Like other people headed toward their mid-40s, I’m starting to envision my retirement. A couple of years ago the picture was somewhat rosy. My 401(k) balance was fairly robust and we had plenty of equity in the house we bought back in 2000. 
But after the economy tanked in the fall, things seem more tenuous. My retirement savings took a hit and the value of our home plummeted right after a major renovation. We have other financial obligations too, such as saving for our kids’ college educations. Plus, things will likely come up that we hadn’t anticipated. Will we always have employer-provided heath insurance?
Oh, and how am I supposed to blog about Latin America if we don’t visit Mexico or some other country every so often?
I’m not planning to retire for at least 20 years, so there’s plenty of time for our economic picture to improve.
Low-Cost Destinations. In the meantime, I’m seriously considering the type of lifestyle I’d like to have during my retirement years. A major component of retirement planning is deciding where to live. One idea that seems increasingly attractive is living at least a portion of my retirement years in a low-cost destination such as Mexico or Panama.
During our trip to Mexico a few weeks ago, my wife and I were pleasantly surprised at how inexpensive our restaurant meals were. But we were even more amazed at how cheap everything was at the grocery store, especially after factoring in the favorable dollar/peso exchange rate. Other day-to-day expenses seemed really low too. We found someone to do our laundry for a fraction of what we would have paid at home.
It’s no wonder so many U.S. retirees live there. There are already an estimated 1.2 million retired Americans and Canadians in Mexico, the Dallas Morning News reported last year.
Mexico saw rapid growth in U.S.-born seniors between 1990 and 2000, according to statistics reported by the Migration Policy Institute in 2006. During this period, “the number of U.S.-born seniors grew in Baja California Sur by 188.0 percent, in Jalisco by 138.6 percent, in Baja California by 43.5 percent, and in Guanajuato by 26.0 percent,” MPI said in a press release.
U.S. retirees are living in other countries in Latin America.
Small, But Growing U.S. Retiree Population. The number of U.S.-born retirees in Panama is relatively small but growing rapidly, MPI said. The number of US-born seniors in Panama, MPI said, more than doubled between 1990 and 2000. There are about 25,000 to 30,000 Americans living there, according to a 2006 article in the New York Times.
Life in Panama looks just as affordable if some of the prices quoted in the latest edition of BusinessWeek (July 13 and 20th 2009) is any guide. In addition to dramatically cheaper real estate prices, you can expect to pay a maid $15 a day and a physician $50 for a checkup. One couple told the magazine that an evening of fish tacos and “endless margaritas” runs about $20.
If this isn’t enough BusinessWeek reports that Panama’s pensioner program gives seniors nearly half off on a variety of things, including plane tickets, doctors’ visits, and electric bills. The country also refrains from taxing expats’ foreign income.
But there’s more to retirement than financial considerations. For instance, are you willing to spend your golden years adjusting to another society’s norms and customs?
on Jul 8th, 2009 at 9:19 am
My parents are planning to retire in Panama. They have been ever since my brother studied there for the first time in 2006. Actually, a good friend of mine from high school says her parents even bought land there so that they will be considered residents by the government and have more rights.