Mexico has long been a favorite retirement destination for Americans, with about 1.6 million U.S. retirees already settled there.
It’s relatively easy for American retirees to transition to a new life in Mexico for several reasons. It’s geographically close and one of the few international retirement destinations you can visit by car. It’s also an affordable place to live, with a low cost of living amplified by a strong U.S. dollar. Many locals speak English, and it’s easy to immigrate there, thanks to user-friendly residency policies.
Here’s how to go about retiring in Mexico.
— Find your perfect spot south of the border.
— Learn Spanish.
— Establish residency in Mexico.
— Choose a house or apartment.
— Import your household effects and set up local accounts.
— Consider your health care options.
— Understand your tax obligations.
Find Your Perfect Spot South of the Border
Mexico is vast. It’s the 13th biggest country in the world, and as such, it offers a variety of lifestyle options. Along its Pacific and Caribbean coastlines, you can enjoy the best of beachside living for a fraction of the cost in the U.S. Inland, you’ll find highland colonial cities with cool weather, colorful Spanish architecture and laid-back atmospheres. The Yucatán Peninsula offers a dense rain forest that spills out onto white-sand beaches. Mexico City, home to over 22 million people, is a buzzing metropolis with endless round-the-clock entertainment options.
Getting to know the many faces of this country is the first step in retiring here. Research the climate, costs of living, communities, local amenities and safety standards of different areas. Try to see as much of Mexico as you can, visiting at different times of the year and staying for extended periods before deciding where you’ll move.
Learn Spanish
Thanks to a strong tourism industry, English is widely spoken throughout Mexico. That said, picking up some Spanish will enrich your life and make day-to-day interactions easier. You can use AI tools and language-learning apps to learn Spanish before leaving the States. Once you arrive in Mexico, hire a private tutor or enroll in in-person classes. This is also a great way to meet new people and tune into cultural norms.
[READ: The Best Places to Retire Overseas Where English Is Spoken]
Establish Residency in Mexico
It’s quick and easy to establish residency in Mexico, but depending on the kind of lifestyle you envision for yourself, you may not need to. You can stay in Mexico for six months as a tourist, which is plenty for those who prefer to live there part time.
If you want to stay in Mexico longer, you can apply for temporary or permanent residency at the Mexican consulate. To qualify for temporary residency, you must show that you receive 74,679 pesos ($3,733) after taxes during the previous six months or proof of personal investment accounts or bank accounts with a monthly balance of at least 1,244,650 pesos ($62,210) during the previous 12 months.
Mexico also allows you to jump straight to a more solid permanent residency status. To do this, you must show proof of a monthly bank balance of at least 4,978,600 pesos ($248,786) during the previous 12 months or proof of a job or pension that yields a monthly income of 124,465 pesos ($6,222) after taxes during the previous six months. Note that the exact qualifying amounts can vary from consulate to consulate.
Mexico offers a few perks relative to other countries when it comes to establishing residency: It does not require you to stay in the country for any specific amount of time to maintain your residency status; it does not require a criminal background check as part of the residency screening process; and it allows you to qualify for residency based on savings, including an IRA or a 401(k), rather than income.
Choose a House or Apartment
When considering an international move, renting before buying a home is always recommended. Local listing sites and Facebook groups are often the best places to find rentals in Mexico. Once you’re ready to purchase a home, you’ll find that property values are generally very low. Beach property, in particular, is an incredible bargain, usually priced well below international standards. For example, the price per square foot for beachfront property in Mazatlán, a city on the Pacific Coast, is $253. Compare that to the average price per square foot for oceanfront homes in Jacksonville, Florida, which is $866.
[Read: Where Retirees Can Buy a Home Overseas for Under $100K]
Import Your Household Effects and Set up Local Accounts
As a new resident, you can import your household effects duty-free.
Administrative tasks like opening a bank account, arranging credit and operating a business are straightforward. Mexico is rated No. 1 in Latin America and the Caribbean by the World Bank when it comes to ease of doing business. It’s also home to many service providers that are already part of daily life for most Americans, including Amazon, Amazon Prime Video, Netflix and Uber.
Consider Your Health Care Options
Mexico has good health care options, particularly its private medical facilities. It’s a growing medical tourism destination worldwide, especially for dental care. Because it’s so close to the States, it’s a good option for Americans who want to keep Medicare after they move abroad. If you prefer, you can easily travel back to the States to have your health care needs met in a more familiar environment.
[READ: How to Retire in Canada.]
Understand Your Tax Obligations
Unlike many other countries, Mexico doesn’t determine tax residency by the total number of days you spend in the country. It considers you a tax resident if your primary home or center of business is established there. As a tax resident of Mexico, you’re subject to tax on your worldwide income. Tax brackets run from 0% to 35%. Capital gains are taxed as ordinary income, and Mexico has no inheritance or wealth tax. A tax treaty with the U.S. helps retirees avoid double taxation.
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How to Retire in Mexico originally appeared on usnews.com
Update 11/01/24: This story was published at an earlier date and has been updated with new information.
