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Maximizing Your Expat Retirement Income in Mexico

Earl French and John McWilliams in Ajijic | Expats in Mexico
Credit: John McWilliams

Maximizing your expat retirement income in Mexico is a must for those living here on a limited budget and important to most everyone. Although Mexico is well known as a retirement haven because of its inexpensive cost of living, knowing how to manage your money is important to living well on your income in Mexico.

Ahead of retiring in Mexico, many future expats want to know how much income they would need to live comfortably. To provide you with some retirement budget guidance, we have put together a few tips to help you stretch your income.

General Cost of Living

The crowd-sourced global online cost of living website Numbeo shows the cost of living in Mexico is around 50 percent less than in the United States. The tourist and expat hotspots are generally more expensive than other areas, and your exact cost of living will depend on your lifestyle choices. Some cost items such as Internet and phone connections, however, are quite similar across the country.

The average cost comparisons among popular expat areas show that a single person can live in Mexico for less than US $1,500 a month. Note that some costs will also vary between different areas within a city.

(Data from Numbeo was collected April 20, 2021. Rent data are rounded to the nearest 500 and other data to the nearest 1. Numbeo says it has less data for Chapala. Therefore, the Chapala data are stated only as approximate. The total monthly costs are the addition of monthly costs, not including rent. A rent example is also shown. The USD conversions are at an approximate exchange rate of USD1: MXN 20).

Healthcare Costs

Expats retiring in Mexico full-time and not covered by international insurance policies have the options of public healthcare and private health insurance.

The INSABI (Instituto de Salud para el Bienestar) is free and usually covers pre-existing conditions. The facilities and services may not be the best, however. The IMSS (Instituto Mexicano del Seguro Social) costs 13,800, or about US$690 a year for a person in the 60-69 age group. You can check for age-group-based prices for 2021. Please note that there are disqualification rules for some pre-existing conditions, as well as waiting periods based on individual circumstances.

The ideal option for most expats is private health insurance, albeit at a higher cost than the IMSS. The prices would depend on your circumstances and the coverage required. Some expats choose to pay medical expenses out of pocket given the low healthcare costs in Mexico. This method can get expensive however, depending on the procedure and care, especially during emergencies. Most American and Canadian expats continue to rely on their respective government-funded medical programs, such as Medicare, for major medical procedures.

For more information on healthcare, you can read the EIM article, “A Lifetime of Healthcare in Mexico.”

Buying and Renting Houses

Housing prices in Mexico have increased in the past years, but there are many good value-for-money options still available. Mexico’s Federal Mortgage Society (Sociedad Hipotecaria Federal) reported the national average house price in the fourth quarter of last year at MXN 1.2 million, or about US$60,000. While expat areas can have much higher price tags than the national average, you can still find good houses for US$150,000 or less.

Colorful wall in Ajijic, MexicoBorrowing locally is generally expensive, so buying outright might be the best option for you, if viable. Most homes in Mexico are purchased with cash, often from home equity in the U.S. or Canada. Foreigners can buy property in Mexico except in restricted zones, where you will need to purchase through a bank trust called a Fideicomismo. Check the different transaction fees and other expenses in advance, especially the agent fees, if you are using one. A 2 percent saving on a US$150,000 home can amount to two months of living costs in Mexico.

Consider renting for a short time to explore the market, ahead of buying or renting for the long-term. The websites and agents focused on selling and renting to expats can be expensive, so, try to find local agents and individual owners renting places not aimed at expats. Buying or renting directly from the owners will be the cheapest option, but you will need some Spanish skills.

Consider living in non-expat areas not far from the popular cities, so you can reduce your cost of living in Mexico as well as still have access to the nearby expat community.

Health Insurance Costs

If you have comprehensive health insurance in your home country, consider attending to any health procedures and medical check-ups before retiring in Mexico. If you choose to get Mexican private health insurance, make sure to shop around for quotes. Note that getting private health insurance after age 65 is difficult and most do not offer private health insurance to those over 75.

Money and Transfers

Monitor the exchange rate and try to transfer money when the Mexican peso is lower. While it may be impossible to predict currency markets, a drop in the exchange rate from USD 1: MXN 20 to USD 1: MXN 21 will get you around MXN 1,500 extra for a US$1,500 transfer, depending on the fees. For someone living on US$1,500 a month that would be an extra 5 percent.

Compare fund transfer methods for competitive exchange rates, low fees and convenience. Online platforms are generally cheaper than traditional banks.

If you want to hold money in Mexico, shop around for bank accounts with favorable interest rates. Consider the impact of exchange rates and inflation before deciding where you want to hold money, or how much you want to deposit in each location. A higher inflation rate, for example, will erode the value of your money at a higher rate.


Owning a car can be cheaper in the long run if you wish to move around freely, and based on where you will live. Ubers are cheap and widely available in cities, but may not be a convenient option in remote locations. If you are looking to buy a used car, purchasing directly from the owner will be cheaper than a second-hand showroom, but ensure you do a comprehensive check on the vehicle to eliminate any risks.

Some individuals offer services such as drop-off, waiting, and pick up at reasonable prices, which can be handy for medical appointments and shopping trips. Some also offer errand services such as grocery shopping. Facebook expat groups for specific cities in Mexico are a great place to find such help.

Buses in Lake Chapala, Mexico
Credit: David Huff

Public buses and other mass transportation in cities are usually inexpensive and frequent, but may not be the best option if you live in the country outside of cities. If you are traveling between major cities, Mexico has many excellent bus companies that offer different levels of service at very reasonable rates.

Other Tips

  • Consider income-generating activities for your retirement such as any hobbies you can monetize, or other forms of investments. Many expats in Mexico engage in online work and businesses to supplement their retirement income, but these business activities often require a work permit addition to your visa, so be sure you check with your local Instituto Nacional de Migración (INM) office.
  • Imported goods such as foreign foods are expensive in Mexico, so learn how to eat like a local…you are in Mexico!
  • Get financial and tax advice to understand how much and where your liabilities will be. You will save money in the long run by paying for good advice in advance.
  • Make a budget for your retirement in Mexico. Remember to factor inflation into your budget because you will need more money every year to maintain the same lifestyle. Last year, prices in Mexico went up about 3.5 percent.