Best Financial Tips from FMF Readers, Part 7: Retire Overseas

Here's the next entry in "The Best Financial Tips from FMF Readers" series. Today's post is from Pagar who gives us the following advice:

This subject will not be appealing to everyone. But I urge everyone to read it because one never knows if life could be more fulfilling unless one considers alternatives. 

Stretching Retirement Dollars -- Retiring Overseas -- Specifically: The Country of Panama

We currently live in a smaller town 20 miles from Panama City, Panama.  There are American, Canadian, and  Australian families here in just this one small town. There are thousands of retirees from these and other countries throughout this one country. Of course, there are many in other countries also. My knowledge is of Panama, so I'm addressing this from that view, but whatever country you look at the reasons are basically the same. One can live better on the income they have Overseas.

We choose Panama because my wife is from Panama - she can be with her family and enjoy life more, because it is cheaper to live in Panama.  There are others who have no family here, but can enjoy their retirement much more, because it is cheaper to live in Panama.

An oft quoted amount is 65 percent of what it would cost to live in the US. But I know we don´t spend half of what we spent to live in the states.

Reasons to enjoy retirement more in Panama:

• The Panama government actively encourages people from other countries to retire here. With incentives such as: Pensionada discounts, (25% off the food portion of your restaurant bill-when you show your Pensionada ID) 25% off the first 600 kw of your electric bill, and many other services. 25% off Airline tickets, discounts on hospital, pharmacy charges etc. Pensionada status for non Panamanians is granted by the government for persons aged 60 (male) or 55 (female) -- same as Panamanians.
• Taxes=You pay your regular US Income tax wherever you reside. Panama does not tax income expats earn outside of Panama. There is sales tax on most items. Usually 5%. Property tax is excused on new houses for 20 years.
• Housing is much more affordable.
• Excellent modern Infrastructure=roads, phones, Internet, TV both local and worldwide.
• Great hospitals with outstanding doctors.
• The country is safe to live in, good police and court systems, no hurricanes, tornadoes, blizzards, and little earthquake risk.
• Rich in culture, recreation, history.
• Paradise for birdwatching, fishing, beaches.
• There are high Elevation areas such as Boquete and El Valle for those who like cooler climates.
• Modern airport for quick trips back to States.
• Most organizations such as Elks club, VFW and American Legion are here as well as many churches. 

Ways to learn more: There are more sites on the internet than you could ever read.  Yahoo has some great groups such as:

http://groups.yahoo.com/group/Panama Laws for Expats. Look in their files for all info needed. Visas etc.

www.panamainfo.com has a tremendous amount of info all over their site.

Most important: Don't pay for information. Whatever you are needing info wise is free. You will have to pay a lawyer to do the immigration visa paperwork, house title work etc. But the best advice for every one, visit and decide what you think before you get to the lawyer, housing etc and don't use lawyers etc, until you get some recommendations from other Americans.

This is something I've never considered (and I'm not sure I will consider it, but it's an interesting idea). What are your thoughts?

Comments

[scooter]

Very cool - i will have to bookmark this information - a friend of mine was looking to retire in the caribeian islands but decided not to due to the high cost of building a house, health care (they would have to do all doctoring in the states), food, etc... they have retired to florida instead - they get virtually the same climate (hot,hotter,and hurricanes:)
great blog - keep up the great work

[Brian]

Thanks for posting...we've been looking at early retirement spent in Costa Rica, but Panama has recently caught our attention.

[pagar]

Many people (because of financial considerations, job assignments etc)do not have an easy choice of whether to live in an area prone to natural disasters. But for anyone looking to make a move to enjoy their retirement, it seems to me to be an easy choice. Do not move into an area prone to certain disasters. Hurricanes, floods, blizzards, earthquakes, tornades, etc, are natural events almost guarenteed to affect certain areas. I was at Lake Charles AFB, Lake Charles La, in 1959 when Hurricane Camille hit, my 1st wife was from Lafayette, La. Her family remains in the area, I have no idea how many times they have replaced homes. because of hurricanes since then; but I know for some-at least 5 times. Every one of them have currently lost their homes from Hurricane Katina.
Panama has no recent history of hurricanes, to my knowledge.

[Rene Boyer]

I am a new retiree and I decided in 2005 to purchase a pre-construction property in Panama City Panama. (Pre-construction means no ceiling, no lights, no stove, refrigerator, hot water heater). Those are extra dollars that you have to pay for yourself. It has been an extremely interesting journey. I expect to be moving into my new condo in the next month. I have learned that Panama has its own rules that you find out along the way. The old adage that "Experience is the best teacher," is certainly true when it comes to Panama City. Everything will cost you money. I'm talking thousands! There is no rhyme or reason why services cost what they cost, they just do. If you are one who is easily upset with not knowing what is going to happen right up front, stay in the US. If you are one who is flexible, who has a pocketbook that is not too threatened, come to Panama. The prices in most restaurants will now challenge the five-star restaurant prices in New York City! What an adventure!!!

[Shi-Hsia Hwa]

Malaysia also has a programme to encourage retirees from other countries to move here. One of the requirements is that you do have to invest a certain amount of money in buying property here (the assumption being that you'll want to buy or build yourself a nice house). http://www.mm2h.gov.my/

To my parents here, moving to a "cheaper country" would have to be China or something...