How your US retirement income is taxed here.
These come straight from the same country data the Glidepath engine uses to calculate your tax. Not a marketing summary.
Mexico taxes worldwide income. Your IRA and 401(k) withdrawals and US capital gains are taxed on the progressive ISR scale (top rate 35%, reached only above ~$279k). US Social Security is exempt under the treaty (US-Mexico treaty, Article 19).
The 10% Mexican Stock Exchange rate does not apply to gains on US securities - that low rate is for the Mexican exchange only. US dividends also carry a separate 10% surtax you cannot credit. Here it is applied to the estimated dividend share of your taxable account, on top of ISR.
Mexico has no wealth tax. As a US citizen you still owe US tax on everything, but the foreign tax credit prevents double taxation.
Roth accounts are not tax-free in Mexico. Mexican law's only pension exemption covers Mexican AFORE (and government-worker) accounts, never foreign ones, and no SAT ruling addresses Roth withdrawals. The plan taxes the full Roth withdrawal on the ISR scale as the defensible default; whether only the growth portion is taxable is genuinely open. A toggle models the favorable untaxed case.
What could change this.
Mexico has never ruled on US retirement accounts; the plan taxes the full Roth withdrawal, but the true bill could be lower.
When: No ruling; filing-position dependent
If you fund a Mexican AFORE, its US reporting could be heavier than modeled - advisors disagree on whether it counts as a foreign trust.
When: No IRS ruling; filing-position dependent
Only a concern if you keep working - there is no US-Mexico totalization deal, so business income can face the full 15.3% US self-employment tax.
When: Signed 2004, never ratified; no near-term change
Compliance traps that catch US retirees here.
Investment products that look ordinary to locals can be tax traps for US citizens. These are the ones specific to Mexico.
AFORE retirement account is a PFIC, not a treaty-protected pension
The IRS treats a Mexican AFORE as a taxable foreign fund, not a protected pension. Funding one adds US tax reporting, so many US retirees check with a US tax specialist first.
Fideicomiso is not a foreign trust (a widely repeated myth)
A plain fideicomiso holding your Mexican home is not a foreign trust, so it skips the heavy Forms 3520/3520-A. The exemption is narrow, though.
US dividends face an extra 10% tax; low gains rate only on Mexican-exchange shares
US dividends cost more here - they face an extra 10% tax you cannot credit, and only Mexican-exchange shares get the low capital-gains rate.
No totalization: double Social-Security exposure on earned income
This only matters if you keep working - self-employment or business income can trigger the full 15.3% US self-employment tax, with no Mexican offset.
Healthcare as a retiree.
Legal residents (Temporal or Permanente, not tourists) can buy into the public IMSS system through voluntary enrollment, called Modalidad 33. The premium is a flat annual amount, set by age band and paid in advance. But IMSS bars pre-existing and chronic conditions and imposes waiting periods. So most expat retirees pair it with private or international insurance, or rely on that plus Mexico's affordable cash-pay private care.
IMSS voluntary premiums are ~$60–95/mo by age band (cheap) but exclude pre-existing/chronic conditions. The ~$5,000/person figure is a midpoint for comprehensive private/international insurance (the expat average is ~$5,900; 65+ international plans run $7,000–10,000+). A younger, healthier retiree using cash-pay private care can spend far less.
This shows the anchor case for a couple in their 70s: IMSS family coverage plus cash-pay private care, about MXN 86,000/yr. The projection itself uses the full IMSS age-band tariff, so a younger household pays the lower band for its age. The fully private major-medical (GMM) path runs about MXN 180,000-330,000/yr per couple instead, with 12-15% observed medical inflation.
The retirement visa route.
Mexico's residency comes in two forms for retirees: Residente Temporal (renewable, up to four years) and Residente Permanente (open-ended). You qualify by showing steady income or savings, so most retirees living on a pension or investments can meet it.
- Residente Temporal: income of about $4,200–4,400/month, shown over the last 6–12 months.
- Residente Temporal (savings route): a bank balance averaging about $70–74k over 12 months.
- Residente Permanente (retirees): income of about $7,400/month, or about $300k in savings.
- The income and savings floors are tied to Mexico's UMA (a daily reference unit) and the minimum wage, so they are recalculated every year.
- Exact amounts vary by consulate, so confirm with the one handling your application.
What could this cost you?
A fast, illustrative estimate for Mexico - no login, nothing stored. Every country page carries its own, tuned to that country's tax treatment.
Your monthly spending power in Mexico on about $1M
These odds are about a withdrawal this size holding up over time - not about how far that amount goes here.
A modest lifestyle in Mexico
Day to day, that looks like a modest two-bed in an ordinary area, one reliable mid-range car owned outright, home cooking plus regular casual dining. For health, public care plus basic supplemental cover.
As a US citizen, you keep filing US taxes wherever you live.
Mexico: US treaty: foreign tax credit (pay the higher of US or Mexico tax, never both)
This is a fast estimate, not the full simulation, and not financial advice. It only flags the tax question. The full plan works out what you'd actually owe on each side of the border. It also models real balances, every account type, and healthcare, year by year.
The terms you'll run into.
- ISR (Impuesto Sobre la Renta)
- Mexico's federal income tax. It uses an 11-band progressive scale that tops out at 35%, a rate reached only above about MXN 5.11M (~$279k) of annual income.
- SAT
- Mexico's federal tax authority, the Servicio de Administración Tributaria (its version of the IRS). It runs the ISR income tax and adjusts the brackets for inflation each year.
- Residente Temporal / Permanente
- The two long-stay residency statuses, not a tourist permit. Both let you join IMSS health coverage and become a Mexican tax resident; Temporal renews for up to four years, and Permanente never expires.
- IMSS voluntary enrollment (Modalidad 33)
- The public health system's paid opt-in for legal residents, at a flat annual premium set by age band. It bars pre-existing and chronic conditions and has waiting periods before coverage begins.
- AFORE
- Mexico’s privatized personal retirement-savings account. To the IRS it is usually a foreign mutual fund (PFIC) and a reportable foreign account, with no US tax deferral.
- GMM (Gastos Médicos Mayores)
- Mexico's private major-medical insurance. Most Mexican insurers will not issue a new GMM policy past about age 65, though existing policies renew for life.
- Fideicomiso
- A Mexican bank trust that a foreigner must use to own a home in the Restricted Zone (within 50 km of the coast or 100 km of a border).
US terms that follow you to every country
- PFIC
- Passive Foreign Investment Company - the IRS label for almost any non-US fund, ETF, or pooled investment. Owning one triggers punitive US tax rates and Form 8621 paperwork. The single most common trap for Americans investing abroad.
- FBAR
- Foreign Bank Account Report (FinCEN Form 114). A yearly online filing that lists your non-US accounts once they total over $10,000. Not a tax - just a report - but penalties for skipping it are severe.
- FATCA
- A US law that makes foreign banks report American customers to the IRS. It is why some foreign banks refuse US clients, and why you may also file Form 8938 with your return.
- Form 8621
- The IRS form you must file for each PFIC you own. Complex enough that most preparers charge per form, per year.
- Form 8938
- The FATCA companion form filed with your US return, listing foreign financial assets above a threshold. Overlaps with, but does not replace, the FBAR.
- Forms 3520/3520-A
- US reporting forms for foreign trusts. Some foreign retirement and insurance wrappers count as trusts, dragging their owners into this heavy annual paperwork.
- UCITS
- The standard European fund format (an EU regulatory label). Fine for Europeans - but to the IRS, a UCITS fund is a PFIC.
- Totalization agreement
- A US bilateral deal that stops you paying Social Security tax to two countries on the same work, and lets work credits in each country count toward one benefit.
- Foreign tax credit
- The US mechanism that stops double taxation: tax you pay to your residence country offsets your US bill on the same income, dollar for dollar. You effectively pay the higher of the two totals - not both.
- Saving clause
- The clause in every US tax treaty that lets the US keep taxing its own citizens as if the treaty did not exist. It is why moving abroad never ends US filing.
- Foreign grantor trust
- The IRS classification some foreign pension and insurance wrappers fall into. It means the owner reports the trust personally, on Forms 3520/3520-A, every year.
Nothing on this page is invented.
Confidence: verified. Last verified July 17, 2026. Every figure above comes from one of the sources below - the same country data the full plan uses to compute your projection.
See the full country-by-country build sheet on the coverage page.