty helps prevent double taxation and clarifies residency status and withholding rules.

FREE

One foot in Mexico?

Don’t let US taxes surprise you.

Schedule my free call

Mexico – the right fit for your retirement

Mexico blends affordability, lifestyle, and tax perks that are hard to beat. It’s ideal for retirees who want sunshine, culture, and a welcoming expat community.

Our team at Taxes for Expats helps you stay compliant, reduce your US tax burdens, while you enjoy your Mexican retirement home with confidence.