How to Retire in Mexico the Right Way
Contents
- Why Mexico? The Numbers Don't Lie
- Step #1: Decide Where You’ll Retire in Mexico
- #1. Mérida: Safety and Simplicity
- #2. Puerto Vallarta: The All-Around Option
- #3. San Miguel de Allende: Culture and Climate
- #4. Lake Chapala: The Retirement Capital
- #5. Playa del Carmen: Caribbean Comfort
- The Safety Question
- Step #2: Establish Your Path to Residency
- Step #3: Find Your Property (And Decide to Buy or Rent)
- A Primer on the Mexican Property Market
- Avoiding Double Taxation
- The Basics You Need to Know
- Common Mistakes Retirees Make
- Step #4: Verify Your Plan With a Professional
- Sources
For more than 1.6 million Americans, Mexico is home. And with good reason: the focus of life is less about work, it’s warmer and, in many places, more affordable.
According to AARP, the average Social Security payment is about $1,975 per month. In many places in the US, that doesn’t get you far. But in many places in Mexico, that same income can fund a comfortable lifestyle – with room for dining out, domestic help, and good private healthcare.
But moving to Mexico – or any country – without a plan isn’t a good idea.
Of course, the question is, what goes into a good plan?
In this article, you’ll learn how to retire in Mexico the “right way” – how to select the right location, secure residency, find a good property, and sidestep common headaches.
Plus, some important data on some of the safest places to live.
Why Mexico? The Numbers Don't Lie
Let’s start with what drives many of life’s decisions: money.
The average cost of living in Mexico is about 41% lower than that of the US, according to quality-of-life tracker Numbeo. A family of four needs about $2,470 – excluding rent – a month to live comfortably. A single person? Just $684.
And rent in Mexico is about 61% lower than what you’ll find in the US. A 1-bedroom apartment in a city center averages out at about $665.27 a month. A 3-bedroom? $1,271.
But it’s not just about stretching your dollars. Mexico offers:
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Close to home. If you fly out of Mexico City (MEX), you can fly directly to over 25 major US cities, including Dallas, Houston, Atlanta, San Francisco, New York, and others.
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You won’t be the only one. With many expat communities to choose from, it’s easier to integrate into a community of like-minded individuals.
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Good urban healthcare access. Major cities like Guadalajara, Mérida, and Mexico City offer modern hospitals and English-speaking specialists. Access in rural areas, though, may be more limited – and your insurance may not cover everything.
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Easy to qualify. Mexico’s residency system is one of the easiest in the world. If you meet the financial thresholds – and we’ll cover those in a moment – you’re in.
📚 Read More: The Best 20 Expat Cities and Communities in Mexico
Step #1: Decide Where You’ll Retire in Mexico
No one-size-fits-all here. Some retirees want walkable towns with mild weather. Others want sand, surf, and full-service hospitals nearby.
Based on where Americans are actually going – and what our clients ask us about – here are five of the most popular retirement spots in Mexico, along with what makes each one appealing.
For quick context: you’ll see that each location below has a “Safety Index” rating. This combines things like crime stats, police response, and how safe locals actually feel. The higher the number, the safer the place – at least on paper. Estimated monthly costs of living for each location are also according to Numbeo’s latest figures.
#1. Mérida: Safety and Simplicity
Known as one of the safest cities in Mexico, Mérida has a Safety Index rating of 75.04. Crime is very low, and people feel safe walking alone at night.
Why people choose it:
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Colonial charm and strong Mayan roots.
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Reliable private hospitals and clinics.
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Expat population estimated at 10,000 to 15,000.
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Beaches and Mayan ruins within easy reach.
Estimated cost for a couple: $1,500–$2,500/month.
Heads-up: Summers get hot and humid. And while the city is modernizing, English is less common outside expat zones.
#2. Puerto Vallarta: The All-Around Option
Puerto Vallarta offers a bit of everything – mountains, beaches, nightlife, and good medical care. It has a Safety Index rating of 64.97. Crime is low, people feel safe, but local government corruption and bribery seem to be on the rise.
What makes it work:
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International airport with dozens of US connections.
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Large English-speaking community.
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Well-developed infrastructure and hospitals.
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Dry-season weather that rivals California.
Estimated cost for a couple: $2,500–$3,000/month.
Keep in mind: Tourist seasons can bring crowds and higher prices, especially along the waterfront.
#3. San Miguel de Allende: Culture and Climate
A UNESCO World Heritage site, San Miguel de Allende is tucked into the mountains of central Mexico and built for wandering. It holds a Safety Index rating of about 49. While the historic center feels secure and crime rarely touches expats directly, it’s worth noting that the broader state of Guanajuato has seen rising crime in recent years. Still, we’ve seen a strong uptick in client interest, with many viewing it as an “up-and-coming” destination.
Why retirees love it:
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Colorful architecture and an active arts scene.
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Cooler climate thanks to its elevation.
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Easy to navigate without a car.
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Deep-rooted American expat presence (10,000+).
Estimated cost for a couple: $1,800–$2,800/month.
A note of caution: It’s not the cheapest place to live in Mexico. If your Social Security payment is $2,000 per month, you’ll likely be using over half of it for rent if you live in a 1-bedroom apartment.
#4. Lake Chapala: The Retirement Capital
Located just south of Guadalajara, Lake Chapala has drawn American retirees for decades. Some estimates say the area has the largest US expat population anywhere in the world.
There’s no Safety Index rating available for Lake Chapala – but for nearby Guadalajara, it’s 37.75. Not great.
What stands out:
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Active community of 20,000+ expats.
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Spring-like weather year-round.
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Access to good healthcare in nearby Guadalajara.
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English widely spoken in services and shops.
Estimated cost for a couple: $1,315–$2,000/month.
Heads-up: Some areas are so expat-heavy they can feel more like Arizona than Mexico.
#5. Playa del Carmen: Caribbean Comfort
A once-sleepy fishing town, Playa has grown into one of the most dynamic beach destinations in the country. Its Safety Index rating is 53. People are slightly worried about increasing crime, but still feel safe being alone in public – and many of our own clients are buying property here.
What you’ll find:
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White-sand beaches and turquoise water.
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International food, shopping, and services.
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Modern condos and gated developments.
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One-hour drive to Cancun’s international airport.
Estimated cost for a couple: $2,000–$3,000/month.
Just know: Tourist prices are creeping up. And as the city grows, so does the noise.
📚 Read More: The Safest Places to Live in Mexico
The Safety Question
Yes – some parts of Mexico have serious security issues.
But that doesn’t mean all of Mexico is dangerous. Much of the country, especially where expats tend to settle, is as safe – or safer – than many parts of the US.
Here’s what the data (not the news cycle) actually shows:
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Yucatán and Campeche consistently rank among the safest states in Mexico, with crime levels far below the national average.
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Tourist zones and expat communities are usually well-patrolled and have visible police presence.
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Most violent crime happens in regions tied to cartel activity – often hundreds of miles from retirement hotspots.
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Basic precautions – like you’d take in any big city – go a long way.
Practical safety tips if you’re considering a move:
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Stick to well-known expat hubs with strong infrastructure.
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Blend in – skip flashy jewelry or luxury displays.
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Learn some Spanish. It builds trust and opens doors.
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Join local expat groups and pay attention to local news.
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If safety is a top concern, consider quieter areas like Mérida or Campeche.
Step #2: Establish Your Path to Residency
Now that you’ve decided on why and where to retire in Mexico, the next step is establishing the how – specifically, your path to residency.
Mexico offers two main residency options for retirees:
📚 Read more: How to Get Residency in Mexico
#1. Temporary Residency (1–4 years)
This is the most common starting point for new expats. It’s renewable and can lead to permanent residency later.
To qualify in 2025, you’ll need either:
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Monthly income: At least $4,185 USD after taxes for the past 6 months (some consulates ask for 12 months), OR
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Savings/investments: Average monthly balance of at least $69,750 USD for the past 12 months.
For couples: Only one of you needs to qualify at the full rate. Add $500 to $1,800 per dependent, depending on the consulate.
#2. Permanent Residency
This skips the temporary step and is often available to retirees over 60.
You’ll need one of the following:
Monthly income: About $7,100 USD after taxes for 6–12 months, OR
Savings/investments: At least $280,000 USD held for the past year, OR
Property ownership in Mexico: Some consulates accept this if the property is worth $558,000+ USD (about 10.4 million Mexican pesos at 18.65 exchange rate) and fully paid off.
A few things to know:
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Requirements vary. Each Mexican consulate sets its own thresholds.
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You must apply outside Mexico. First steps usually happen in your home country.
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Age matters. Some consulates only issue permanent residency to those over 60.
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The right guidance helps. The right team can make the process faster – and far less frustrating.
If you’re already married to a Mexican citizen, no financial proof is required if you apply for residency inside Mexico.
The same is true if you’re married to a Mexican resident, though the process is slightly different.
Step #3: Find Your Property (And Decide to Buy or Rent)
Real estate is often the biggest retirement expense – and the easiest to get wrong abroad.
That’s why we recommend renting before buying, ideally for at least 6 months.
It gives you space to observe, compare neighborhoods, and decide what kind of life you actually want in Mexico – without a financial commitment you might regret.
📚 Jump to: A Primer on the Mexican Property Market
Why Renting Makes Sense First
Get to know different areas – and what things really
Learn how the infrastructure works, including water, power, maintenance, and HOA rules.
Build a network of professionals you trust (lawyers, property managers, contractors).
Avoid pressure from agents who may not work in your best interest.
Typical rental costs:
Studio/1BR: $400–$1,000/month.
2BR in expat zones: $800–$2,000/month
Luxury beachfront or gated homes: $2,000–$5,000+/month
What to Know If You Plan to Buy
Yes – foreigners can buy property in Mexico. But the rules depend on location:
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Interior regions: You can buy directly in your name.
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Restricted zones (within 50 km of the coast or 100 km of a border): Foreigners must buy through a fideicomiso – a special trust where a Mexican bank holds legal title on your behalf.
Smart Buying Tips
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Enlist professional guidance. You’ll want to avoid having to clean up mistakes.
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Never wire a large deposit without signed contracts and due diligence.
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Verify the title. Make sure the property is lien-free and legally transferable.
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Budget 5–7% of the purchase price for closing costs, including notary fees and taxes.
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Plan for property management. If you won’t live there full-time, someone needs to handle maintenance and emergencies.
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Know local rules. Some cities like Mexico City and Playa del Carmen have introduced new regulations on short-term rentals. Work with professionals who understand the legal and tax landscape in your area.
A Primer on the Mexican Property Market
Housing demand continues to outpace supply – especially in metro areas and vacation hubs popular with retirees and expats.
And despite rising prices, many foreign buyers are still entering the market, looking for affordable lifestyle upgrades and long-term value.
Living on short-term rental (STR) income in Mexico
Several Nestmann clients have structured their retirement around owning 1–2 properties in high-demand tourist areas and living elsewhere in Mexico more affordably. A typical model:
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Buy in Playa del Carmen, rent out full-time on Airbnb… all taken care of by a property manager.
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Live in Mérida, where monthly costs are currently lower.
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Use STR income to fund monthly expenses, healthcare, and leisure.
Even with occasional vacancies, the rental income covers most living costs – creating financial flexibility without requiring full US-level income.
Housing Prices Are Still Rising
According to real estate data service Global Property Guide, average home values rose by 8.7% year-over-year in 2024. New builds saw an even bigger bump – up 9.6%.
Why? Fewer homes being built, plus growing demand from both locals and foreigners.
Even the lower-cost segments are heating up. “Popular” housing (entry-level units) saw 12% annual price growth, which outpaced the luxury market.
Source: Global Property Guide
Where the Action Is
Mexico City: Price: $2,473 per square meter, up 8.1%.
Monterrey: $3,651/sqm, up 9.9% – highest growth among major metros.
Guadalajara: $2,607/sqm, up 8.3%.
Mérida, Riviera Maya, and Los Cabos also remain popular with expats – especially for vacation properties and long-term rentals.
What About Rent?
Rents are rising too, though not quite as fast as sale prices.
In Mexico City, a 2-bedroom apartment now averages $953/month – a 14.4% increase year-over-year.
In Monterrey, it’s $1,216/month, and in Guadalajara, about $806/month.
Rental demand is high, and the market is evolving. New “institutional rental” properties are popping up – fully managed buildings aimed at digital nomads and expats.
The Hidden Pressure: Supply Shortages
Only 128,000 new homes were completed nationwide in 2024 – the lowest number in over a decade.
That’s not nearly enough to meet demand. Rising construction costs, high interest rates, and legal red tape are slowing down development.
The result? Rising prices and shrinking inventory – especially for newer or well-located properties.
What This Means for Expats and Retirees
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Buyers: If you’re looking to buy, expect upward pressure on prices – especially in urban or coastal zones. Construction delays and limited supply mean competition for quality listings.
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Renters: Monthly rent is still affordable compared to US cities, but expect moderate increases, especially in high-demand areas.
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Investors: Although gross yields average 13% nationwide for traditional long-term renters, we have plenty of clients who have bought well along the coasts and enjoy net yields as high as 8-10% (13-17% gross yield) when renting out on a short-term-rental basis
Many of our clients generate part- or full-time retirement income by owning property in Mexico and renting it out via platforms like Airbnb and VRBO. In beach towns like Playa del Carmen, Puerto Vallarta, and Tulum, short-term rentals (STRs) often outperform long-term leases, especially during high season.
For example, a well-managed 2BR condo in a tourist hotspot can gross between $1,500–$3,000/month depending on occupancy and season – more than enough to offset living expenses for a retiree in another part of the country.
Some of our clients even live in a quieter, more affordable area like Mérida or Lake Chapala while renting out their coastal property for STR income.
Mexico’s property market is active and still growing. But it’s no longer a fire sale. For retirees, that means choosing carefully. For investors, it means ensuring the yield justifies the risk.
Avoiding Double Taxation
Your US taxes don’t go away when you move. They just get more complicated.
The only way to completely remove your US tax obligation – even if you stop living in the US full-time – is to expatriate yourself, and that’s practically impossible to reverse if you change your mind.
If you spend enough time in Mexico, you could become a tax resident there. But even then, you’re still on the hook with Uncle Sam.
That’s why good planning – before you relocate – can save you time, stress, and possibly a lot of money.
The Basics You Need to Know
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You still owe US taxes. As a US citizen, you must file an annual tax return no matter where you live. If you hold foreign accounts, you’ll likely need to file FBAR and Form 8938 as well.
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Mexico taxes residents on worldwide income. If you spend 183 days or more in Mexico – or if Mexico becomes your “center of vital interests” – you may be considered a tax resident there, too.
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There’s a US–Mexico tax treaty. It’s designed to help prevent double taxation on things like retirement income, dividends, interest, and capital gains. But you still need to file properly to claim the benefits.
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State taxes can follow you. Many US states – like California and New York – keep taxing former residents even after they leave. If possible, consider moving your legal domicile to a no-income-tax state before relocating abroad.
With that in mind, this is not something to figure out with a TurboTax account and a blog post. You’ll need professionals who understand both systems – and how they interact with each other.
Common Mistakes Retirees Make
Moving to Mexico can be one of the best decisions you make in retirement. But it’s easy to get tripped up – especially if you treat it like an extended vacation.
#1: Rushing the Process
Falling in love with a location during one visit doesn’t mean it’s right long-term. Take your time. Visit different areas. Rent before you buy. Test the seasons, infrastructure, and pace of life before making commitments.
#2: Ignoring Legal Requirements
Overstaying your visa or skipping residency paperwork can cause major problems. So can buying property without understanding how foreign ownership works. Get the legal side sorted early – and keep it current.
#3: Assuming Your US Insurance Will Work
Most US health insurance, including Medicare, won’t cover you in Mexico. You’ll need international coverage, private Mexican insurance, or a self-insurance plan. Don’t leave this to chance.
#4: Thinking Mexico Is “Cheap America”
Mexico has a distinct culture, legal system, and way of life. Treating it like a discounted version of the US is a fast track to frustration. Learn some Spanish. Respect the customs. The more you integrate, the better your experience.
#5: Overlooking Currency and Inflation Risks
Your dollars go further in Mexico – but not always as far as you think. Currency fluctuations, inflation, and transfer fees can add up. Make sure your financial plan accounts for this.
#6: Buying Too Quickly
Real estate in Mexico has its own rules and quirks. Before you purchase, rent for a while. Get to know the neighborhoods. Understand local regulations. Talk to other expats who’ve been through it.
#7: Neglecting Cross-Border Estate Planning
If you pass away with assets in Mexico and no plan, your heirs could be tied up in foreign probate for years. Coordinating your estate plan across jurisdictions isn’t optional – it’s essential.
Conveniently, buying property through a fideicomiso aka “Mexican bank trust” bypasses Mexican probate on the covered property. However, any other assets – including any bank accounts in Mexico – will still likely have to go through probate without proper planning.
#8: Staying in the Expat Bubble
Step #4: Verify Your Plan With a Professional
For many of our clients, retiring in Mexico isn’t just about sunshine and cost of living. It’s about building a life that offers more freedom, flexibility, and protection – without creating new risks.
That’s why retirement planning should include more than just finding the right neighborhood. It might also involve:
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Offshore asset protection.
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International investment diversification.
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Cross-border estate and tax planning.
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Second citizenship options.
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Legal structures that work in both the US and Mexico.
Mexico might be part of that plan. Or it might be a starting point.
If you want to explore how it fits into your broader strategy, feel free to get in touch. We’ll walk through your goals, highlight any blind spots, and help you move forward with clarity and confidence.
Because retiring in Mexico isn’t just about escaping the US. It’s about building a life that makes sense – for you, your family, and your future.
The best time to plan was yesterday. The second best is now.
Sources:
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AARP. (2023, October 13). How many Americans depend on Social Security? https://www.aarp.org/social-security/americans-depend-on-social-security/
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Numbeo. (2025). Cost of living in Mexico. https://www.numbeo.com/cost-of-living/country_result.jsp?country=Mexico
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Numbeo. (2025). Crime in Merida. https://www.numbeo.com/crime/in/Merida
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Numbeo. (2025). Crime in Puerto Vallarta. https://www.numbeo.com/crime/in/Puerto-Vallarta
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Numbeo. (2025). Cost of living in San Miguel de Allende. https://www.numbeo.com/cost-of-living/in/San-Miguel-de-Allende
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Numbeo. (2025). Cost of living in Guadalajara. https://www.numbeo.com/cost-of-living/in/Guadalajara
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Numbeo. (2025). Crime in Playa del Carmen. https://www.numbeo.com/crime/in/Playa-del-Carmen
About The Author
We have 40+ years experience helping Americans move, live and invest internationally…
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We have 40+ years experience helping Americans move, live and invest internationally…
