Sylvain’s Panama Adventure

We had originally planned to go to Austria and the Czech Republic this September but we decided to change our plans. We are heading to Panama instead. Why Panama you may ask? Well, it’s a long story, but essentially we’re going there to look at some real-estate investments. Say what?!?

We we’re first put on to Panama by our friend Susan B. who bought a lot on an island in Bocas del Toro, Panama, two years ago. She’s been studying international real-estate investing for some time and settled on Panama as both a sound investment and a great retirement destination. Subsequently, for the last 6 months or so, we have been doing our homework and determined that yes, Panama is indeed a sound investment, and we might very well want to retire there as well.

But why Panama? Well, Panama is actually the most stable of the Central American countries. The Panama Canal not only provides a steady stream of income, but it also means the area is strongly protected by the Americans and the international community. Except for a few years under the dictatorship of Manuel Noriega, the country has been a stable democracy for 100 years. The Americans have also left behind a lot of modern infrastructure including roads, buildings, and modern hospitals, so Panama has better infrastructure then any other Central American country. Most importantly, they have modern, well-equipped hospitals with North-American trained staff and a cost that is about 25% of what it is in the USA.

Panama has also become the world’s second biggest international banking center after Switzerland and is home to over 160 banks. They have modern banking with the same standards as in North America. They are also at the crossroads of 5 major fibre-optic pipes linking the major areas of the world (they go through the canal), giving Panama excellent access to the Internet. The Panama Canal will soon be expanded to allow the passage of new super container ships, which should ensure a steady flow of income for decades to come.

Panama is also a beautiful country with over one thousand islands and 500 rivers, coastlines on both the Pacific Ocean and the Caribbean Sea, and rugged mountains covered in tropical forests in between. Over 1000 species of birds from North and South America as well as many unique species can be found here. Panama is also known as the best place in the world for deep-sea fishing. The climate is amazingly consistent year round with little temperature fluctuations and two seasons: a green season from May to November, and a dry season from December to April. Temperatures range from around 32 degrees on the pacific coast to 20 degrees in the highlands. Panama is also too far south for hurricanes and has not been prone to severe earthquakes.

Panamanians are known to be a very proud people and amongst the most friendly you will find anywhere. They are very open to foreigners and proud that some of us would think of retiring there. The government has also implemented several laws to attract foreign investors and retirees to the country. Tax and residency laws are very favourable to foreign investors. Anyone who draws a pension of at least $500 a month is entitled to a Pensionado visa, which is renewable forever. Or if you want to invest $50K or more in a business, you pay no taxes for 20 years and can get full citizenship after 5 years. Unlike most other developing countries, they also have good real-estate laws that allow for fully titled properties with title insurance, and they allow foreigners to buy property. On top of that, while you are a resident of Panama, any revenue that you earn outside of the country will not be taxed! When you combine these tax benefits with the fact that the cost of living in Panama is 30-40% of what it is in North America, one can retire in Panama for about 25-30% of what it costs to retire up here. Or seen another way, you can retire there and live like a millionaire on what would just get you by in most parts of North America.

So Panama is a stable democracy with a growing economy, modern infrastructure, modern medical care, nice people, a wonderful climate, beautiful landscapes with lots of wildlife, and favourable tax laws. What’s not to like?

Well of course, nothing is perfect. Panama City is one of the fastest growing cities in the world with the equivalent of a Miami skyline going up every year. Countless condo and office sky scrapers lining up the shoreline. This has brought with it traffic problems, noise, pollution, crime, and rapidly rising prices. In other words, Panama City is becoming like most large North American cities. But hey, I have no intention of moving to a tropical paradise just to end up in another concrete jungle. We actually plan to buy property in the mountain highlands of western Panama. However, out there one will find some poverty, lack of infrastructure, and will have to deal with the very laid-back Latino culture. We will also have to learn Spanish, but that doesn’t scare us at all. Plus we are actually looking for a laid-back lifestyle in retirement, so why not?

Next time I will discuss some of the areas of Panama that we will be looking at.

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