Reader Question: I will be moving to Mexico (specifically the Cabo San Lucas Area) to retire in the next few years. I will be selling my business in the states and planning to live off the proceeds as well as my Social Security. I will have both a U.S. and foreign bank account, and plan to apply for Mexican residency. What should I do to prepare?
Hey Scott, glad you're thinking about taking the plunge!
American citizens must pay tax on world-wide income wherever they live, so you will have to continue your tax filings in Mexico, plus file an FBAR if you have a foreign bank account. We usually refer out to Taxes for Expats if you want tax advice. They specialize in these types of filings.
Depending on which state you are living in now, you may want to consider transferring your official residency to FL or NV (both very tax-friendly and retiree-friendly states) before you officially leave the U.S.
We always recommend setting up a mail forwarding service, Inc Paradise is the service that we use in NV. Make sure to drop a change of address form in the mail and do a USPS change of address online the day that you leave (and keep a copy of it). That's good evidence of a formal address change.
If you want to get Mexican Residency, it's easy if you have a pension or some other sort of passive income source, because Mexico offers a "retiree visa" that is relatively easy to get. You have to actually start the process at a Mexican consulate before you leave, though, so we recommend getting in touch with a good Mexican immigration attorney to help with the paperwork. While not difficult, it is time consuming and it is easy to forget one necessary document that you might need, and that will derail the whole process, which is aggravating (and happened to us the first time we tried to get the ball rolling)! We always recommend EDUARDO CHAVEZ FREGOSO, ESQ.
He is our immigration attorney and he also does real estate, which is important if you plan to buy a home in Mexico. Expect to pay between $750 and $1,000 USD (at the current exchange rate 20:1) for the attorney to file the necessary paperwork for you. The retiree visa is good for 4 years and will allow you to live indefinitely in Mexico and open a Mexican bank account.
You can use your US driver's license in Mexico but you won't be able to use your car in Mexico for more than 180 days without bringing it back to the US. That's not a problem if you plan to go back and forth at least twice a year (people in Baja/Cabo tend to make frequent trips, but if you end up going somewhere like Quintana Roo/Cancun, you need to think about buying a car down there).
After that, it's basically all about getting used to the culture and the climate, both of which are different but wonderful. English is widely spoken in Cabo and all over Baja so you won't have a difficult time. Enjoy your move, Mexico is a beautiful place for retirees!
A Mexican Woman told me about an expat community in the mountains close to Colima that has the same climate as Ajijic, the Lake Chapala area. I am interested in visiting ASAP. I don't know the name.
I am going to assume you are talking about the state of Colima, and not Colima City, which is the capital of the Colima state.
In fact, the state of Colima does have several small, but vibrant expat communities.
Many Canadians and Americans live in Colima because the climate is relatively temperate (although summers near the coast can be hot and humid) and it is affordable to live, even on a fixed income.
Manzanillo, Colima has many expats and the city contains Mexico's busiest port, which is responsible for handling Pacific cargo for the Mexico City area. There is a lot of commerce in the city, and it is relatively affordable compared to many other Pacific Coast cities. There are cheaper areas, of course.
According to the website Expatistan, the cost of living in Chapala-Ajijic, Jalisco (the other city that you mentioned) is approximately 19% cheaper than in Manzanillo, Colima (Mexico).
Now, if you are talking about Colima City itself, the Financial Times of London ranked Colima first in small cities and tenth in Latin America as a place to live. Colima is a wonderful colonial city, it's not too large, but it is large enough to have all the amenities that a large metropolitan city would have. Colima city is only an hour from the beach. The climate is semi-humid and relatively mild all year round, although the city itself can be very hot, especially in the summertime, there are more temperate areas just outside the city. This Canadian expat shares her personal expat story in Colima here and we think it's a very thoughtful take on the region.
Whatever you decide, we generally suggest visiting the area with an extended vacation in mind. Try staying at a local Airbnb or other service that allows for long-term rentals, and stay for at least 3-6 months before you make any kind of permanent decision about moving.
Let's talk about beautiful Manzanillo, Mexico. Manzanillo is in the Mexican state of Colima. Colima is one of the smallest Mexican states. Manzanillo is the largest beach city in the state. The city is located right on the Pacific ocean and contains Mexico's biggest and busiest port. The city has a population of about 140,000 people, give or take. The city is well known for each deep-sea fishing competitions as well as warm water and swimmable beaches. There are many beach clubs that are friendly to locals as well as tourists.
There are several golf courses in Manzanillo, so if you enjoy golf, you’ll have more than one course to choose from. The Las Hadas Golf Resort and Marina is the “ritziest” by far, in the area. It is an award-winning, 18-hole course with ocean views. We drove by Las Hadas and took several pictures, the course itself looks well-maintained with lots of amenities, including golf carts, caddies, etc.
Some expats prefer Manzanillo to other popular tourist areas like Cabo San Lucas, because Manzanillo has many swimmable beaches as well as excellent fishing. Manzanillo is known as the “sailfish capital of the world” boasts several annual fishing competitions that attract thousands of tourists every year.
The cost of a “beachfront” condo tends to be cheaper in Manzanillo than in many other Pacific coast cities, for example, a moderately-sized condo near the beach with two bedrooms can be purchased for as little as $100,000 USD. Compared to other resort-style areas like Puerto Vallarta or Zihuantanejo/Ixtapa, the price of real estate in Manzanillo is a bargain.
A retiree on a budget of $800-$1,000 per month could live comfortably (although not lavishly) in Manzanillo.
Manzanillo is generally safe for tourists and expats, the crime rate is lower than most major US cities, but there is still a fair amount of crime, especially property crime, like petty theft. Locals and expats are generally advised to stay away from the Colima-Michoacán border, where there is reportedly drug trafficking.
Manzanillo is an important Mexican port city, as well as a popular tourist destination, so the local police try hard to make the city as safe as possible for tourists. Tourism accounts for a large portion of the city’s revenues so the local government makes it a priority to try to keep tourists safe in order to avoid bad press.
That’s not to say that if you visit Manzanillo as a tourist that you shouldn’t be sensible. You should never flash money around, and you should be careful with your wallet, purse, camera or any other expensive belongings. Don’t wear expensive jewelry, watches, or rings. Keep those items at home.
Try to avoid becoming inebriated in a public place. Try to avoid walking very late at night, or in areas that have poor lighting or are not main streets. Being distracted can make you an easy target for thieves. Be watchful of their surroundings. Most crimes that occur in tourist areas are crimes of opportunity.
Thieves look for tourists who are already drunk, or not paying attention to their belongings. If you avoid making yourself an easy victim, it’s unlikely that you will be targeted.
There are a number of all-inclusive resorts in the city, and those resorts try to keep tourists there at night, but I have ventured out with my family several times in the evening in Manzanillo and did not feel unsafe. As long as you stick to the main streets, and practice basic common sense, you should be fine.
The city itself is not very “walkable,” in other words, it’s more of an industrialized city, so you really do need a car to get around if you want to explore. As I said there are resorts that are all-inclusive, but I’m not the type that wants to spend my entire vacation locked-down inside a single resort. Unlike other popular tourist zones (like Cabo San Lucas or Cancun), don’t expect to find a lot of English speakers in the local population. Most of the locals speak Spanish and you should at least understand some Spanish if you want to explore.
GETTING THERE: We drove! Now, Manzanillo does have an international airport which is officially called the "Playa de Oro International Airport". This airport is the largest international Airport in Colima and an important gateway for tourism and state. The official airport code is ZLO. The airport offers international and national flights.
Rather than taking a flight, however, we decided to drive. We wanted to avoid the expense of renting a car as well as the expense and hassle of flying with three children! So, we packed the kids in our truck, filled our suitcases with beach supplies, and also brought along a large cooler filled with sandwiches, snacks, and bottled water.
There are actually two highways along the Highway 54 route to Manzanillo for part of the way, a toll road and a non-toll road. We stuck to the main highways and toll road the entire way, which we were told was safer. The toll roads have numerous gas stations and small restaurants along the way, as well as bathrooms and other amenities if you need to stop.
The general consensus is that the toll roads are faster, safer, and easier. But they are not cheap, and you will have to stop and pay tolls several times. We ended up paying around 1,500 pesos (about $125-$150 at the current exchange rate) in tolls on the way there as well as the return trip.
Now, you can choose to take the non-toll roads. These roads are free, but they will make your trip quite a bit longer, and the general consensus is that the toll roads are safer. There is a benefit to taking the free roads, and that is that there are some interesting towns and beautiful scenery that might be worth seeing, especially if you have the time to stop. The toll road and the free road run parallel to each other for the majority of the trip. Depending on your starting point, taking the free road will probably add additional hours to your trip.
Many people also choose to travel to Manzanillo by way of first-class bus. The Primera Plus bus line is one of the more popular bus lines. The buses offer free Wi-Fi, they have movies on board, and many of them also offer meals and drinks. The buses have air conditioning and bathrooms, just like a plane, but are generally much cheaper than flying. The price by bus from Guadalajara to Manzanillo is about 500 pesos per person (about $30 US dollars at the current exchange rate).
Traffic was slow in some areas, especially once we got closer to the main city of Manzanillo. The drive took about 8 hours total from where we were currently staying in Guanajuato, although the “Google Maps” estimate was 5 hours. We encountered no problems on the road except a few construction delays. Traffic never stopped completely, although there were a few areas on the highway once we reached Colima where we were moving along at a snail’s pace.
LODGING: Using Airbnb, we rented a house on La Punta (Colonia), which was a gated community with 24-hour security staff. The views were breathtaking and the house itself was very nice, with a first-floor dip/swimming pool that we enjoyed with the kids. The community was safe to walk around, even in the evening. We saw security guards walking about at night. The beach club and private beach were beautiful and the beach was safe to swim.
The drawback of La Punta is its odd location to the beach. The closest beach club is private and it is close by, but only by going down some very steep hills. It’s basically impossible to visit the beach without a car or truck if you:
• Want to take any supplies with you, such as towels, food, or an ice chest or cooler; or
• If you have any difficulty walking or have some other type of physical impairment.
We felt that the Airbnb listing, frankly, was misleading at best. The photos showed a beautiful private beach club (which, admittedly, were part of the amenities at La Punta), except the owner never mentioned that the beach club was easily half a mile away, down a very steep and winding hillside. Our advice is to verify with the owners of the property if the house or condo you are renting is actually beachfront or not.
Note: We've noticed that this is a chronic problem with Airbnb where many hosts will post misleading photographs and Airbnb does not permit searches by zip code or exact address, and their map is grossly inaccurate. I understand that many hosts would prefer that their address not be listed publicly, but at least a “beachfront” filter would be extremely helpful. A listing might be 5 kilometers away from the beach and show up on the map as “beachfront”. Always confirm directly with the host if you desire a specific location (for example, if you want to be close to a certain landmark or right on the beach).
FOOD: In general, we stayed away from expensive restaurants and enjoyed mostly cheap street food, which was excellent. Our rental had a full kitchen so we went to the grocery store and bought cereal as well as some breakfast items so we could have breakfast before going out and exploring.
There are a number of stores where you can readily purchase groceries, as well as anything else you may have forgotten to bring with you, like sunglasses, towels, a bathing suit, etc. Stores like: Soriana, Wal-Mart, and La Comer all mega-stores that carry groceries, meat, dairy goods, as well as large sections for clothing, baby items, etc. There is currently a small mall called “Plaza Manzanillo” with several dozen stores. We visited it and saw that it was mostly clothing being sold there. There is also a Sam’s Club and Home Depot in the city if you need those types of supplies.
Anything you might need is there, and they are all located in the center of the city. Smaller items such as milk, cold medicine, bottled water, etc. can be picked up at smaller drugstores located throughout the city (almost on every corner, it seems!).
We did go out with the family two evenings and ate at two different restaurants which were considered “upscale” according to TripAdvisor.
THE WEATHER: The weather was beautiful every day we were there. Manzanillo is not very hot or humid, and temperatures tended to be mild, although warm enough to swim every single day. The skies were blue and gorgeous throughout our visit.
Some of the beaches have been very crowded, although there are private beaches that are available to those who stay in exclusive areas. There are many beaches worth exploring, and you can find crowded beaches as well as secluded ones if that is what you prefer.
With regards to whether throughout the year Manzanillo has dry periods in February, March, April, and May. The best time to visit Manzanillo tends to be the summertime, from May until early July. Temperatures throughout the year run from the low 70’s F (around 21 Celsius) to highs of 91° (around 25° C) in August, which tends to be the hottest month of the year.
Perfect weather while we were there!
Reader Question: I need dental implants to replace several of my teeth. My insurance of course will not pay fr this, and the price quotes that I am getting in the US are insane. Like $20K and up. I have been reading about the possibility of getting my dental work done in Mexico, and maybe making a fishing trip out of it. Can you give me any suggestions?
~Daniel in Idaho
Manny's Answer: Well, I completely understand your desire to try to save money on medical care. We've written several blog posts about this in the past. I personally have never had dental implants done in Mexico, but our family has had several medical procedures done in Mexico, including dental work.
My wife and I have both had many medical services done in Mexico (including dental work for ourselves and our children) and we’ve been happy overall with the service as well as price. For example, our most recent dental emergency was for our youngest son, who experienced a cracked molar. We visited orthodontist who ordered x-rays the same day.
The full-mouth x-ray cost less than $20, and a metal crown cost less than $100. Everything was finished in about a week and cost less than $150. The doctor believed the crack was caused by biting something hard (perhaps a piece of animal bone or a rock in food) and he suggested a metal crown to protect the tooth from further damage and also protect the nerve. Our son didn't feel any actual pain yet, but the tooth was visibly cracked and he was getting sensitive to hot and cold foods, like hot chocolate and ice cream.
The crown was applied and the doctor told us that he would lose the tooth in 3-4 years when his adult molars started to come in. In the meantime, he would be able to eat normally and without pain.
Compare this to the cost of the metal crown in California (which I had to have done several years before moving out of the state) which cost our family over $1,000 USD, all of which had to be paid out of pocket because our insurance did not cover dental work.
Now, we don't ever plan to go back to California for any reason, (much less for obscenely expensive medical care). But I was giving you an example of our own experience with U.S. medical care.
My most recent medical visit was in Guanajuato Mexico, for blood work (my cholesterol is a bit on the high side). The blood testing cost about $36 USD and the prescription for cholesterol medication was less than $10 at the local pharmacy. That was it, the actual consultation with the doctor was only around $10, as well. The full cost of the blood work, prescription, and office visit is less than I would've paid for a single office visit co-pay in the United States.
My personal take is that, if you are planning a trip to Mexico anyway, it's worth it to get an appointment and an estimate for whatever elective surgery (either dental, cosmetic, or otherwise) that you might be considering.
READER QUESTION: Hello, I have been reading several of your posts, I was wondering if most of the information is also relevant for Canadians looking to relocate to Cabo/Baja area. Obviously there will be differences in taxation but as for as the processes to work and live in Mexico, is it similar? Most the information on your blog is American-based. Thank you.
Manny's Answer: Hi Sean! The information on our blog is mainly based on U.S. expats, because that's what we are, and we are basically talking about our own experiences. But we've met LOTS of Canadian expats in Mexico, as well as Canadian "snowbirds" that only come down to visit to escape the harsh northern winters and then return home.
Many of them are either retirees or digital nomads who work online and can basically roam around and live anywhere. There are also a lot of French, Spanish, and German transplants in Mexico, (from our experience, more in the Mayan Riviera and the state of Quintana Roo than in Baja California Sur, but I think that's more due to simple geography than anything else. Californians and Texans can easily drive down the Baja Peninsula with their cars and it's less than a day's drive to get down to Baja and start enjoying great beaches and a cheaper standard of living.
I don't know anything about Canadian taxation but my understanding is that the residency process for Canadians is the same as for Americans who wish to obtain Mexican residency. You just have to prove that you are solvent (basically) and produce 3 months of bank statements showing that you can support yourself, which is why so many retirees come down to Baja and live very comfortably on their Social Security checks. A good Mexican immigration attorney can answer all these questions for you and they are typically much cheaper than any US or Canadian attorney.
We have met countless people who do this, including Mexican nationals who have dual U.S./Mexican Citizenship. Even a very small Social Security check (or other retirement, such as a military pension or other pension) is usually a LOT more than most Mexicans earn per month. For example, in Mexico, a schoolteacher typically makes around (the equivalent) of $11,000 U.S. dollars. That is less than $1,000 US dollars per month! And that is considered a good and stable job in Mexico.
American and Canadian dollars stretch further down here, as you can imagine. That's even taking into account the fact that the peso is currently very weak against the U.S. dollar.
Now is a great time to buy land or other property in Mexico, because it is considered dirt cheap. We have purchased two plots of land and we are looking to purchase vacation property, as well (just haven't decided if we should go with Ixtapa or Tulum, or Playa Del Carmen!) There are so many beautiful coastal cities that it's really hard to decide.
Our advice, as always, is to come down with an open mind and really just enjoy yourself. DON'T spend your time at all-inclusive resorts or hotels. Get a place off the beaten path (there are tons on Airbnb) and just walk around and see how the locals live. That will tell you if Mexico really is for you.
Be FREE! EXPATRIATE!
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Happy New Year everyone! It's been a wild ride so far. We have the chance to look back and reflect on everything we've done and all the places we have been (and all the places we plan to visit this year too!)
We are planning a very quick trip back to the U.S. for business this week. We are finding that our trips back to the U.S. are getting shorter and shorter, and most of what we need to do we can now do online.
We finally bit the bullet this year and got a foreign bank account, (we also kept our US-based accounts) but this means that we have to file an FBAR this year (bummer). My wife is filing our FBAR because she has an accounting background, but she only plans do it for us (she doesn't file FBARs for any clients because of the liability attached it it).
Similar to regular U.S. tax filings, there is no need to register as a professional to file the FBAR as an individual, but most expats get professional help from a CPA, enrolled agent, or attorney to file their FBARs.
Most of our banking can be done online, and if we have anything that needs to be signed and mailed back to the U.S. with a wet signature (i.e., an "original signature") we have found that DHL is the most reliable method for mailing documents outside the U.S.
Some trips are inevitable, of course. But everything is getting easier for us to manage, our lives, our finances, everything.
Here's to another year of expat living!
Another year in Mexico has almost come and gone, and we can't believe how quickly the time has passed! All of our children are in private schools (at less than the cost of having a single student enrolled in a school in the U.S.!) and the schools are out for Christmas break.
We've gone to Christmas plays, Christmas Mass, Christmas parades! It's bright lights everywhere, and the holiday continues until El Día de Reyes Magos (literally, the "Day of the Kings").
In most Christian traditions, this is called the Epiphany, or the "Feast of The Three Kings". Epiphany is celebrated 12 days after Christmas on 6th January (or January 19th for some Orthodox Church who have Christmas on 7th January) and is the time when Christians remember the three wise men who visited baby Jesus in the Manger with the Mary and St. Joseph.
There has been lots of festive parties and family get-togethers, this weekend alone there have been two big parties and two we have had to decline. All the kids get dressed up and go with us, there's lots of food and children playing, it is a wonderful time for family and making memories.
And also a time for eating! We have been eating almost non-stop, we are going to have to hit the treadmill in January but until then, Merry Christmas from our family to yours!
Reader Question: Hello - We are currently building a house in Loreto, Baja CA Sur. We look forward to spending much of our time there in the future. I've read in past blog posts your advise about purchasing cars with Mexican plates vs. 'importing' our US cars. We have an Airstream travel trailer that we may want to have with us in Loreto. Can we keep it there with us with US plates? I've been digging around online and I'm hoping you can steer me to a source of accurate info.
Manny's Answer: We generally don't advise on importing U.S. vehicles, the process of legalization is very difficult. But you can drive your cars into Mexico for the length of your tourist visa (180 days) while you decide what to do. You don't have to decide right away. I'm not sure about the travel trailer, you should probably speak to a professional in Cabo that can advise you on that. As we mentioned in prior blog posts, we merely purchased our vehicles in Mexico, which were very cheap as the exchange rate is very good right now for U.S. dollars.
I know that there are many offices that specialize in importing cars and household goods in Cabo and San Jose del Cabo. I would consult with an attorney on the matter. It is very cheap to seek legal advice in Mexico, we paid only about 1,000 pesos for a consult (about $50 U.S. dollars). If you want to import a car and "legalize" it in Mexico, you have to hire a custom’s agent (an agente aduanal). A google search turned up several of these processionals in Cabo and all over Baja. That's what I would recommend.
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