RETIREMENT LIVING
Low-cost living
In Panama, a refuge for U.S. retirees hoping to stretch their dollars
By Jasmina Kelemen
Last update: 3:52 p.m. EST Feb. 19, 2008
This is an update to correct a typographical error in a version published on Feb. 14.
ALTOS DEL MARIA, Panama (MarketWatch) -- In a lush valley hidden in the coffee-producing hills of Panama, the sounds of tropical birds singing and burbling brooks compete with the rumble of cement trucks groaning their way uphill.
The steady convoy of trucks is ferrying labor and material to the hundreds of sprawling, ranch-style homes being built in this new gated community an hour and half outside of Panama City, many by U.S. retirees.
While precise figures aren't available, a compilation of data and anecdotal evidence suggests that aging Americans aren't only interested in buffing their tans or improving their golf swing, but are actively seeking out lower living costs in places where the much-debilitated dollar still reigns.
"It's very limited in the States what you can choose from but in retirement havens all around the world you can stretch your dollar three times more," said Kelly Campbell, a certified financial planner and owner of Campbell Wealth Management. "It can be more affordable to retire abroad than in the States."
That remains true even as economic concerns batter U.S. markets. Housing prices might have fallen more than 30% in once hot markets on the East and West coasts but they're still exponentially higher than prices in the developing world, said planning experts.
"Obviously, a few years ago when the real estate market was really good ... people were really doing a lot of investing in Latin America; now it's actually a lifestyle change," said Suzan Haskins, Latin America editorial director for International Living.
Living cheaper abroad
Offering special property tax breaks, generous senior citizen discounts and affordable living costs, Panama has in just a few short years established itself as a welcoming haven for Americans looking to stretch limited incomes during their golden years.
"Once you're established here you can live a cheaper life and a nice life," said Honey Dodge, who owns a bed and breakfast in Altos with her husband Larry that often caters to Americans who are in the process of building homes nearby.
In countries like Panama, Ecuador and El Salvador, which use American currency, $1 will buy you far more than it would in even the least expensive regions of the U.S., said experts.
According to the Migration Policy Institute, a growing number of U.S.-retirees are headed to the warm climes and cheaper lifestyles found in Latin America, especially Mexico and Panama.
In Panama, the number of visas issued to U.S. retirees tripled between 2003 and 2005, according to a study published in 2006 by the MPI. In the previous decade in some regions of Mexico the number of U.S. retirees jumped nearly 200%.
Concentrating its research in communities in Panama and Mexico, the Migration Policy Institute found that a large portion of those who moved there cited affordable health costs as chief among the reasons that pushed them to look outside the United States.
The findings challenge the conventional idea that retirees abroad are "amenity-seeking migrants" and illustrate that they are also moving to meet more basic needs, said the report.
The Dodge's experience affirms the report's findings.
"If you're less than Medicare age and disqualify for insurance you could be in big trouble," said Honey, who is 61 and moved to Panama from Texas in 2005.
As retired small-business owners with potentially serious medical issues, health insurance in the States became prohibitively expensive for the couple, said Honey.
Larry, 65, who had a photographic souvenir business in Montana and Wyoming, had a hip replaced for $14,000 and a stent installed for $11,000 in Panama City. Honey says her husband's medical care was "up-to-the minute," but cautions that some medicines can be hard to find and that choices are limited.
The couple said even though prices have risen since they first arrived, livings costs are still a fraction of what they are in the States.
Low-cost living
In Panama, a refuge for U.S. retirees hoping to stretch their dollars
By Jasmina Kelemen
Last update: 3:52 p.m. EST Feb. 19, 2008
This is an update to correct a typographical error in a version published on Feb. 14.
ALTOS DEL MARIA, Panama (MarketWatch) -- In a lush valley hidden in the coffee-producing hills of Panama, the sounds of tropical birds singing and burbling brooks compete with the rumble of cement trucks groaning their way uphill.
The steady convoy of trucks is ferrying labor and material to the hundreds of sprawling, ranch-style homes being built in this new gated community an hour and half outside of Panama City, many by U.S. retirees.
While precise figures aren't available, a compilation of data and anecdotal evidence suggests that aging Americans aren't only interested in buffing their tans or improving their golf swing, but are actively seeking out lower living costs in places where the much-debilitated dollar still reigns.
"It's very limited in the States what you can choose from but in retirement havens all around the world you can stretch your dollar three times more," said Kelly Campbell, a certified financial planner and owner of Campbell Wealth Management. "It can be more affordable to retire abroad than in the States."
That remains true even as economic concerns batter U.S. markets. Housing prices might have fallen more than 30% in once hot markets on the East and West coasts but they're still exponentially higher than prices in the developing world, said planning experts.
"Obviously, a few years ago when the real estate market was really good ... people were really doing a lot of investing in Latin America; now it's actually a lifestyle change," said Suzan Haskins, Latin America editorial director for International Living.
Living cheaper abroad
Offering special property tax breaks, generous senior citizen discounts and affordable living costs, Panama has in just a few short years established itself as a welcoming haven for Americans looking to stretch limited incomes during their golden years.
"Once you're established here you can live a cheaper life and a nice life," said Honey Dodge, who owns a bed and breakfast in Altos with her husband Larry that often caters to Americans who are in the process of building homes nearby.
In countries like Panama, Ecuador and El Salvador, which use American currency, $1 will buy you far more than it would in even the least expensive regions of the U.S., said experts.
According to the Migration Policy Institute, a growing number of U.S.-retirees are headed to the warm climes and cheaper lifestyles found in Latin America, especially Mexico and Panama.
In Panama, the number of visas issued to U.S. retirees tripled between 2003 and 2005, according to a study published in 2006 by the MPI. In the previous decade in some regions of Mexico the number of U.S. retirees jumped nearly 200%.
Concentrating its research in communities in Panama and Mexico, the Migration Policy Institute found that a large portion of those who moved there cited affordable health costs as chief among the reasons that pushed them to look outside the United States.
The findings challenge the conventional idea that retirees abroad are "amenity-seeking migrants" and illustrate that they are also moving to meet more basic needs, said the report.
The Dodge's experience affirms the report's findings.
"If you're less than Medicare age and disqualify for insurance you could be in big trouble," said Honey, who is 61 and moved to Panama from Texas in 2005.
As retired small-business owners with potentially serious medical issues, health insurance in the States became prohibitively expensive for the couple, said Honey.
Larry, 65, who had a photographic souvenir business in Montana and Wyoming, had a hip replaced for $14,000 and a stent installed for $11,000 in Panama City. Honey says her husband's medical care was "up-to-the minute," but cautions that some medicines can be hard to find and that choices are limited.
The couple said even though prices have risen since they first arrived, livings costs are still a fraction of what they are in the States.
Simple lifestyle changes have made their lives less expensive in Panama, said Honey. For example, the couple buys less packaged foods than they did in the U.S. and eats more fruits and vegetables, which are cheaper. Because of the mild mountain climate they never need a heater and very rarely run the air conditioner.
"Daily living expenses are much less," she said.
Do your research
Interest in moving south is so great that even countries once known more for civil wars and unrest, such as El Salvador and Nicaragua, are attracting a fair share of aging budget seekers.
And the options aren't limited to Latin America. Adventure-seeking but budget-conscious U.S. retirees are also popping up in places as far afield as Malaysia, Thailand and Romania.
Retirement and planning experts agree that regardless of where wanderlust leads the retiree, thorough research and planning is essential.
"If you do your homework, your chances of failure are greatly reduced," said Haskins of International Living.
When visiting a new country that might one day be your home, stay in an inexpensive guesthouse rather than a hotel. Buy your own food at several markets and cook for yourself.
"It's all about thinking like a local," she said.
Again the Dodge experience is illustrative. The adventuresome couple was open to moving anywhere in the world, even Albania. The committed Libertarians thought that a country just emerging from decades of international isolation and enjoying miles of undeveloped coastlines would offer great investment opportunities for entrepreneurs.
The countryside was spectacular and the people were among "the nicest we'd ever met," but the Balkan nation was bristling with international nongovernmental organizations advising the new government to establish yet more regulations, said Larry Dodge.
And the options aren't limited to Latin America. Adventure-seeking but budget-conscious U.S. retirees are also popping up in places as far afield as Malaysia, Thailand and Romania.
Retirement and planning experts agree that regardless of where wanderlust leads the retiree, thorough research and planning is essential.
"If you do your homework, your chances of failure are greatly reduced," said Haskins of International Living.
When visiting a new country that might one day be your home, stay in an inexpensive guesthouse rather than a hotel. Buy your own food at several markets and cook for yourself.
"It's all about thinking like a local," she said.
Again the Dodge experience is illustrative. The adventuresome couple was open to moving anywhere in the world, even Albania. The committed Libertarians thought that a country just emerging from decades of international isolation and enjoying miles of undeveloped coastlines would offer great investment opportunities for entrepreneurs.
The countryside was spectacular and the people were among "the nicest we'd ever met," but the Balkan nation was bristling with international nongovernmental organizations advising the new government to establish yet more regulations, said Larry Dodge.
Panama's more hands-off approach was much more attractive to the couple, he said.
It's imperative to educate yourself on tax laws, asset-ownership laws and whether health insurance coverage extends to other countries, said Raymond Benton, a certified financial planner at Lincoln Financial Group.
Benton also recommends establishing a low-maintenance investment portfolio that is structured to meet income requirements and requires little in the way of frequent changes.
"I don't think the financial planning issues change that significantly," said Campbell of Campbell Wealth Management. "You still need to do the same planning as you would do at home," figuring out how to live on a fixed income, he said.
People must also consider how they will adapt to a new language and cope with distance from family, says Campbell, who believes that retirees often focus on financial planning more than on how they will fill their time.
"It's important to do things that are going to excite you and make you happy during retirement," he said. "If [moving abroad] is it, then I'm all for it."
Jasmina Kelemen is a former MarketWatch reporter who now lives in Venezuela.
SOURCE:
http://www.marketwatch.com/news/story/panama-refuge-us-retirees-stretches/story.aspx?guid=%7BB05043DC-A95C-4C88-9EF7-D14ACED353EC%7D
