Headlines - Where to Retire - "Retiring to Panama"


Pacific beach towns, Caribbean isles and fertile highlands are among places drawing retirees
--- By John Howells and Melodye Taylor ---

Retirement abroad is a concept with strong appeal, especially among baby boomers. After all, this generation invented the concept of adventure travel, backpacking through Europe, Asia and Latin America. Spring breaks were spent surfing in Acapulco or trekking through rain forests in Central America and the Amazon. Many baby boomers thought nothing of dropping a semester of college to leisurely tour and investigate foreign countries that their parents had never even heard of.

It's no surprise that many baby boomers seriously consider foreign retirement as a viable option. Mexico and Costa Rica have traditionally been popular foreign destinations. And a growing number of Americans are discovering that Panama fulfills their dreams of retiring abroad.

Located just south of Costa Rica, Panama is a long and narrow country shaped like a lazy S. At the country's narrowest point, only 31 miles separates the Pacific from the Atlantic. Residents like to brag that they can enjoy a sunrise over the Pacific and a sunset over the Atlantic, swimming in both oceans on the same day.

Panama's population is around 3 million, with two-thirds of mestizo descent, and there is a significant number of Americans doing business here. Panama is a constitutional democracy and, like Costa Rica, has no military. The commercial and economic center of the country is Panama City, ultra modern and well-kept, bustling with commerce and elegant residential neighborhoods.

Why Panama? The country has several things going for it that mesh with modern-day retirement plans. Panamanians have a reputation for being friendly and welcoming, as do the North American expatriates who are already living here. Americans are not new to Panama, with some families tracing their history here to the construction of the Panama Canal in the early part of the last century.

Retirees can choose among quiet beach communities on the Pacific Ocean, the urban and modern Panama City area, tropical Caribbean islands or Panama's highlands, where year-round spring makes sweaters comfortable in the evenings. "The best thing about living in Panama is that I feel relaxed and stress-free here - beautiful scenery and climate, and the people are so friendly," says Randy Muscarells, formerly of Ojai, CA.

The frosting on the cake of Panama retirement is an affordable cost of living and inexpensive real estate. Having full-time servants would be prohibitive for most folks back home, but a housekeeper and a gardener are considered essential for most middle-income lifestyles in Panama. A maid earns about $150 a month, a gardener about the same.

How much income is required to live in Panama? This question is a frequent topic of argument and debate. The government requires evidence of $600 monthly income for a couple to qualify for a retiree visa. But, warns Henry Smith, a 30-year resident of Panama, "You certainly cannot live well on that amount. You would have to learn to like rice and beans. Most folks are more comfortable with a budget of $2,000 per month."

"It's possible to rent a three-bedroom house for $90 a month - we did - and furnish it with all the basic amenities for a few hundred bucks," says Mary Clark, who moved to Panama with her husband, Bob, from California. "Transportation is cheap. If you don't want to drive, buses and taxis are almost always within a short walk. We would agree that living in a small community, being careful with your budget and with no major medical expenses, and expatriate couple can do just fine on $1,200."

So far, retirees moving to Panama haven't spawned a frenzied immigration rush, but it is gaining momentum. Last year the government granted nearly twice as many retiree visas as in the previous year.

This figure does not reflect the number of retirees who live in Panama seasonally, preferring to spend the best seasons of the year in the United States or Canada, and then escaping harsh weather by returning to second homes in Panama. These snowbirds aren't interested in becoming full-time residents, and they simply come and go on tourist visas. Foreigners can own property in Panama with the same ownership rights as Panamanian citizens, making the country an excellent option for a winter getaway.

Because of Panama's proximity to the equator, year-round temperatures remain fairly constant. But there are essentially only two seasons - winter and summer, distinguished by the amount of rainfall rather than the thermometer. Summer is the dry season between the middle of December and the middle of March, longer on the Pacific coast. The remainder of the year is winter, the rainy season, which brings showers interspersed with sunshine, but not constant rain.

Newcomers often complain about strong winds that occur during the sunshine months, and windstorms can last several days, with strong gusts that sometimes carry dust. This is common to most of Central America, and residents become accustomed to it. Like Costa Rica, Panama is out of the hurricane corridor that ravages countries from Nicaragua north to the Carolinas and even to Boston. Tornados are also unknown here.

Areas Popular Among Expatriates

Panama City: The largest number of expatriates can be found in the Panama City area. Several elegant parts of the city are preferred by foreign retirees who want English-speaking neighbors. Many of these expatriates are business people, including families who have lived here for decades. Panama's economy is one of the most stable in Latin America, with low inflation and a favorable business environment. The currency is the U.S. dollar, making it easy for U.S. citizens to handle their bank accounts.

A favorite retirement place, not far from the metropolis of Panama City, is El Valle de Anton. It has always been popular as a weekend getaway from Panama's lowland heat. Retirees are rediscovering it now, with all the benefits of country living, brilliant flowers and wildlife, yet only an hour and a half from Panama City. Also close to Panama City are the Pacific beaches. You'll find expatriated living in beach towns such as Santa Clara, Gorgona and San Carlos…

Bocas del Toro: Bocas del Toro, a picturesque archipelago on the northwest coast of Panama, is probably Panama's most popular tourist destination after the Panama Canal. It isn't surprising that tourism is catching on at Bocas del Toro, given the fascinating Caribbean island ambiance and classic tropical climate. Many, but not all, islands boast sandy beaches lined with coconut trees and coral reefs for snorkeling and diving. The islands' rain forests host troops of monkeys as well as endangered red frogs.

The Panamanian natives of this island wonderland are mostly indigenous people mixed with English-speaking descendents of immigrants from the West Indies. This lends an exotic Caribbean atmosphere to Bocas. Some islands are designated for tourism only, with residential construction prohibited. Isla Colon is the main island, where the town of Bocas del Toro - commonly called Bocas Town - is located. This is the starting point for most tourists. Visitors can fly to Bocas Town or take a water taxi from the mainland at Almirante.

According to local sources, between 300 and 500 expatriates are scattered throughout the archipelago. Many visitors are North American expatriates who live in Costa Rica on tourist visas. In order to renew their 90-day tourist visas, they must leave the country for at least 72 hours before returning. Bocas del Toro has become one of the more popular places for tourists to pass their three-day sojourns, then return to Costa Rica with another three-month visa. A few decide to switch allegiances from Cost Rica to Panama…

Helpful Information

Property ownership: Panama places no restrictions on foreign nationals owning titled property in the country. The national constitution guarantees and protects ownership of all legally owned and duly registered properties. Deeds are recorded in Panama's public registry and are available for inspection…

Crime and personal safety: No country on earth is crime-free, but most people agree that Panama's crime rates are considerably lower than most developing countries. Violent crimes against expatriates are rare.

Panama City, like any large metropolis, has a higher crime rate than smaller towns, and there are neighborhoods best avoided after dark. But it's often claimed that Panama City is safer than most urban centers in the world. An exception to low crime expectancy is the province of Darien, which borders Colombia. Colombian militia and drug smugglers are occasionally in the region. But few retirees venture this far south unless they are interested in the drug trade or revolutionary activities.

Medical care: An often-asked question about Panama involves the quality and availability of hospitals and doctors. As you might expect, the best facilities are located in the more heavily populated areas. If you find an area you really like, be sure to check out the local clinics and distance to the nearest hospital. Most retirees are satisfied with the quality of medical care in Panama, and care is affordable even if you don't have insurance. Many major medical insurances, including Tricare for Life for military retirees, are recognized in Panama. Government health coverage can be had for $50 per month.

It is not uncommon in Panama to find doctors who are fluent in English and who did their residency in the United States.

Rules for obtaining residence: It's fairly easy to obtain a retirement visa that allows you to live full time in Panama. You need only show an income of at least $500 a month for yourself and $100 for your spouse. Benefits to foreign retirees include exemption from property taxes on a personal residence for a period of 20 years, and there are no taxes on bank deposit interest or on income earned outside Panama. Newcomers can import up to $10,000 in personal belongings duty-free.

An automobile can be imported every two years duty-free - or, rather, duty-deferred, because when the car is sold, the buyer has to pay the original duty, which detracts from the value of the vehicle. Most expatriates don't bother to import cars, preferring to buy them in Panama.

Retirees receive numerous discounts, including 30 percent off most plane and bus tickets, 50 percent off theater tickets, 25 percent off the first $50 of electricity bills, and 50 percent off hotel rates on weekdays and 30 percent of weekends.

Those who enter on tourist visas are given 90-day visas. (Be sure to request 90 days; otherwise, you might be given a visa for 30 days.) These visas currently can be renewed after a 72-hour exit from the country, usually to Costa Rica or the San Andres Island of Colombia. This avoids the legal footwork and expense of obtaining a permanent retirement visa.

Special visas are required for small business investors and others engaging in larger enterprises. The requirements vary depending on the type of business you plan to operate and the number of employees involved.

Beware and Be Wise

Because Panama is attracting many foreign residents and investors, the country is gaining a reputation as a good place to invest in real estate. Ever eager to cash in on the country's growing popularity, development promoters and salespeople picture Panama as a paradise with no flaws. Some promise fantastic returns on investments, elegant lifestyles on dirt-cheap budgets, and a peaceful and crime-free environment. Retirees should beware of wild promises and investigate for themselves.

It's a mistake to choose foreign retirement just because you believe it's possible to live on the proverbial shoestring. Panama sometimes is promoted as a perfect retirement paradise where high living is available for about $500 a month. While that amount is much more than the average Panamanian earns, it would not provide a pleasant lifestyle. And unless you have substantial financial backup for emergencies, you could find yourself in trouble. Foreign countries provide no safety nets for noncitizens. The expatriate community will resent having to help someone who arrives without adequate funds.

Some promoters claim that Panama is virtually tax free in that you can deduct $80,000 of earned income from your U.S. tax returns. What they don't mention (or may not be aware of) is that this only applies to wages earned in Panama, and only under limited circumstances. Any money earned in the United States or Canada will be taxed in your home country. Any wages earned in Panama will be taxed by Panama.

Another erroneous notion is that new residents needn't learn Spanish because most Panamanians speak English. Panama's language is Spanish just as in all Central American countries. Most newcomers will want to live where English-speaking neighbors form a support group until they get accustomed to their new surroundings.

Panama is a developing nation that experiences occasional deficiencies. For some folks, that's part of the charm of living here. But depending on where you choose to live, you might experience occasional electricity fluctuations and outages, low water pressure and expensive or nonexistent telephone service.