Information on Taxes in Mexico

By international living

As an expat in Mexico, the taxes you’ll pay will depend, in part, on your situation. If you own property in Mexico, you’ll pay property taxes. If you rent out that property or own a business, have a job, or have interest-bear­ing bank accounts, you’ll owe income tax. Even if you have none of these, you’ll still pay sales tax (known as Value Added Tax or VAT) on most retail goods and services.

If you will be doing business in Mexico or even if you will be employed by a Mexican company, it’s a good idea to meet with an international tax specialist, in your home country, before you move. He or she can advise you how to best minimize your tax obligations, especially if you have significant assets in both Mexico and your home country.

Income Tax in Mexico

You will owe income tax in Mexico if you hold a job, run a business, rent out a property you own, or hold an interest-bearing bank account or security in Mexico. In most of these cases, you will need to file a Mexican tax return.

If you are a U.S. citizen, note that the United States taxes citizens and permanent residents on their worldwide income. Canada taxes citizens on worldwide income unless they have officially moved their legal residence outside Canada. If you earn any income in Mexico it must be declared on your U.S. or Canadian tax return. You will get credit on your home-country return, however, for taxes you have already paid in Mexico.

Income tax in Mexico varies greatly. Like the U.S., your tax rate will depend on the amount of your earnings, deductions, and other factors. Mexico’s individual income tax rates range from 1.92% to 35%. Non-residents (those in Mexico on a work visa/permit) pay 15% to 30%. Mexico’s corporate tax rate is a flat 30%.

Mexican Real Estate Taxes

There are three types of tax that you’ll have for residential property over the years that you own it:

1. A 2% acquisition tax when you buy the property
2. Annual property taxes (known as predial)
3. Capital gains tax when you sell the property.

Many communities in Mexico commonly use a property’s “assessed” value as the basis for these taxes, and the official assessment can be much lower than the property’s market value—in some cases, as low as 30% or 40% of the actual sales price. So on a $100,000 home that has an official “assessed” value of $40,000, you’ll pay $800 in acquisition tax. Under Mexican law, using an assessed value less than the actual commercial value for tax purposes is technically illegal. But we don’t know anyone who doesn’t do it.

Property taxes (predial) in Mexico are very low. It is quite common to have annual property taxes of $100 or less, and they seldom run higher than about $300.

If you sell the property, you’ll owe capital gains tax. Capital gains tax can be figured two ways in Mexico:

1. You can pay 25% of the declared value of the transaction, or
2. You can pay 30% of the net value—the difference between the assessed values at the time you bought the property and when you sell it, taking into consideration how long the property was held, any improvements made, any commissions paid, and other allowable expenses. (If there is a significant difference between the assessed value recorded for the property when you bought it and the value you claim when you sell it, you could be in for a big tax bite.) You should calculate your capital gains tax both ways with the help of an accountant or notario and pay the lower one.

Value-Added Tax

In Mexico, a Value-Added Tax is applied to the sale of most retail goods and services. This tax is 16% in most of the country and 11% in border areas. You will see this VAT added onto the bottom of sales receipts just as would see sales tax added, north of the border.

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Everything You Need to Know to Move to Mexico

By Diane Schmidt | The Spruce 

Whether it’s the warm weather and beautiful scenery or the lower cost of living, people decide to live in Mexico for many reasons. Despite the reports of drug wars and drug-related crime, people continue to choose Mexico as a place to live, retire, own a vacation home, or go on vacation. Many are beginning to realize the advantages of living in a place where the median household income is about one-tenth of that in the US.

While you shouldn’t ignore security concerns, it is useful to put these media reports in perspective. Do the research and decide for yourself whether moving to Mexico is the right idea for you.

1. Cost of Living in Mexico

The cost of living is a significant reason why people decide to move from the United States to Mexico, but incomes are lower, too. So much depends on your needs, your lifestyle, and whether you buy or rent your home. Even though it’s cheaper to live in Mexico than other areas of North America, some people still spend as much or more than they do back in the U.S. or Europe. Do a budget to figure out if you can afford to make the

2. Safety of Living in Mexico

The first thought you might have about moving to Mexico is questions about its safety. With media stories going on about drug wars, shootings, and kidnapping, can it be safe to live in Mexico? Check out a first-hand account of whether or not it feels safe to live south of the border.

3. Visa Requirements to Live in Mexico

People who are planning to move to Mexico, either permanently or for an extended period, need to understand the immigration laws of the country, as well as the paperwork you will need to make the move.

There are three types of Mexican visitor permits or visa. To move, you’ll need either the FM3 or FM2 visa. The FM3 (or No Inmigrante) Long-Term, Non-Immigrant Visa is what tourists apply for in order to stay in Mexico for anything longer than the six months’ maximum they get at the border. If you want to stay in Mexico for anything longer than six months (without having to exit and re-enter the country), you will need to apply for an FM3 (No Inmigrante) visa.

The FM2 visa, which has lately been renamed the Inmigrante Visa, is what you’ll need if you want to be a permanent resident in Mexico or if you are ​planning eventually to obtain Mexican Citizenship.

It might be a good idea to hire an immigration attorney, but for most people, it’s possible to do it all yourself.

4. Moving Household Items to Mexico

Moving everything in your home to Mexico isn’t as easy as calling up a moving company, like you might do if you were just moving to another state. To move household goods to Mexico, you must have an immigration status of Permanent Resident (Residente Permanente) or Temporary Resident (Residente Temporal). You have to provide a number of documents to move the household goods, and certain items are not.

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8 pieces of advice to help you retire when you want, according to people who have done it

By: Liz Knueven | Business Insider

Retirement is more than just leaving work. 

 

If you want to make sure that you’ll be able to retire when you want, retirees from Business Insider’s Real Retirement series have some tips from their own retirement experiences, from paying off your mortgage and other debts, to working with a financial planner.

Here are these retirees’ best pieces of advice for anyone who wants to leave work someday.

1. Find a good financial planner and work on your equity allocation

Dirk Cotton. 

Courtesy Dirk Cotton

When one of his friends tell him they’re thinking about retiring, Dirk Cotton’s first advice is to find an expert. “Find a good a retirement planner, because retirement planning is incredibly complex,” he said. “They’re extremely helpful and worth the investment, and it’s worth it to start talking to them in the years before you retire.”

He also suggests focusing on your investments. “The major thing that I would say is, 10 years before retirement, you probably want to end up somewhere in the neighborhood of 40% to 50% equity allocation,” Cotton, who retired at 52, said. He said this is one of the big things that helped him retire comfortably in 2005 and get through the Great Recession.

“I weathered that storm extremely well,” he said, crediting this advice. “A lot of people had 100% equities when they were saving for retirement, and lost over 50% in a very short period of time.”

2. Make time for a yearly or quarterly retirement planning check-in

Bill Brown. 

Courtesy of Bill Brown

Bill Brown, who retired at 65, says one of the most helpful things he did was regularly set aside a few minutes to strategize. “I did this maybe once or twice a year,” he said. “You sit back and you mentally go through, ‘How am I doing? What could I change? What should I change?’ And then, you alter it.”

Doing this helped him and his wife realize they could be doing more to cover themselves with life insurance and long-term care insurance. It helped them to focus on the bigger picture of retirement planning, and keep on track to retire on time.

3. Start planning sooner rather than later

David Fisher. 

Courtesy of David Fisher

“I got a late start. From 33 to 43, those quarterly statements I got from a TIAA, I threw them away,” David Fisher, who retired at 65, told Business Insider.

“When I was in my early 40s, I opened one of my quarterly statements that I used to throw away. And I said, ‘Oh my goodness, I’ve got $30,000 to $35,000 in there. That’s my money.’ Then I became interested and retirement,” Fisher said.

If he could turn back time, that’s the advice he’d give to his 35-year-old self. “Invest early and invest as early as you can and put away whatever you can afford,” he said.

4. Start maxing out your retirement accounts and live within your means

Corky and Patti Ewing. 

Courtesy of Corky Ewing

Corky and Patti Ewing never made more than what is considered a middle class income in their California home. In 2019, they retired comfortably thanks to strategic saving and investment decisions. Corky told Business Insider he’d advise anyone wanting to retire to “max out their retirement accounts, their 401ks or their IRAs.”

To do this, he continued: “I’d tell someone to live within their means, because you don’t have to try to keep up with your neighbors.”

5. Prioritize your spending on experiences rather than things

Karen and Joe Stermitz. 

Courtesy of Joe Stermitz

Karen and Joe Stermitz sold their home in Washington to travel the world and live frugally after they retired in 2017.

“I would tell people just to be frugal. Things don’t bring you happiness, experiences do,” Karen said. She and her husband started a journey through South America in an overlanding vehicle in 2019.

“I don’t buy things; we don’t buy a lot of things. Get away from the focus of the things, and focus on experiences and living life,” she said.

6. Own a home you can afford

Bill and Rose Davidson. 

Courtesy of Bill Davidson

“Our home is key to our retirement,” said Bill Davidson, who retired at 54. He and his wife Rose moved from Oregon to New Mexico after he stopped working to travel, live affordably, and be mortgage-free.

They chose to build an environmentally-friendly home, which reduces utility expenses considerably. “If you reduce your utilities to almost nothing, that means you’re living in environmentally friendly, energy-efficient lifestyle,” he said.

“Our home costs about $300 per month,” he said. By owning a home they can easily afford and moving to live mortgage-free, the Davidsons are able to spend more on family and travel.

7. Keep your credit score up and live debt-free

Jim and Fernanda Dorsey. 

Courtesy of Jim and Fernanda Dorsey

“I did get a little good advice early on from my godfather about having perfect credit scores and never using credit to finance lifestyle,” said Fernanda Dorsey, who is now traveling the world with her husband, Jim, after retiring at 52. “Those pieces of advice were jewels,” she added.

“We’ve been basically following those two things, so we don’t have any debt. When we left work to travel, we had perfect credit scores, and that’s good,” she said.

8. Pay off your mortgage

James R. 

Photo courtesy of James R.

James R., who preferred not to use his last name to protect his privacy, said that staying out of debt and living simply are the keys to retiring whenever you want.

“We were already debt-free, that was normal for us,” said James, who left his full-time job at 59 to work part-time from home. He and his wife had been living mortgage-free for about 25 years.

By not having debt, he was able to retire when the time was right, and take the opportunity without worrying about it. “When the clock ticked down to 59 and a half, I was 10 years in at work. That was enough to get an additional monthly check from the organization I worked for,” he said. “That was the logical time to go.”3

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How to Retire Abroad and Make Money

By: Mac McCarthy | The Good Men Project

Have you made up your mind you want to retire abroad, but are not sure if your pension will be enough to fund your new lifestyle? If so you are not alone – while there are many countries in the world that offer an excellent standard of living for low costs such as Costa Rica, Mexico, and Ecuador, there is the all-important consideration of health care that needs to be factored in, especially if you move to a country where you will have to pay or partially pay for private care.

Then there is the question of finding housing abroad – will you buy or rent? While there are many countries in the world where accommodation is far cheaper than the US or UK, you will inevitably have less monthly income once you retire compared to when you were working.

But don’t let financial doubts prevent you from following your dreams, as there are simple ways to earn extra money when you retire overseas. In this post, we’ll take a look at some low-cost retirement startups that will allow you to enjoy life in the sun as an ex-pat without struggling financially.

Sell Photos

With the low cost of excellent digital cameras, selling photographs online has become a realistic way to earn extra income in an enjoyable way without a large financial investment. There are plenty of affordable photography courses on online learning platforms such as Udemy to help get you started if you are a beginner.

You can sell your work on stock photography websites which have a huge catalog of photographs, featuring just about any subject you can imagine. As a seller, you simply upload your work to stock sites who then sell the rights of usage to webmasters, magazines, designers, etc.

This is an enjoyable way to make passive income, as once a picture has been uploaded it can be sold many times over, continuing to make you money for years to come without requiring any extra work from you.

Become a Travel Writer

To earn a good income as a travel writer you will need some writing skills. But if writing is a strong point for you, there are numerous magazines worldwide looking for travel pieces, both online and offline.

It’s important to research each publication to become acquainted with the type of content they publish, and also to read the writer’s guidelines, you’ll find just about all publications provide these on their websites.

Become a Tour Guide

If you move to an area popular with tourists, you have a potential money-making opportunity that is low cost to start and entertaining, showing tourists the local attractions they would probably struggle to find on their own. Tour guiding can be in the form of walking tours, or you could hire a minibus and driver to take your clients further afield.

Websites like Freetour which covers destinations worldwide are a great way to connect with potential clients.

Become a Copywriter

To become a copywriter, you will probably need to take a course or several courses, to learn the tricks of the trade, but don’t let this put you off.

Copywriting is a skill that is in huge demand, overflowing with opportunity, as all businesses need good sales copy. Once your copywriting skills reach a certain level, you can practically write your own paycheck, which will usually be paid in U.S. dollars, regardless of where you have chosen to live in the world.

Become an English Teacher

If English is your first language you have a qualification that can earn you regular money from just about any country worldwide.

While in some cities like Madrid and Paris the competition to earn money teaching English is fierce, this is not the case everywhere, and in many countries, English teachers are in huge demand.

No prior teaching experience is required to set yourself up as an English teacher, but taking an accredited TEFL (Teaching English as a Foreign Language) certification course will teach you the skills and you’ll have a recognized qualification to help you get work and educate your students professionally.

Make Money with Instructional Videos

As a retiree, you will probably have worked at least one career for many decades and have a skill set that others could learn from. YouTube has become the primary source to learn a copious number of skills as diverse as how to apply makeup, how to hang a door, how to use every app under the sun, and even how to perform an exorcism.

Creators can monetize their videos from ad revenue, or by protecting content with a password until a customer pays to view the video. Vimeo is a video platform that makes providing paid content to customers very straight forward.

YouTubers with a loyal and connected earn further income by partnering with brands that will pay very well to have their products reviewed.

Mobile Salon

If you’re moving abroad and you have skills such as hairdressing, as a makeup artist or in nail art, you might be quite surprised at the high demand for your services especially among the ex-pat community and seniors.

Start a Rental Business

If you move to an area visited by many tourists, a rental business could be a lucrative option. People try to travel with as little as possible, and prefer to rent larger items like bicycles, surfboards, baby strollers, wheelchairs, etc. You can even go one step farther and provide tools or items that are seldom used such as certain tools or lawnmowers to locals. Business premises are not vital for this model, as items can be stored in a home garage or spare room and advertised in local hotels via posters and flyers.

Rent Your Space

There are several much-used websites like Airbnb and VRBO that facilitate earning money by renting out accommodation, be it a spare room, apartment, or even your couch. Renting out living space can be quite lucrative depending on what you can offer, and it’s also a way to meet travelers from around the globe.

Summary

While many of these business ideas would not earn you a full-time income from the first week you start, just about all of them are potential money earners to augment a pension while also offering the opportunity to meet new people or learn marketable skills without too much effort.

Remember before starting any type of business be sure to do your research to determine if there is likely to be a demand for it in your desired retirement location.

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Social Security for American Expats and Retirement Abroad

By: Thun Financial

Social Security is an important source of retirement income for many Americans. The size of a monthly retirement benefit depends on a retiree’s earnings history, and how old a retiree is when they first begin taking benefits. Benefits alone generally do not provide a comfortable standard of living, but can be a vital supplementary income stream in addition to other pensions and retirement accounts.

Americans retiring abroad may receive Social Security benefits outside the United States as long as they are eligible. To receive Social Security retirement benefits, a worker must have contributed to the Social Security system for a minimum cumulative total of at least 40 quarters (10 years).

American expats working and retiring abroad may receive U.S. Social Security benefits if they are eligible. However, there are several special issues that American expats must first consider. For example, bilateral social security agreements and foreign pension plans can impact the total amount of benefits received. This Thun Research note addresses common issues American expats and their spouses encounter when receiving U.S. Social Security benefits abroad.

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Bi-Lateral Social Security Agreements and Totalization Agreements

Many American expats find themselves working a large portion of their careers abroad. If an expat worked less than 40 quarters under Social Security in the United States, but also contributed to an equivalent social program in another country, they may still be able to obtain Social Security retirement benefits. The bilateral agreements that permit this are specifically referred to as Totalization Agreements.

As of 2018, the United States had entered into Totalization Agreements with 26 countries. Totalization Agreements have two main purposes. First, they eliminate dual Social Security taxation, the situation that occurs when a worker from one country works in another country and is required to pay social insurance taxes to both countries. Second, the agreements fill gaps in benefit protection for workers who have divided their careers between the United States and another country.

The Social Security benefit gap can occur if an expat is working in certain countries with no Totalization Agreements. For example, if the U.S. citizen is working in a country without a Totalization Agreement, they may not work enough quarters to qualify for the social insurance benefits of either the United States or the foreign country. They will be denied the benefits from both countries, although they paid into both of them. This occurs even though their total combined years in both countries would meet the requirements for one or both countries’ retirement systems.

A Totalization Agreement, on the other hand, tracks the total quarters worked in both countries. If insufficient time is put into either system to qualify exclusively for its social insurance program, but enough combined time would qualify for one country’s social security program, then each country will pay out its proportionate share in retirement of the benefits that the employee earned. This is very beneficial for an American expat who works in one of the 26 countries (mainly Western Europe) with such Totalization Agreements.

The Social Security Administration (SSA) will obviously not sent payments to countries affected by Department of Treasury sanctions, such as Cuba and North Korea. In addition, it applies strict payment restrictions on the following countries: Azerbaijan, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan.

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Can Foreign Spouses Receive U.S. Social Security?

Depending on the situation, a foreign spouse may be eligible for spousal and survivor social Security Benefits. The next section gives a brief overview of general rules regarding the treatment of foreign spouses for determining Social Security benefits. For more detailed information concerning a specific situation, it will be essential to visit the Social Security Administration website to check for regularly updated policy and tax treaty changes.

The general rule is that with any spouse who is not a U.S. citizen or green-card holder, Social Security payments must stop if the spouse has been outside of the U.S. for six consecutive calendar months. However, there are many exceptions that could easily qualify a non-American spouse to receive Social Security. First, non-citizens may receive social security benefits abroad if they lived in the United States for at least five years as a married couple. Second, if your spouse is a resident or citizen of certain countries that have bilateral social security agreements (see above), then they can receive benefits. Importantly, foreign spouse will generally be able to receive Social Security survivor benefits.

For more information, including a full list of countries exempt from the residency requirement and the Social Security office you can contact with more questions, go to the Social Security Administration’s online publication entitled “Your Payments While You are Outside the United States.”. A useful online screening tool is also available on the SSA’s website: https://www.ssa.gov/international/payments_outsideUS.html

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Windfall Elimination Provision (WEP) Could Change Social Security Benefit

The Windfall Elimination Provision (WEP) is also something that American expats must become familiar with. The WEP affects American expats if they earned a pension from a foreign government and are also eligible for US Social Security benefits. Typically, this would be Americans who work abroad for a foreign employer, but also contributed to the U.S. Social Security System in the past.

Without the WEP, the worker would effectively be double-dipping by receiving benefits from both plans. In an extreme case, a retiree could work two half-careers and get almost two full pensions. The WEP is used in determining all benefits on the record, both for the primary beneficiary and any auxiliaries. This includes an effect upon the maximum total benefits paid on the record as well. Since the WEP does not apply after the death of the primary beneficiary, it is never used for Social Security survivor benefits.

The net effect of the WEP is to reduce the Social Security payments that you are entitled to. The resulting reduction cannot be more than 50% of your foreign pension based on earnings after 1956 on which you did not pay Social Security taxes. For comprehensive retirement planning, American expats must calculate how the Windfall Elimination Provision will affect their retirement plans and adjust accordingly. (The Social Security Administration has a website that will allow an American expats to enter their earning history into a calculator to derive the potential deduction that might occur due to the Windfall Elimination Provision: https://www.ssa.gov/planners/retire/anyPiaWepjs04.html

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Maximizing Retirement Wealth with Social Security Planning

Maximizing your social security benefits when living abroad requires paying attention to when and how you collect your benefits. By thinking strategically about how you transfer your benefits to your foreign country and currency, you can save yourself from significant reductions in the benefits via poor currency exchange rates and excessive wire transfer fees. A long-term plan can help you figure out whether drawing your social security benefits now or later will provide you with the best chance of maximizing those benefits over your and your spouse’s lifetime.

While you always have the options to receive a check, by far the easiest and fastest way to receive your benefits is to maintain a US bank account and set up a direct deposit. There is also a long list of foreign countries that the SSA may be able to send direct deposits to. A full list is available here: https://www.ssa.gov/international/countrylist6.htm Ultimately, fees should be a key consideration in deciding how to collect benefits, as banks tend to charge a very high rate for currency conversions.

The second question of when to start Social Security payments requires a comprehensive analysis of all retirement assets. Many workers decide to claim Social Security as soon as possible, but they may regret that decision later in retirement. Claiming benefits early at age 62 provides valuable retirement income, but it also triggers a reduction in monthly payments because retirees collect them over a longer period of time.

After paying into the system for decades, it is tempting to start Social Security payments as soon as possible, but the decision to sign up for benefits deserves careful consideration. Taking the money early might seem attractive, but it means settling for a lower monthly payment, which could lead to lower overall social security payments during a retiree’s lifetime. The optimal claiming decision for each individual depends on many factors, such as total liquid assets, expected mortality, employment opportunities, and health concerns.

As a general rule, early or late retirement will give you similar total Social Security benefits over lifetime. Early retirement translates to smaller monthly benefit amounts, to compensate for a longer withdrawal period.  Later retirement means, it’s for a shorter period of time, and the larger monthly amounts make up for the deferral of benefits.

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Conclusion

The Social Security Administration is not a financial advisor and will not provide detailed information on strategies for maximizing Social Security benefits. To make an informed choice about beginning Social Security benefits, it is essential to review a retiree’s household budget, health, financial savings, life insurance, and plans to work in retirement. We undertake comprehensive analyses for our clients as to the best time for them to being taking Social Security payments, including the effects of Totalization Agreements and relevant Windfall Elimination Provisions.

In addition to these concerns, Thun Financial Advisors understands the unique challenges faced by Americans living outside the United States. The results of a social security analysis and our expat knowledge will be incorporated into an overall integrated financial plan and investment strategy.

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She’s 63 and living by the beach in Mexico on $1,000 a month: ‘I can’t imagine living in the U.S. again’

By Catey Hill | Market Watch

Janet Blaser knows a thing or two about reinvention.

Once a food and restaurant writer in Santa Cruz, Calif., the now-63-year-old struggled to find work roughly a decade ago as journalism increasingly moved online. She lost one beloved job, got her hours cut at another, and ended up working odd jobs, including one in human resources at an amusement park.

With little savings and a low salary, the single mother of three struggled — even as she watched friends buy million-dollar homes and pricey cars. “I constantly felt like I wasn’t ‘enough’ and didn’t have ‘enough,’ ” she writes in her new book, “Why We Left,” which profiles 27 expats in Mexico.

A trip to Mazatlán, Mexico — a colorful resort town on the Pacific coast — changed the course of her life. “I fell in love, I felt this heart connection somehow — there were beautiful old buildings, cobblestone streets, plazas with wrought iron and the beautiful glittering Pacific Ocean, warm and swimmable,” she tells MarketWatch. “It just felt deeply healing, friendly and welcoming.” Plus, she saw the interesting cultural, outdoors and foodie offerings of the town and its abundance of English-speaking expats and tourists, and realized that there was almost no information in English about Mazatlán’s many goings-on. It sparked an idea: that she could use her journalism experience to create an English-language magazine about Mazatlán and its cultural happenings.

And so, though the surfing enthusiast initially considered moving to New Orleans, off to Mazatlán she went, by herself, in 2006 — her Toyota Echo packed to the gills. The trip took about four days, and it wasn’t absent self-doubt: She called each of her three children, who by that time were adults, sobbing, wondering if she was making a huge mistake. But she knew that staying in Santa Cruz would leave her scrambling for every dollar, unsure of her future, and she was ready for a new life — and a new journalistic endeavor. (Plus, she jokes, “I wanted warmer weather and a warmer [expanse of] ocean that I could swim and play in.”)

She spent the first year in Mazatlán living on what she was paid for part-time editing work she did online and some savings (Janet lives on about $1,000 a month), while she explored how to start that local arts-and-entertainment magazine. M! Magazine launched in 2007 — filled with restaurant reviews, profiles, and advice on what to do and see — and Janet owned it for nine years.

Fast-forward more than a decade — during which time Janet also started a local organic farmers market — and, though Janet misses her kids and now three grandkids in the U.S., she reports she “can’t imagine living in the U.S. again” — in part because, she says, “I couldn’t afford to live in the States again” and that “the more easygoing Mexican lifestyle agrees” with her.

“It’s a very different vibe here that’s kind of hard to explain. It’s not about being retired, because I wasn’t that until a year ago. It’s just a different understanding of what’s important in life, and a more relaxed, live-and-let-live attitude. If something doesn’t get done today — there’s always tomorrow, or the next day. What’s the big deal?” she explains. Here’s what her life in Mazatlán is like, including the costs, residency issues, health care and more.

Costs: Janet says she lives on about $1,000 a month, with her biggest regular expenses being rent ($210 a month, including water and electricity, for a one-bedroom apartment), gas for her car ($100 to $150 a month) and food (groceries cost her about $250 a month). While produce is cheap, specialty items like fancy cheese or high-end pasta are a bit more than they might be in the U.S., she says. She likes going out to breakfast sometimes and pays about $6, including tip, for that; a fancy dinner might cost $18 or so, she says. She also pays about $22 a month for Wi-Fi for her apartment, and $18 for phone (she uses WhatsApp a lot, which is how we talked), and adds that entertainment is very cheap in the area. You can go to a movie for under $5, for example. She even has a vet who makes house calls ($15) and a bike-repair person who does the same ($10, plus parts).

One bigger, albeit irregular, expense is travel, as flying to the U.S. is pricey, she says. One hack: You can fly out of Culiacán, which is about 220 kilometers north of Mazatlán, to Tijuana and then walk across the border, she says.

Health care: Janet says she spends roughly $1,500 a year on health insurance through an international health-insurance company. Her deductible is $1,000, and she rarely meets that because routine health care in Mexico is inexpensive. She says she’ll spend about $30 on a doctor’s visit and can get appointments the same week and sometimes even the same day; a recent trip to get two dental crowns cost her $135 each. So far, she says she’s had a good experience with the health care in Mexico and highlights the two privately run hospitals in town as a perk.

Language hurdles: Though Janet had studied Spanish while living in the U.S., and “thought I knew what I was doing — that I’ve got this,” she quickly realized upon moving to Mexico that she wasn’t quite as close to fluent as she thought (and even today isn’t perfect). “I can carry on a conversation and make a phone call and order food to go and give directions, but I will never be completely fluent,” she says. The difference between now and then, though, is that “I’m not afraid to try. Even if I sound like a caveman, I’m not afraid — it’s a constantly humbling position,” she says, adding with a laugh that sometimes she still sounds like “a toddler.”

Residency: Janet says the process to secure permanent residency status was relatively easy for her more than a decade ago but notes that is has changed and is more complicated now, though still doable. Here are the details on Mexico residency.

Cons of living in Mexico: Janet fully admits that life in Mexico has some significant downsides. “There are issues in this country,” she writes in her new book. These include “extreme poverty in some parts,” she tells MarketWatch. On a more day-to-day front, Janet laments being unable to find the underwear and organic body products that she likes, and that she finds some store-bought products like kitchen utensils, towels and sheets to be of low quality.

Bottom line: “For all the challenges, I can’t imagine living in the U.S. anymore,” despite the pull of her grandkids and “the deep comfort of being around my adult children,” Janet writes in her book. “When I visit, it doesn’t feel like home anymore; I am indeed a visitor.” And, she tells MarketWatch, “I’m able to actually live a more simple life and be satisfied in a way I could never before in the U.S.”

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Which of These 9 Retirement Personality Types Are You?

By: Jeff Opdyke| International Living

I guess you would classify me as the “tirelessly moving, globetrotting workhorse.”

That’s my takeaway from a recent story in Kiplinger magazine by a financial adviser and investment educator that categorizes retirees into nine buckets: Tireless Mover, the Lost, Workhorse, the Lonely, Globetrotter, Reluctant Spender, Superhero, Overly Generous, and Never Retired.

It’s sort of a Myers-Briggs test for the retirement set, only it’s not a test and it’s not based on any empirical research (just eyeballing a bunch of surveys, basically). However, the categories do make logical sense, based on my own experiences as a retirement-focused writer when I was at The Wall Street Journal.

Now, I know this is a very broad statement to make—and maybe it’s wishful thinking—but I like to think that you’re reading this because you’re like me in many ways. That is to say:

• Tireless Mover: On the go, bucket list in hand, someone who fills their day with things to do such as classes, and who might spend the weekend hitting festivals or maybe learning to scuba dive.
• Workhorse: Those of us who truly want to work. Sure, we’re doing it to earn a bit of scratch, particularly those of us still in our 50s…but just as many work because it gives us a sense of purpose, a reason to breathe for another day. Moreover, it gives us a chance to pursue a job we’ve dreamed about. I have mentioned in weeks past my desire to be a painter, and I know others who have used retirement to become authors or to start various types of artisanal shops
• Globetrotter: The traveler. And that doesn’t imply someone who’s hiking the Inca Trail in Peru this week, before kayaking Norwegian fjords next week. Just as easily, the Globetrotter could be trotting around America to hike the Appalachian Trail or to bonefish in the Florida Keys.

The only other of the nine traits I expect to add to my list later is Superhero…the person who gives back to society.

Back in the ’90s, when I was still a newspaper journalist, I traveled to eastern Romania with a group of American retirees who’d gone to spend a two-week vacation taking care of orphans in a local orphanage. That trip had a real impact on me. I was in my 30s at the time, and I’d grown up with my grandparents, so the interaction of youth and age really resonated.

Seeing the joys these retirees were experiencing with these kids, and seeing the love these kids gave back to the retirees…it makes you realize that the only true value you can leave on the world is that you cared enough about someone else to make their life a little better, even for a while.

As for those other five traits…well, I don’t want to call them negative, so, instead, I will call them “improvables”—traits that, together, we can work on improving.

I don’t want you to feel lost and lonely in retirement, so over the course of my writings I am hopefully going to motivate you to find joy in living your retirement. Nor do I want you to be a Reluctant Spender or a Never Retired—two categories that are broadly connected because they both center on money. Spending your retirement anxiously counting pennies takes the joy out of what should be our Age of Excitement.

As for “never retiring,” I regularly say that’s my goal. But in this context, that descriptor refers to financially ill-prepared workers still toiling at a job they typically don’t like or enjoy, but which they’re forced to endure for financial reasons.

Look, it’s OK if your nest egg is a tad light, and it’s OK if you work past full retirement age. But my colleagues and I want you to work at something you really enjoy, something that brings not just money but a sense of happiness and contentment. That way you move away from Reluctant Spender and Never Retired and more toward Workhorse, those of us happily working at what we love doing.

Finally, from the Kiplinger piece, there’s Overly Generous. The “generous” part is fine—that dovetails into Superhero. It’s the “overly” qualifier that’s problematic, because it too often hints at financial manipulation by your family members. I have way too much history with this (sadly). Consider that it’s one thing to offer monetary help to a child or grandchild facing a temporary financial setback…it’s entirely something different to become a permanent ATM.

Now, if you’ll excuse me, it’s Sunday in Prague and I’ve got some painting to do before I head back to the computer to book an upcoming trip to Asia…

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3 trends that could change your retirement plans in 2020

By: Alessandra Malito | Market Watch

The new year is upon us, and so are new retirement rules and plenty of new (or soon-to-be) retirees.

This year already began with major changes, now that the Secure Act is in effect as of Jan. 1. The bill passed shortly before Christmas, and will change the way workers save for retirement and retirees contribute, spend or give away their assets. Other trends have been in motion over the last few years, including the way people prepare for health expenses in retirement or if and how they earn more money during these later years in life.

Not all Americans find retirement to be a top priority. Some worry about current financial responsibilities, like student loans, child care costs and rising rents and home prices. Others simply haven’t gotten around to enrolling in their workplace retirement plan or increasing contributions. The U.S. retirement savings gap — which is what people have saved versus what they should have saved — is expected to swell to $137 trillion, up from $28 trillion in 2015, according to the World Economic Forum, a Cologny-Geneva, Switzerland-based nonprofit that researches international financial affairs.

Here’s what financial advisers predict will happen this year, regarding Americans’ retirement savings.

More love for Roth accounts

The passing of the Secure Act may result in an increase of Roth accounts, said Sean Williams, a financial adviser at Sojourn Wealth Advisory in Timonium, Md. Part of the law eliminates “stretch IRAs,” which allowed individuals who inherited qualified accounts, like individual retirement accounts and 401(k) plans, to take required distributions over their lifespans.

Under the Secure Act, non-spousal inheritors will need to withdraw all of an inherited accounts assets within 10 years, which could create higher tax consequences in a shorter time frame. Roth accounts are funded with after-tax dollars, and are therefore withdrawn tax-free. The Tax Cuts and Jobs Act, which was the largest tax law revamp in decades when it was passed in 2017, will also expire in 2025, which could potentially mean having higher tax brackets in the future. “If that assumption plays out, paying income taxes today and contributing to a Roth may be more beneficial,” he Williams said.

Using a Health Savings Account for the long haul

Health Savings Accounts, or HSAs, are tax-advantageous accounts that allow workers to save, invest and withdraw their money tax-free if used for qualified medical expenses. They’re also a beneficial tool for retirement savings, said Karen Van Voorhis, the director of financial planning at Daniel J. Galli & Associates in Norwell, Mass, who predicts more Americans will use them as such. “People are starting to pay more attention to these, and are thinking more of using them to save for the long-term,” she said.

HSAs are only available with a high deductible health plan, which aren’t available — or appealing — for some workers. High deductible health plans, as the name implies, requires patients to spend more upfront before the plan begins to cover medical expenses.

Still, contributing to an HSA, and not touching the money until retirement, by which time you’ve amassed a large stockpile of savings, can be a solid retirement planning strategy, considering many medical expenses arise in retirement. The average 65-year-old couple retiring in 2019 could expect to spend $285,000 in retirement for health care costs alone, which does not include long-term care, according to Fidelity Investments. That figure is expected to rise indefinitely.

Less of a ‘traditional’ retirement

The days of people working until they’re 65 and then moving to a sunny state are long gone for many Americans, who will likely work well into their late 60s and early 70s, if even just part time, some advisers predict. The labor market is tight, but wages have also not increased very much in the last decade, said Nate Wenner, a financial adviser and principal of WIPFLi Financial Advisors in Minneapolis. “Many people feel too vulnerable to stop working, especially with worries about health care costs,” he said. “Plus, many people have not saved enough for a full retirement at this point, and understand Social Security alone will not provide enough income to maintain their desired lifestyle.”

Older workers staying in the workforce is increasingly common, and will continue in the future, according to Bureau of Labor Statistics data. The number of workers 65 and older has tripled in the last 30 years, and those 75 and older has almost quadrupled during the same time. (Still, there were and are more younger workers than those 65 and up, which contributes to the high growth rate.)

Not all older workers will want to stay in the workforce full-time, but they may not want to retire fully either. A 2019 Merrill Lynch study found nearly half of retirees say they have or plan to work during their retirement, which could mean taking a consulting or teaching job or a short-term job such as driving a ride share or pet sitting.

“Folks are more comfortable having conversations with employers about easing into retirement by slowing down their workload, going part-time or even leaving their employer but consulting some before totally turning off the earned income spigot,” said Rob Greenman, an adviser and partner of Vista Capital Partners in Portland, Ore.

They may also start businesses or take up volunteering, so that they can engage with other people and partake in passion projects, said Jake Northrup, a financial adviser at Experience Your Wealth in Bristol, R.I. “The idea of retirement is flawed — it’s unhealthy for someone to work their whole life and then suddenly stop,” he said.

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