Dreaming of Cabo San Lucas? Here’s What to Know About Retiring or Living Part-Time in Paradise
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
Why Cabo San Lucas Is on Retirees' Radar
Over the years there has been an increasing number of Americans who are drawn to the idea of living part of the year in Cabo San Lucas while maintaining a home in the U.S. And I get it. With its ocean views, luxury amenities, and short direct flights from many U.S. cities, Cabo checks a lot of boxes for retirees seeking better weather, lifestyle, and affordability.
But while the margaritas are smooth and the sunsets are stunning, living in Cabo—even part-time—comes with financial, tax, and legal planning considerations you won’t want to overlook.
Why People Are Choosing Cabo for Part-Time Retirement
Climate: Year-round sunshine with low humidity and mild winters
Lifestyle: Great dining, beaches, boating, golf, and expat-friendly communities
Healthcare: Access to high-quality, affordable private healthcare options
Proximity: Only a few hours from California, Arizona, and Texas
Affordability: Lower cost of living than many U.S. retirement destinations
What You Need to Know Before Buying a One-Way Ticket
Here are some must-consider areas if you’re thinking of splitting your time between Cabo and the U.S.:
1. Residency and Visas
U.S. citizens can visit Mexico for up to 180 days on a tourist visa.
Want to stay longer or own property? You’ll likely need a temporary resident visa, which requires proof of income or assets.
Many retirees opt to stay under 180 days per visit and maintain primary U.S. residency.
2. Taxes
U.S. citizens are taxed on worldwide income, even while living abroad.
Mexico generally won’t tax you unless you earn local income or become a tax resident.
Consider how withdrawals from IRAs, pensions, or Social Security affect your tax bracket and Medicare IRMAA surcharges.
3. Healthcare Planning
Medicare does not cover services outside the U.S.
Consider international health insurance, private plans in Mexico, or maintaining a U.S. policy for domestic care.
Many expats use private hospitals in Cabo, which are often affordable and high-quality.
4. Banking and Currency
You can use many U.S. bank cards in Mexico, but fees can add up.
Some retirees open peso-denominated bank accounts or use international fintech apps to avoid high conversion costs.
5. Real Estate Ownership
Foreigners can legally own coastal property in Cabo via a fideicomiso (bank trust).
Be aware of inheritance and estate planning implications, especially if your beneficiaries are U.S.-based.
Property taxes are low, but ongoing maintenance and HOA costs should be factored in.
Real Example: Dave and Susan’s Cabo Lifestyle
Dave (62) and Susan (60) wanted a warm-weather getaway they could enjoy 5–6 months out of the year. They already had Medicare, but knew it wouldn’t cover them in Mexico. Here’s how we helped:
Maintained U.S. residency and health coverage for part of the year
Purchased a 2-bedroom condo using a fideicomiso structure
Used Roth withdrawals and capital gains from a brokerage account to fund $85,000/year in income—almost entirely tax-free
Implemented estate planning strategies to avoid double probate across borders
Today, they spend winters in Cabo and summers near their grandkids in Colorado—with no regrets.
Planning Questions to Ask Yourself
Will I keep a home in the U.S. or become a full-time expat?
How will I cover health insurance when I’m outside the U.S.?
How will I access and convert my retirement income?
Will owning property add value or become a liability?
Am I prepared to handle legal, estate, and tax matters across two countries?
Final Thoughts: Cabo Could Be Your Perfect Half-Retirement
Living part-time in Cabo offers the best of both worlds—warmth, culture, cost savings, and still being close to home. But like any cross-border plan, it requires intentional financial, healthcare, and legal planning.
Whether you’re a few years out or already scouting real estate in Baja, let’s create a custom cross-border retirement roadmap that aligns with your vision and safeguards your lifestyle.
👉 Want to learn how to retire without the worry of running out of money in retirement? Click here to watch this video
FAQs
Can I use Medicare in Mexico?
Generally no. You’ll need private or international insurance for coverage while abroad.
Do I have to pay taxes in Mexico?
Usually not, unless you earn local income or stay long enough to be considered a tax resident.
Can I own property in Cabo as a foreigner?
Yes, through a fideicomiso (Mexican bank trust). It’s a legal, government-backed structure for foreign ownership near coasts and borders.
Disclaimer: This example is hypothetical and does not represent a specific client. This material is for educational purposes only and should not be considered tax or legal advice. Please consult a qualified professional for your individual situation.