§   We require an affordable solution to the high risk of living in an "assisted living" facility.  

§   We cannot tolerate living without potable tap water.

§   Friendly people in a tolerant and democratic society are one of the most critical factors for our long-term happiness.

§   Finally, we love to entertain friends at home on a regular basis. This desire requires access to many good friends and reasonable prices.     

Our Problem is Solved!!!!

In the spring of 2005, we purchased an almost new, fully furnished, 4 bedroom, 4 bathroom, modern house on a half acre of land right beside the Pacific Ocean in Coronado Panama.

Our home is situated 200 paces or a 2 minute walk from an outstanding, sandy swimming beach guarded by swaying palm trees and bougainvillea.

Panama is less than a five hour and $500 round trip, direct flight from New York City and about the same from Los Angeles.   

Our new home is located in a “gated community” comprising about 1000 residences including a number of well-designed condominiums and ocean mansions.

This “resort” golf and country club community was planned and constructed about 70 years ago as a weekend retreat for wealthy local families.  

This tropical country is never impacted by hurricanes, earthquakes or other natural disasters.  

We could have chosen, for the same price, a beautiful home in a cooler, pristine mountain resort community only 25 minutes from our current beach home. The soaring dramatic peaks are clearly visible from our property.

On the weekends and during high season, "our little beach" buzzes with gaggles of teenagers, 25-50 surfers, lazing sunbathers and frolicking children with picnicking families.

In the spring of 2006 (NA time), world famous surfer Tim Curran (winner of several world surfing titles) was doing his thing off our little beach at Punta Prieta.

In one month I usually meet more potential "good friends" than I did in New Jersey in three years.  Our new friends are mostly Americans and Canadians but also many locals.

Several of our friends hail from Ottawa which was our previous home in Canada. Each month there is an "expat night" and as many as 140 people will turn up at a local restaurant a mere 2 miles from our house. Making friends could not be easier. These are "expats" and NOT tourists passing through.

At night, we hear the occasional gecko as well as "stereophonic waves”. Our house happens to be located on a small spit of land that is almost a “peninsula” making the surfing excellent. A Zen Buddhist might ask ... "What is the sound of two shores lapping?" ....   

In the morning, we are awakened by the inevitable rooster calls followed by chattering parrots. At first, the rooster calls were a bit much but one adjusts quite quickly.

Our House is in the very, very Distant Background

 More Property Details

Because real estate is a major decision area for a move offshore, most people are happy to get as much information as is available on this subject.

My book "Panama ... Your Best Value for Offshore Living" gives you all of the details and then some.

As I mentioned earlier, there were three detached buildings on our property when we purchased it. In addition to our main 1300 square foot, 4 bedroom home, we had a bright 480 square foot, air conditioned, “family room” with a two piece vanity. This had been used as a "party room" by the former owners.

As of mid 2007, we have converted the studio into a "one bedroom guest house" for our friends and possibly for extra income in high season and for holidays.   

The third building was only 300 square feet in size and designed as a self-contained “maid’s quarters”. We have now doubled this "casita" and created a second "guest house" with 2 bedrooms.

We have also received permission to construct an additional guest house in the back orchard which could actually serve as two units with a minor adjustment each with private terraces and separate yards. This orchard building is about 50% built as of May 2007.

On taking possession, we built a 15’ x 22’ swimming pool fully lined with ceramic tile for easy cleaning. It includes three curved, walk-down steps, a submerged “massage bed” serviced by several Jacuzzi jets, an underwater light, and a “fountain jet” for "white noise" if required.

I will tell you the total cost to build this pool later ....  

After One Week of Hard Work

 Property Visuals and Curb Appeal

The main property is completely enclosed by a 6 foot high, whitewashed, cement block, privacy wall. The arched gate at the rear leads to our 5000 square foot "orchard".

One enters the property through our new ornate wrought iron gate which is the preferred style for this community.

Our half-acre of land is flat without rocks. On purchase, it contained landscaped lawns, mature flowering shrubs, many tree orchids, four or five coconut palm trees, and several fruiting trees.

There was a huge “papaya mango” tree which yielded hundreds if not thousands of delicious mangoes for our voracious “smoothie” blender. Unfortunately, it had to be sacrificed because the roots are so destructive.

60 Minutes to a “First Class” City

Our ocean resort community is less than a 60 minute drive (less than 50 miles), on a well maintained four lane highway, to a modern, dynamic city. If something is not for sale here, it probably does not exist anywhere in the world.  

The city skyline comprises about 150 modern commercial and residential skyscrapers of 40-60 stories with another 40-50 similar projects rising from the ground. A building boom is in clear evidence. Some people equate this building boom to the one in Dubai.

Most importantly, the city is populated by one million extremely friendly people. This was one of our most important factors for an offshore decision!

Many city shops offer “world class” goods. You can buy the latest "designer labels" from Paris or Milan in exclusive boutiques. You can visit the new 1,000,000 square foot shopping center comprising 200+ stores, restaurants and cinemas.

“Global goods” such as automobiles and electronic items have the same prices as in North America. Perhaps the latest electronic goods are 5% more expensive than in the USA. Otherwise most prices are substantially lower than in North America or Europe.

In this “first world” city, there are four excellent hospitals with English speaking and North American or European trained doctors. A brand new, state-of-the-art “John’s Hopkins” hospital opened in 2006.

Medical tourism has become a dynamic industry here.

For example:

• A triple heart bypass that costs about $140,000 in an American city may cost $15,000 here in a private hospital room. This price is about 50% of your “standard co-pay” charge in the USA.

• A stent procedure in the USA that costs $50,000 will run about $10,000 here

• A dental “crown” costing $700-1500 in the USA and $350-600 with a standard 50% co-pay, costs $125-150 here.

As one might expect, excellent health insurance is available for expats at a price much lower than in the USA, Canada or Europe where you pay through higher marginal tax rates.

Many expats simply choose to “self-insure” themselves and put their insurance savings in a high yielding, tax free offshore mutual fund for a rainy day.

• The cost to visit an English speaking doctor at our local clinic, 2 miles from our home, costs USD$5 cash.  The "clinic" is open 7 days a week and the doctor will spend up to 15-20 minutes with you to discuss more than one medical problem per visit. Try that in New Jersey! 

• If you need a blood test the cost is between $5 and $10 depending on what you need checked. In May 2007, I was informed that the most expensive blood test available was $27. It checks everything possible. In NJ, a comprehensive set of blood tests runs about $400.

• All of the latest proprietary and generic drugs are available at two local pharmacies (one is open 24x7). They cost about 25-40% less than in the USA. 

• Many standard pharmaceutical products are available without a doctor's prescription such as antibiotics     

• The tap water is potable in most towns and cities, including our little resort community.  

The City Skyline

"Our Millionaire Neighbors"

On the "ocean side" of our street, there are perhaps 75-100 elegant mansions that would be priced anywhere from $7,000,000 to $30,000,000 in the Santa Barbara or San Diego coastal areas of California and perhaps 40-50% less along the eastern seaboard.

There are 5 or 6 high quality, high-rise condominiums in this community. The unit sizes range from 1000 to 7000 square feet. Virtually all have gorgeous ocean views and easy access to the beach plus a large social area with swimming pool.

A brand new "ultra-modern", 64 unit luxury condominium project "broke ground" in the summer of 2006 with about 65% of the units “pre-sold” mostly to expats.

This project is called “El Alcazar” and will enhance the "profile" of our entire community. The average sized unit is 3000 square feet with incredible views of the Pacific Ocean, the golf course, and the surrounding mountains.

There are several two story penthouses available with 7000 square feet. Lower floor units are priced at about $300,000. The project is located in the center of the golf club. On completion this project will be easily visible from our house.

Our 4 Star “Golf and Country Club”

An Affordable, Sustainable Lifestyle?

Absolutely yes!

We paid $136,000 cash for our property, fully furnished, including all closing costs. We also paid the “seller asking price” which is totally out of character for me.

The annual taxes on our property were $123 or $10.25 per month for 2005.  In comparison, our rather modest, 4 bedroom house in New Jersey, had a 2007 municipal tax bill of about $6800 per annum and is rising more rapidly than inflation. 

For the same amount of money in Panama City we could have bought a 6-7 year old, three bedroom, 3.5 bath room, 1800 square foot well-designed condo with separate maid’s quarters, on the 15^th floor of a high rise apartment building, overlooking the Pacific Ocean in the best part of town with zero municipal taxes for 13 years.

A 20 year tax exemption has been available on new property but this window is slowly closing. In this particular building there were two units per floor so we would have had a 180 degree view. The unit came with two garage parking spots plus a large social area with pool, exercise room, party room, security guards etc.  The monthly condo fee was $215.

But, we preferred the beach .....

The Cost of “Home Improvements”!

In New Jersey, I am always cautious when engaging a “trades person” for house repair work.

In 2006 I hired an electrician in NJ for a minor electrical problem in the panel. He and his “apprentice helper” took 40 minutes to fix the problem and charged $240. No materials required.

In 2003, a plumber completed several small repairs on my NJ house which took 6 hours of work. He worked alone and charged me $1850. In this case, he used $200 of his own materials. Amazing!

A good painter or carpenter in NJ runs about $40+ per hour. This same service runs $400 per day in Manhattan.

In contrast, in Panama, during the summer of 2005, I engaged and managed 10 skilled construction workers for two months in Coronado. They worked a total of 3000 hours and cost me about $7,000 for the labor component only. They used up about $8000 of materials. In 2007, the labor costs remain fairly similar but material costs have jumped by 15-25%.

This same amount of work would have cost me at least $125,000 in New Jersey (and much more in California) because there were many plumbing, electrical and other skilled tasks involved.

My non-English speaking, construction "team" enhanced our property enormously. They installed, flawlessly I might add, and to the highest standards, our 15’ x 22’ ceramic-lined swimming pool.

The total cost of the pool was just less than $5,000 including everything (all materials, pumps, filters, excavation, labor etc.).

A similar New Jersey pool would cost $35-40,000 and in sunny California it would run in excess of $60,000.

Our Newly Completed Pool for $5000

 Development Potential

In 2006/07, we significantly enhanced our residence and constructed or expanded three  (or possibly 4) guest houses on our rather long half-acre property surrounding the new pool.

The total budget to complete everything was estimated at about $60,000 and the time to complete about 4-5 months. We will probably be slightly over budget on both counts but not by very much. Construction is 90% finished as on May 1 2007 (the famous last 10%).  

“Fair Market Value” on Completion

Passive Income Flow

You might have noticed that with an “additional investment” of about $50,000 (the property already having been purchased and about $10,000 went into improving out 2400 sf house), we could create a long term “passive income flow”, from four rental units of about $3000 per month.    

The “average” American Social Security payment today is only $1000 after a lifetime of work. At death, only about 50-60% or this payment is available to the surviving spouse. On the demise of the surviving spouse, there is very little left “for the kids”.

In contrast, our rental income and its underlying assets continue forever for whomever .... 

Our Original House with Pool at Rear

Our House with a new Front Addition (2007)

 How could $50,000 possibly have a value of $2,400,000?

There may be an even more interesting way of analyzing the value of our proposed $50,000 investment. This has to do with "opportunity cost" which is reviewed carefully in my book. This may also be of particular interest to any Eisenberg fans out there who might be a bit worried about achieving their “Number” in this lifetime ... or the next.

If you were to deposit $1,000,000 into a long term “annuity” or Certificate of Deposit with a friendly banker in North America, you would earn approximately $50,000 per annum at the existing 5% rates. Fantastic you might say!

However, after paying average taxes of say 25% on these earnings, you would have only about $37,500 left. Still not so bad ....

However, after making "provision for inflation", at say 2.5% or $25,000 (on the original million), you would have only about  $1000 per month left over of "net spendable" cash.

If you choose to spend more than this amount, you will start to erode your capital base and you may live much longer than you expect.

Your million bucks has to last and last. Of course you could take greater risk and get a higher return after taxes and inflation but then you might get a repeat of year 2000 just as you turn 80 ... 20 years before your untimely death at age 100!

In contrast, our $50,000 property investment served to create four new guest house rental income streams and these rents can be quickly adjusted for inflation.

  Two of our Guest Houses... virtually finished.

Our new $2700 per month of cash flow (less the 10% VACANCY RATE) is protected against inflation. It would be about $2400 net net net after another $300 of monthly estimated costs. 

Our new "income stream”, based on our $50,000 investment plus some "sweat equity", has produced a “net spendable income” equal to that of a $2,400,000 Certificate of Deposit.... not bad!

Our New Budget and Lifestyle

Our expected annual living expenses, in Panama in our new greatly enhanced home by the pool, will be less than $20,000 per annum without any debts.

This budget is basically one third of our New Jersey budget in late 2006 where our standard of living was considerably lower. In NJ, we could NOT eat out whenever we wished, we did not have a "beach house" with an in-ground pool, we could not have afforded a membership in a private country club (although we still have not joined here).

We did much less entertaining with far fewer friends. We also lives on a rather standard 3500 square foot lot on a busy street corner rather than on a quiet half acre only 200 paces from a sandy Pacific beach.

At our new offshore home we can (and will shortly) engage a gardener for $10 a week to clean our pool and manicure the lawn and plants.  A maid for one day also costs $10.

We live within 2 miles of a clean, modern food super market open 24x7 where huge juicy pineapples cost less than $1.00.  Top quality rib-eye steak is priced at $2.25 per pound; delicious sea bass costs $1.25 per pound. Three large avocadoes will set you back $1.00. Bananas are 5 cents each.

I hesitate to tell you about the low cost of the excellent imported wines and hard alcohol ... it is truly a hazard ...  but there is an excellent Chilean Merlot table wine for $2 a liter

One should not be surprised that health insurance costs are about 33% of American or Canadian rates (considering the higher marginal tax rates that apply in Canada).

In summary, one dollar spent in our new tropical paradise buys at least 3-4 times as much "stuff" as it would in the USA considering an average basket of goods and services.

Without any real financial planning, we created a “triple financial cushion” on our required "number". Not bad ..... 

Incidentally, the official currency used in Panama is the Balboa which is essentially the American dollar. This makes keeping track of costs a lot easier.

 Our New "Millionaire Lifestyle"

In New Jersey or Florida, this “offshore lifestyle” would clearly be considered that of a “millionaire”. In California, this is a slam dunk “multi-millionaire lifestyle”.

Just buying a lot with a fixer upper house within one or two blocks of the ocean along the “Jersey Shores”, in Southern Florida or anywhere along the Pacific Coastal Highway in California might set you back $2,000,000 - $5,000,000 or much more. An ocean frontage home in Santa Barbara will start in $10,000,000 range. Just the municipal taxes would be several times our annual cost of living.

Such properties in the US are often adjacent to busy highways with awkward beach access to water that is too cold for swimming 5-8 months a year (and sometimes all year) unless you are under 20 years of age and wear a wet suit. 

In mid-2006, a modest 650 square foot condo in downtown Carlsbad CA, one block to the beach at Lincoln and Pine had an asking price of $800 per square foot (about $550,000). This unit did NOT have ocean views, there was NO swimming pool (but a hot tub), and, in my opinion, it was modestly designed with "floating" floors that  easily transmitted sound to the separate unit below.

I took note that the Pacific Ocean temperature, as of May 1, was 60 degrees and rising and as of August 15 it was 70 degrees and falling. In April and May I had to wear a long sleeve shirt, sweater and light jacket in the evenings. Inland, it is much warmer ... but I like the ocean.

The Inevitable Tax “Bite”

One thing I forgot to mention ... the tax regime!

Income that you earn outside of Panama is potentially “tax free” although it is “reportable” to the tax authorities.

§    If you happen to be a Canadian or a European this means "tax free” for unlimited offshore earnings from any source although there are restrictions for "active" income. 

§   If you are an American, and you have lived outside the USA for 330 days in any “calendar year” then you and your spouse may quality for an IRS annual exemption of more than $80,000 each on income earned through regular salaries. This exemption does not apply to "passive" or investment incomes.

Our Playa Serena

 Residency Rules

Our low cost tropical developing country has some of the most generous residency conditions in the world for pensioners although there are many other countries with easy residency conditions as well. 

To obtain “Pensionado Status” you only have to be 18 years of age or older with proof of an “after tax” pension income of USD$500 per month plus $100 per dependent.

Different rules apply for various investor visas and other visa types but they are all very generous. With a $50,000 investment you can set yourself up in the "tourist business" and have a tax exemption for up to 20 years. 

A clean criminal and health record are needed.

Your legal and application costs for residency will be in the $1500 range for a couple.

You also have the option of purchasing a 5 year Certificate of Deposit at the Central Bank sufficient to generate $750 per month and obtain residency for your family in this manner.

“Pensionado” Benefits

• You can reside permanently in the country.

• On moving, you will receive an Import Tax exemption for personal household goods up to $10,000.

• You have an Import Tax exemption for a new car, for personal use, every two years

• You can purchase tickets for the cinema, sport events and entertainment at a 50% discount

• You can enjoy public transportation for 30% less on buses, trains and boats and less 25% for internal travel on airlines.

• You can stay at hotels for 50% less from Monday through Thursday and less 30% from Friday to Sunday

• Your restaurant meals will be discounted by 25%

• Fast food restaurant meals are discounted by 15-25%

• Visits and services received at hospitals and clinics are discounted 15%

• Medical prescriptions and most medical services and special consultations are discounted from 10% to 20%.

• The mortgage rate on your personal residence is reduced by 1 percentage point.

• Your monthly electric bill, up to 600 kwh, enjoys a 25% discount.

• Your water bill is reduced by 25%.  

Although very attractive, these discounts should NOT become the main reason you choose to move but they certainly make life more enjoyable and serve to significantly stretch the purchasing power of your "fixed income".

Other Visa Options

$200,000 invested in a home, registered in your own name, can also provide you with a permanent resident visa as a “person of means”.

My book explains many other visa options for residency.

 Is this some Mythical Country?

Absolutely not!

Many tropical developing countries have overall lower costs of living and real estate than Panama. In fact, you could probably live very well on 5-15% of your current North American retirement budget in Ecuador, Uruguay, Belize, Argentina, Thailand, or even Nicaragua where you could purchase or build a comfortable home for as little as $20,000 to $50,000. Every country is a compromise but you can take some comfort that Escape Artist, AARP, Fortune Magazine, and many prestigious publications have written very favorably about Panama.

But Panama, on balance, has a significant edge ... in my opinion.  

Panama is was chosen as the “best country in the world” to live by International Living … in fact six times in a row. The Editor of International Living has in fact decided that she and her husband will move to Panama by early 2007. 

If “offshore living” is potentially an option for your retirement contingency planning, then this book will give you the "big picture".

 What Could I Learn from this Book?

•  “Retirement Planning for Offshore Living” provides you with a solid “framework” and “reference” to compare one tropical country with another as well as developed countries with developing countries.

• It will show you how to dramatically enhance your present lifestyle on one third of your current budget if that is of interest.

• It allows you to compare the many retirement advantages and disadvantages of living in developed countries such as the USA, Canada, the UK, France, Singapore etc with specific low cost tropical developing countries such as Thailand and Panama. Mexico is also compared in-depth but is not considered a low cost developing country.

• It provides you with a “road map” or “plan of action” to analyze your retirement options and alternatives to an expensive and high risk retirement in a developed country (e.g. the USA, Canada or Europe). 

• You will learn important details about purchasing real estate, day-to-day living, investing, working, and retirement opportunities.

• There is also a significant section outlining a wide range of small businesses that you could easily start in such a country with much less capital and fewer risks than in North America or Europe.

 Why should I Purchase this Book?

• My book will help you to make a sound judgment concerning the advantages of offshore living and retirement.

• It reviews the full range of retirement issues using a long term perspective with a focus on important financial and medical risks that could cause a “lifestyle relapse”.

• It directly addresses the long-term risk of “assisted living” in a developed country and provides a sensible alternative.

• It will save you time and money by avoiding common “mistakes” that the author (and others) has already made.

• It provides you with a valuable “standard of measure” and a “checklist” so that you can quickly determine and compare the most optimal retirement locations for your particular needs and interests.

• It will permit you to better understand the risks and advantages of retiring or downsizing in a developed country. 

• It will introduce you to some of the best small business opportunities for a developing country and the advantages of a starting a second career.

Why Purchase this Book Today?

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Email me at richard@panamamundo.com if you have any questions.

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