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Thursday, March 17, 2011

Pros and cons of retiring in Panama

Panama has a lower cost of living than more expensive countries, yet at the same time has good health care and retirement friendly government policies. The pros and cons of moving to Panama vary with one's retirement objectives, but there are some aspects of Panamanian living that are well worth considering if planning a retirement there. 'International Living Magazine' ranked Panama with a score of 71 for Quality of Living in 2010; France was the highest with 82.

Panama is a country with approximately 3.41 million people and according to the CIA World Factbook, and near the size of South Carolina in size. Panama has a welcoming retirement visa program and infrastructure that is able to support a high standard of living at a fraction of the price. The slideshow below illustrates three popular places in Panama that retirees seek out:

Pros of moving to Panama

The benefits of Panamanian retirement may particularly suit cash strapped retirees with monthly retirement income of $750-$1000. Panama is located in central America with a warm climate with lots of beach front and access to both the Pacific and Caribbean sea. Panama is known for its canal and tax shelters. A few of the pros of moving to Panama for retirement are listed below:

• 'Pensionados' visa and national benefit plan

The Pensionados national visa and benefit plan of Panama allows qualifying foreigners discounts of up to 50% for a wide variety of services including medical, transportation, financial services and entertainment. As of 2010, International living states that to qualify as a Pensionado, one must receive a qualified monthly retirement income of $1000 or $750 if at least $100,000 of real estate is purchased.

 • Tax sheltered investments and tax free income

Retiring in Panama means no income tax of 'foreign earned income' which is a huge benefit to retirees with limited income. Additionally, property tax on newly constructed real estate may qualify for property tax exemption according to the Embassy of Panama. Panama is also a tax shelter with several protective laws for international corporations and individuals alike.

• Low cost of living

In addition to having a stable currency pegged to the U.S. Dollar, which is also used as currency, Panama has a lower cost of living than the U.S. According to MSN Moneycentral, a 2000 square foot home can be constructed for approximately $80,000; this doesn't include the generous property tax exemptions on the property.

• High quality health care

According to the Panamanian Embassy, health care in Panama is among the best in Latin America and health insurance through Panamanian companies is more affordable than American insurance.

• Standard of living

A U.S. standard of living in Panama is available through its service orientated economy and costs less than the same services would in the U.S. Food and drinks cost much less than in the U.S. making life there financially cost effective for U.S. retirees.  Major Panamanian cities are well developed with access to many amenities, and services.
Also according to MSN Money Central, the crime rate in Panama is lower than Costa Rica which is considered to have a strong policing environment. This would make the relative safety of Panama relatively considerable.

• Convenient location to U.S.

If you are an American considering retirement in Panama, the travel time by air is approximately 3-5 hours from continental U.S. and direct flights from several large U.S. cities such as Washington D.C., Los Angeles, Houston, Miami and Orlando.

Cons of moving to Panama

As with any country, it is unrealistic to presume retirement in Panama is paradise 100 percent of the time. Panama does have its characteristics and issues, some of which may dissuade some from retiring there. A few potential cons of moving to Panama are described below.

• Pollution

Pollution in Panama is also a problem, air pollution in urban centers such as Panama city can be unpleasant to some. Other forms of pollution related to waste management are also a concern for Panama and may have some impact on quality of life.

• Humidity

The climate in Panama is warm, but it is also humid, hot and has a long rainy season. Unless one plans on living at higher altitudes where access to services may not be available, there will be hot and sticky days in the forecast.

• Poverty

According to the World Health Organization, Poverty in Panama means access to services considered standard in the U.S. is not necessarily available. This includes clean water, secondary school education, and nutrition. Retirees in Panama can expect to encounter such poverty either directly or indirectly.

• Economy

While not directly related to retirement in Panama, Panama's economy is small and can affect life there in terms of some standards of living. The annual GDP of Panama is less than the size of Microsoft Corporations 2009 annual revenue indicating national wealth is not among the highest in the world. This is also what allows the cost of living to be lower for American retirees however.


1. http://bit.ly/9cv9iV (Embassy of Panama)
2. http://bit.ly/cCgR7e (International Living)
3. http://bit.ly/zgEkd (CIA World Factbook)
4. http://bit.ly/a0Eslh (MSN Money)
5. http://bit.ly/bPU3Sf (World Health Organization)