Latin America is great place to live with its low cost of living, great weather, and friendly communities that welcome expats with open arms. Mexico and Paraguay are two of the most popular options that those who are looking to retire in Latin America consider.
In this article, I’m going to compare the cost of living, tax system, ease of immigration, and more to help you figure out which country is the best pick for you!
Table of Contents
Cost of Living in Mexico vs Paraguay
Let me start by saying that both of these countries have a pleasantly low cost of living. Retiring here will always be cheaper than trying to live out your golden years in the US, Canada, Europe, or Australia.
A one-bedroom apartment outside the city center will cost around $290 per month in Mexico. Even if you get a three-bedroom apartment in a city center, you’ll still only pay a little over $800 per month on average.
Of course, if that three-bedroom apartment happens to be in Mexico City then you might end up paying $1,500 per month or more. Over all, you’ll be hard-pressed to pay four figures in monthly rent unless you’re actively seeking out the country’s pricier areas.
The cost of living in Paraguay is even lower at a staggering $200 per month for a one-bedroom apartment outside the city center. Meanwhile, a three-bedroom apartment in the city center of capital Asuncion will only cost $670 per month — talk about bang for your buck!
Winner: the cost of living in both countries is close enough to call this a tie (but note that Mexico has a higher price ceiling).
Taxes in Mexico vs Paraguay
Residents of Mexico pay progressive tax rates up to 35%. Mexican income tax applies to worldwide income regardless of what citizenship the resident holds or what their country of origin is.
Residents of Paraguay pay a flat 10% tax on income earned locally, with no taxation on foreign-source income at all. If you reside in the country then the capital gains on your investments may be taxable as local income.
Winner: Paraguay is the best option with its 10% flat income tax rate and no taxation on foreign-source income.
Mexico vs Paraguay: Ease of Immigration
To be eligible for a residence permit in Mexico, all you have to do is prove economic solvency by meeting either one of the following criteria:
- Savings. Provide a bank statement showing an account balance of at least $27,000 for the past 12 months.
- Income. Provide proof of income showing that you have a monthly income of at least $1,620 per month from your salary, investments, businesses, etc.
Requirements are higher for permanent residency, requiring a bank balance of at least $180,000 or income of at least $4,500 per month.
Paraguay uses the same solvency system to qualify its residency applicants. However, the requirements in Paraguay are a lot lower than that of Mexico.
To qualify for a permanent residency permit in Paraguay, all you have to do is deposit (not donate) to the Paraguayan Central Bank or any commercial bank in the country. Those looking to retire in Paraguay will also need to prove an income of at least $1,300 per month.
In addition to being very easy to obtain, the Paraguayan permanent residency permit is also very easy to maintain. As long as you visit the country once every three years, your residency permit will remain active.
Winner: Paraguay is the clear winner due to its lower barrier to entry for aspiring permanent residents.
Location
Location is a fairly subjective metric but it’s worth talking about.
If you’re from the United States or have family there then Mexico would be the better choice from a geographic standpoint. You can easily drive into California in a day or grab a flight to LAX whenever you want to visit the US.
However, Paraguay does have geographic benefits too. It shares a border with Argentina which is a top destination for skiing, surfing, and rock climbing. Paraguay is also quite remote which makes it quite unlikely that it’ll ever be in the line of fire during global conflicts.
Winner: location is obviously going to be a tie due to how subjective it is so carefully consider how much you value proximity to the US.
Safety
Mexico has the 12th highest intentional homicide rate in the world according to the United Nations Office on Drugs and Crime. This puts it in line with countries like El Salvador, Venezuela, and Nigeria.
In contrast, Paraguay ranks 56th on the UNODC list with an intentional homicide rate of 6.7 per 100,000 inhabitants. This is much lower than Mexico’s 28.4 intentional homicides per 100,000 inhabitants.
General crime rates are also significantly lower in Paraguay compared to Mexico, as seen on the Global Peace Index map below:
Winner: Paraguay is much safer than Mexico, with lower homicide rates and less crime overall.
Mexico vs Paraguay Conclusion: Where Should You Retire?
It’s clear that Paraguay has a lot going for it. Living in Paraguay is cheaper, safer, and less of a tax burden than retiring in Mexico. That being said, those who want to stay close to the US may still find value in the Mexican Republic.
Both countries are pretty easy to get into so it’ll really come down to your specific needs. Personally, I’d go for Paraguay since I don’t visit the US often enough to justify paying tax rates that are 3.5x higher in Mexico.
Whichever country you decide to retire in, I hope this article has been helpful in your journey on how to Live After Success!