Retiring in Paraguay isn’t just about the lower cost of living; it is a strategic financial play. For a US citizen, this is one of the last remaining “tax havens” that is actually livable, provided you navigate the Law 6984/2022 residency rules correctly.
Here is the unvarnished reality of retiring here in 2025, with the specific numbers you need.
The “Golden Ticket”: Territorial Tax & Your Nest Egg
This is the primary reason smart money moves to Asunción.
- The Law: Paraguay applies a Territorial Tax System.
- What this means for you: The Paraguayan tax authority (DNIT, formerly SET) only taxes money earned from activities inside Paraguay.
- US Social Security: 0% Tax in Paraguay.
- US 401(k) / IRA Distributions: 0% Tax in Paraguay.
- US Stock Dividends: 0% Tax in Paraguay.
- The US Catch: You are still a US citizen, so you must file your IRS 1040 every year. However, because you pay no tax here on that income, you don’t claim a Foreign Tax Credit, but you do get to keep 100% of your check (minus standard US taxes).
The Residency Roadmap (The “Law 6984” Reality)
Since October 2022, the “instant permanent residency” is gone. You must follow the new two-step track.
Step 1: Temporary Residency (The 2-Year Probation)
- Solvency Requirement: You must prove you can support yourself. As of 2025, immigration usually requires proof of income equal to roughly 100 daily minimum wages monthly.
- The Magic Number: This fluctuates, but aim to show at least $1,300 USD per month in guaranteed income (Social Security award letters work perfectly for this).
- The “Criminal Record” Trap: Your FBI background check is valid for only 3 to 6 months. Do not order it until you are ready to fly. If it expires while you are packing, you have to start over.
Step 2: Permanent Residency (After 24 Months)
- Once you hold the temporary card for 2 years, you apply for the upgrade.
- The Benefit: Only Permanent Residents can get the Cédula de Identidad valid for 10 years (Temporary is only 2 years). This Cédula is your golden key to discounts, senior benefits, and banking.
Healthcare for Seniors (The “Pre-Existing” Reality)
Medicare stops at the US border. You are on your own. Here is how the private market works for expats over 60.
The “Seguro VIP” Options: You want a “Plan Premium” from a top provider like Santa Clara, Asismed, or the hospital-specific plan from La Costa.
- Cost Expectation: For a healthy 65-year-old, expect to pay $120 – $180 USD per month.
- The “Medication Cap” Warning: This is where they get you. Most plans cover 100% of hospitalization but have a cap on outpatient medications (often low, like 1.5 million Guaranies/year).
- Insider Tip: Keep a “medical slush fund” of $2,000 USD for expensive imported meds that hit your cap.
- Age Limits: If you are over 70, many insurers will deny new entry. You must secure insurance before this age, or you will be forced into “Adherente” plans which are pricier and have less coverage.
The Banking & Social Security “Maze”
1. Receiving Your Check
- Direct Deposit: Do not try to wire your Social Security directly to a Paraguayan bank each month. The fees and exchange rate spreads will eat 3-5%.
- The Insider Strategy: Keep your check going to your US bank (Chase, Schwab, etc.). Use a Charles Schwab Investor Checking card (which refunds all ATM fees worldwide) to pull cash in Guaranies at BNF or Continental ATMs.
2. The “Fe de Vida” (Proof of Life)
- Every year or two, the Social Security Administration (SSA) may demand proof you are still alive.
- The Fix: You do not need to fly to the US.
- The Federal Benefits Unit (FBU) in Buenos Aires handles Paraguay.
- You can often use the “Notarize” app (online US notary) for certain forms, or visit the US Embassy in Asunción (by appointment only, $50 fee per seal) to get your “Proof of Life” stamped.
3. FATCA is Real
- Paraguayan banks (Itaú, Sudameris) are terrified of the US Foreign Account Tax Compliance Act.
- If you walk in saying “I am American and want a savings account,” they may hand you a stack of W-9 forms or simply say “No.”
- Workaround: Open a “Cooperativa” account (Credit Union) for paying local light/water bills. They are often less stringent than the big international banks, though this is changing.
Where to Live (The “Walkability” Factor)
As you age, driving in Asunción traffic becomes dangerous and stressful.
- Recommended: Villa Morra / Recoleta
- Why: You can walk to supermarkets (Casa Rica), pharmacies, and coffee shops. The sidewalks are (mostly) paved.
- Avoid: The “Gated Communities” in Surubi’i
- Why: They are beautiful but isolated. If you have a medical emergency at 2 AM, you are 45 minutes from the best heart specialists in Asunción. Stay central.
The Unfiltered Truth About Retiring Here
If you have read this far, you know the math works. You can retire in Paraguay with a dignity that is becoming impossible in the US or Europe.
You can have the gardener, the pool, and the steak dinners.
But as your insider, I need to give you the final “reality check” that has nothing to do with money. This is why retirees actually leave.
1. The “Golden Cage” of Boredom
In the US or Europe, retirement often means museums, theater, walking clubs, and endless activities.
- The Paraguay Reality: Asunción is not Paris. It is not even Buenos Aires. It is a slow, sleepy capital.
- The Risk: If your identity is tied to “doing things” opera, hiking mountains, varied shopping, you will be bored within 6 months.
- The Fix: The retirees who thrive here are the ones who create their own world. They start charities, they paint, they write books, or they obsess over their garden. If you cannot entertain yourself in 40°C heat while sitting on a porch, the cheap cost of living won’t save you.
2. The “75-Year-Old” Healthcare Cliff
I told you healthcare is good. And it is for your 60s.
- The Hard Truth: Paraguay is excellent for “standard” aging (blood pressure, minor surgeries, dentistry). It is not the place to be if you develop a rare, complex condition requiring experimental treatment or top-tier specialists.
- The Strategy: Smart retirees keep a “medevac” fund. If you get the “Big C” (Cancer) or a complex neuro condition, you fly to São Paulo (Hospital Albert Einstein) or back to the US/Europe. Do not expect Paraguay to be a medical research hub.
3. The “Gringo Wallet” Effect
When you retire here, you are instantly in the top 1% of income earners in the country.
- The Social Shift: You will find it easy to make acquaintances, but hard to make equals. You may feel that people are overly nice to you because they see you as a walking ATM.
- The Insider Advice: Be generous, but not naive. The happiest retirees are the ones who live modestly and don’t flash their cash. If you live in a bubble of other wealthy expats complaining about the locals, you will be miserable. If you learn Spanish and drink tereré with your neighbors on the sidewalk, you will find a family.
4. The Ultimate Trade-Off
Retiring in Paraguay is a trade.
You give up: Efficiency, punctuality, cool weather, and first-world consumerism.
You gain: Time. Here, nobody is rushing. Nobody cares what car you drive. The pressure is off. For the first time in your life, you can actually exhale.
If you are ready to slow down—truly slow down—then welcome home.
