Expatriate Retirement Living in Panama

Baby boomers are hitting retirement age. Once considered the end of an active lifestyle, this new generation of retirees is viewing retirement as an opportunity. No longer tied to time clocks and other career restraints, today's retirees are anxious to fulfill life-long dreams of travel, recreation, and other leisurely pursuits.

Retirement Living: Funding an Active Lifestyle

As the U.S. economy has taken a nosedive, so, too, have some retirement plans and investment portfolios, leaving many retirees wondering how to finance the active retirement lifestyle their hard-won freedom now allows.

In order to make the most of diminishing retirement investments and stagnated Social Security retirement income, many retirees are thinking not only outside the box but outside the borders. Expatriate living is being widely accepted as a viable alternative for the modern-day retiree.

Expatriate Living: A Realistic Retirement Option

While leaving the country may seem like a drastic move for some, foreign relocation is not quite the extreme choice it was in the past. With the advent of technology, including the internet with easy email accessibility and low-cost phone services like Skype and MagicJack, expatriate retirees can remain in close contact with family and friends stateside. Low cost airfares, even from developing countries, are more prevalent in recent years and can facilitate more frequent visits back to the States than could once be expected.

The biggest draw for most retirees considering an expatriate retirement, however, is a lower cost of living. Many foreign destinations allow retirees to live the active retirement lifestyles they have planned for and dreamed of at a standard not necessarily available to them as retirees in the States.

South and Central American destinations like Nicaragua, Ecuador, Honduras, and Uruguay have all received expatriates warmly. In the East, the Philippines and Thailand have become popular retirement spots. In most of these countries, as little as $20,000 annually will provide you with a rich retirement experience. Often, an added benefit is the ability to afford a few unexpected luxuries, including fine dining, recreational pursuits like deep sea fishing and golf, and international shopping.

Expatriate Retirement and Social Security

Concerned about receiving your Social Security retirement payments if you move to a foreign land? Don't be. The Social Security Administration operates an entire Office of International Operations for the sole purpose of assisting expatriates receiving retirement or disability benefits while out of the country. While the Social Security Administration does not have foreign offices, expatriates can receive assistance through the U.S. State Department at American embassies and consulates located in most foreign countries.

Expatriate Retirement: The Benefits of Panama

In conducting online expatriate retirement information searches, no single destination pops up more frequently than Panama. And, no wonder. Panama's pensionado program offers expatriate retirees a myriad of benefits in addition to the country's other selling points, including a moderate climate, reasonable cost of living, stable government, and low crime rate.

After considering both domestic (southern and south western United States) and international locations (Mexico, Belize, Costa Rica, and New Zealand), George Harley, formerly of Cleveland, Ohio, packed up the dogs, some personal belongings and, along with his wife, made the long, arduous trek to his new Panamanian home by car. It was all worth it, he says of opting for an expatriate retirement. He explained the process in an interview from his home in Panama.

"We liked New Zealand," says George, a former engineer for Ford Motor Company and a real estate agent back in Cleveland. "But it was just too far away. It's difficult to own property in Mexico. While Belize spoke English, it had hurricanes, crime, and high humidity. The U.S. still had the tax problem."

Taxes are a major consideration for Americans contemplating an expatriate retirement lifestyle in any country. As in many other nations, Panama does not tax foreign income, preferring instead to see it stimulate the economy through spending. In fact, one of the criteria for receiving a pensionado visa is a minimum lifetime monthly foreign retirement income of $1,000 for a single person. That amount increases by $500 per month for each dependent included under the visa.

Expatriate Retirement: Pensionado Visas

The lifetime pensionado visa affords expatriate retirees the opportunity to reside in Panama indefinitely with a treasure trove of discounted services and amenities offered to holders. It costs roughly $1,200 to $1,500 to obtain, and George highly recommends the hiring of an attorney to handle the cumbersome paperwork involved.

The Harleys use their pensionado benefits extensively, making their retirement funds go even further.

"We get 25% off flights originating in Panama," says George. "And 25% off at restaurants, 15% off for fast food. Half price movie tickets, which discounts the cost to $2. Electricity is discounted 25%. Medical and dental services are also discounted. Prescription drugs are 10% off, routine teeth cleaning costs $15. My bridge replacement set me back $300."

While monetary perks are nice, the Harleys have found other reasons to remain in Panama.

"The people are very friendly. There is great fishing - Panama has more than 960 miles of coast line. We live in the mountains where the year-round temperature is 70 degrees. The air is clean," says George. "The banks are very stable, and there is little waiting. Special lines are provided for those with pensionado visas."

In part due to U.S. involvement with the Panama Canal, American influences in the area are prevalent, especially in Panama City where high-rise condominiums and modern shopping malls are sure to remind some retirees of stateside metropolitan areas. As a result, most expatriate Americans assimilate into the Panamanian lifestyle easily.

Expatriate Retirement: Slow and Easy

For the Harleys, the biggest adjustment has been the slower pace - of just about everything.

"Paper work is very time consuming" George says. "The mail is very slow. You must use a private service to send and receive mail from the U.S., and it takes about 10 to 15 days. Internet speeds can be slow, and there is some down time. We also lose electricity two to three times per month for short periods of time."

For prospective expatriates, George recommends moving to the area temporarily, renting and experiencing the culture for a while first hand. He also suggests talking to those who have already made the move. In fact, he recently began offering his own information service for those contemplating expatriate living in Panama.

Another tip: George says, "Learn the language."

In Panama, one Spanish phrase is especially important:

"Descuento de jubilado, por favor."

Retired person's discount, please.

For those considering an expatriate lifestyle, be sure to consider my "Checklist for Expatriate Retirement Living."

Sources: Embedded