Retirement in the U.S. vs. Mexico: What Every Binational Family Should Know
If you have worked in both the U.S. and Mexico, or plan to retire in a different country than the one you contribute in today, your retirement depends on two systems that don't talk to each other. Understanding both is the difference between reaching 65 with a plan or with surprises.
At GoldStone we see the same pattern often: families who contribute to IMSS, have a forgotten 401(k) from a job in Texas, and don't know whether they can collect Social Security while living in Querétaro. In this article we compare both systems, explain what happens when you have a foot in each country, and share the first steps to organize your retirement.
How retirement works in Mexico
In Mexico, your pension depends mainly on when you started contributing to IMSS. That date determines whether your retirement is paid by the government or by your own AFORE savings.
Ley 73 (started contributing before July 1, 1997): a lifetime pension based on your average salary in your final years and your weeks contributed. Requires 500 weeks and age 60 (early) or 65 (old age).
Ley 97, the “AFORE generation” (started later): your pension comes from what you accumulate in your individual AFORE account. In 2026 you need 875 weeks, rising by 25 per year to 1,000 in 2031.
Mandatory contributions: 6.5% of salary before the 2020 reform. The reform raises them gradually to 15% by 2030, mostly paid by employers.
Fondo de Pensiones para el Bienestar: tops up AFORE-generation pensions from age 65 so they reach 100% of your last salary, capped around MXN $17,364 per month.
Voluntary savings: you can make voluntary AFORE contributions or open a Personal Retirement Plan (PPR). Both can be tax-deductible within the limits of Article 151 of Mexico's Income Tax Law.
The key takeaway: for the AFORE generation, your pension depends on your balance. If you contributed for few years, on a low salary, or spent years working outside Mexico, your account may fall short.
How retirement works in the United States
In the U.S., retirement rests on three pillars: government-paid Social Security, employer plans like the 401(k), and personal savings in IRAs.
Social Security: a lifetime benefit funded by payroll taxes up to US$184,500 of wages in 2026. You need 40 credits (about 10 years of work). Full retirement age is 67 for those born in 1960 or later; you can claim a reduced benefit from 62. The maximum at full retirement age is around US$4,152 per month in 2026, and this year's cost-of-living adjustment was 2.8%.
401(k), 403(b) and 457: employer plans, often with a company match. In 2026 you can contribute up to US$24,500, plus US$8,000 if you are 50 or older, or US$11,250 if you are 60 to 63.
IRA and Roth IRA: personal accounts with a US$7,500 limit in 2026 (US$8,600 if 50 or older). With a traditional IRA you deduct today and pay taxes on withdrawal; with a Roth you pay today and withdraw tax-free, subject to income limits.
Withdrawal rules: taking money from a 401(k) or IRA before age 59½ usually triggers a 10% penalty plus taxes. From age 73 you must take required minimum distributions.
The key takeaway: in the U.S., Social Security is only a floor. Your lifestyle in retirement depends on how well you used your 401(k) and IRAs.
Mexico vs. the United States, side by side
Public pension. Mexico: IMSS Ley 73 (state-paid, lifetime) or Ley 97 (based on your AFORE balance). U.S.: Social Security, lifetime and inflation-adjusted.
Minimum requirement. Mexico: 875 weeks in 2026 (Ley 97) or 500 (Ley 73). U.S.: 40 credits, about 10 years.
Retirement age. Mexico: 60 (early) or 65 (old age). U.S.: 62 early, 67 full.
Mandatory contribution. Mexico: rising from 6.5% to 15% of salary by 2030. U.S.: 6.2% employee + 6.2% employer, up to US$184,500.
Employer savings plans. Mexico: uncommon outside large companies. U.S.: 401(k), 403(b) and 457, often with a match.
Tax-advantaged voluntary savings. Mexico: voluntary AFORE contributions and PPR. U.S.: IRA, Roth IRA and 401(k).
State top-up. Mexico: Fondo de Pensiones para el Bienestar (up to ~MXN $17,364 per month). U.S.: none; SSI exists for low-income individuals.
If you have a foot in each country
The good news: you can collect Social Security while living in Mexico. The bad news: years worked in one country don't count in the other.
Collecting Social Security in Mexico: U.S. citizens can receive it abroad. Mexican citizens can too when the benefit is based on their own work; spouses and dependent children must show at least 5 years of U.S. residence.
No totalization agreement: the U.S. has agreements with dozens of countries to combine work years, but Mexico is not among the agreements in force. If you worked 8 years in the U.S., you fall short of 40 credits, and your IMSS weeks won't help you reach them.
Taxes: under the U.S.–Mexico tax treaty, Social Security is taxed only by the paying country, and private pensions such as a 401(k) are taxed by your country of residence. If you are a U.S. citizen, the U.S. can always tax you.
Your 401(k) or IRA from Mexico: you can keep it and withdraw while living here, but withholding, exchange rates and filing in both countries should be planned before you move a dollar.
Your AFORE if you live in the U.S.: it is still yours. Keep your information up to date, register beneficiaries and consider whether voluntary contributions still make sense.
Five mistakes we see often
Forgetting old accounts. A 401(k) from a previous job or an AFORE you never consolidated are still there, but if nobody reviews them they lose returns and beneficiaries.
Cashing out a 401(k) early. Withdrawing it all before 59½ can cost you a 10% penalty, taxes and a bad exchange rate in a single move.
Assuming work years add up. With no totalization agreement, falling a few credits short of 40 in the U.S. or a few weeks short at IMSS can leave you without a pension in that country.
Relying only on the public pension. Both the AFORE system and Social Security were designed as a base, not as your full retirement income.
Ignoring binational taxes. Filing incorrectly in one country can cancel the treaty benefit in the other.
How to start organizing your binational retirement
The first step isn't investing; it's knowing what you have. Before talking about products, take this inventory:
Download your AFORE statement and check your IMSS contribution weeks.
Create your my Social Security account (ssa.gov) and review your credits and benefit estimate.
List every 401(k), IRA and former employer plan, with balances and beneficiaries.
Decide in which country and at what age you want to retire.
Calculate how much monthly income you need and how much you are missing.
At GoldStone we help you build your wealth map: order first, product second. If your family lives between Mexico and the United States, book a session with us at goldstone.mx.
Sources
This article is for informational purposes only and is not tax, legal or investment advice. Figures are for 2026 and may change. Consult a specialist about your situation.
Comments