Here's another article that suggests you should consider my advice and retire in style south of the border. This time, the piece is from Money Central and suggests that you can save money by retiring in Panama. Here's a summary of their thoughts:
Panama is one of the best places in the world for retirees today, combining a low cost of living, near-perfect weather and one of the world's best discount programs for retirees, with up to 50% off everything from public transport to movies, mortgage rates, doctor's visits, electricity, restaurants and airfares.
When you compare Panama with its neighbors, you'll see that it has more amenities than traditional retirement spots such as Mexico and Costa Rica, with lower costs and crime rates. In Panama, you'll encounter less red tape and less interference from local authorities.
Panama has one of the lowest costs of living in all Central and South America: A U.S.-style home can be built for about $40 per square foot; unskilled labor costs $6.40 per day; a full-time live-in maid costs $120 to $160 a month; a beer at a bar costs 35 cents; a cup of coffee, 30 cents; a haircut and shave can cost as little as $2; an afternoon at a beauty salon is $8; electricity is about 10 cents per kilowatt-hour; water bills are $18 per year; telephone service costs roughly $30 a month; Internet access is $14 a month; wireless is available for a bit more; cellular-telephone service costs about $30 a month plus a per-minute charge of around 22 cents; and cable TV will cost you about $30 a month.
Wow! A full-time live-in maid for that price? Beer for 35 cents? Seems like there's something for every woman and for every man! ;-)
Seriously, are you interested? Sounds like a good deal so far. Here are some specifics to add to the above:
To encourage long-term foreign investment, Panama requires no special authorizations, permits or prior registration for foreign investors. The Investment Stability Law, passed in 1998, protects foreign investors from any change in tax, customs, municipal and labor rules for a period of 10 years after an investment is registered.
And there are other incentives for foreigners to spend time here, invest here … or retire here. For example:
- Newcomers who buy or build a new house won't owe any property taxes for 20 years.
- Residents pay no taxes on foreign-earned income.
- Tourism investments have 20-year exemptions from import duties, fees for construction materials and equipment, and income, real estate and other taxes.
- The U.S. dollar is legal tender in Panama, which insulates its economy from global shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.
The more and more I post about this topic, the more I think it's a very viable solution for many retirees. After all, millions of Americans won't have enough to retire when they reach 65, so they're either going to need to do something like retire to a cheaper place (maybe even just a cheaper place in the U.S.), put off retirement for some time, or do something else creative like not retiring at all.
For some more tips on having a great retirement, see these posts:
Free Money-This sounds good and looks good on paper but my family and friends mean so much to me. Don't people find it hard just to leave town?
Posted by: Steve Mertz | July 08, 2006 at 09:10 PM
Sounds like it's worth looking in to. A few other questions, however:
1) Can I deduct interest paid on a mortgage for a home in Panama on my U.S. returns?
2) Does investing in real estate in Panama qualify for an IRA?
3) If I buy and sell a property in Panama and make a profit, how can I bring it back to the U.S. and how is it taxed?
Perhaps you can direct me to a reliable source that has these answers if you do not have this expertise.
Thank you.
Posted by: Glenn Lodwig | July 10, 2006 at 03:40 PM
I have no expertise in this area. That's why I use a CPA to do my taxes. If I wanted to know the answers to questions like this, I'd ask her. :-)
Posted by: FMF | July 10, 2006 at 03:58 PM
Steve --
That's obviously a consideration. Many people (like me) already live away from family and actually may be moving closer to them by living in various foreign countries. Others may have to give up their wishes to live near loved ones simply to be able to afford their retirement.
Just some thoughts to consider.
Posted by: FMF | July 11, 2006 at 10:56 PM
Even if you don't move to another coountry permanently, see if your employer won't send you to another country for a year or so. My boss spent a year in Africa and told me it was one of the best financial moves of his life. Here's why:
*he kept his $200k/year salary (I'm guessing on the consverative side)
*the company paid ALL his expenses while in Africa (room, board, transportation, etc)
*he received a weekly CASH stipend of $200 for miscellaneous expenses (which he told me he pocketed most of it).
He took his wife with him, rented his house in Columbus and made out like a thief!
Andy
Posted by: Andy | September 20, 2006 at 03:35 PM
could you retire off your social security alone, in panama?
Posted by: mike | January 06, 2008 at 02:28 PM