17 Things You Should Know About Panama

One decision awayEach day you make a myriad of decisions, some little and some grand, that will determine what your life will be like.  You decide to let everything remain as it is, or you decide to make some changes to recreate your life and your future.  If you are happy with your life, where you are and what surrounds you, why change?  If you’re not happy, or you suspect that there is more to life, why not make a change?

If you are thinking about an ex-pat lifestyle, maybe thinking about moving to Panama, there are some things that you should know.  Here are 17 Things You Should Know About Panama.

Ten Reasons To Retire In Panama

I’ve had the pleasure to lunch with Bob Adams several times in Panama City along with the Panama Relocation Tour. Bob loves his life in the hustle and bustle of Panama City. He writes a great blog called Retirement Wave. Adams says, Call it the “Baby Boom” or a “demographic explosion”, every day a wave of tens of millions of Americans and Europeans move one day closer to retirement. Retirement should be a stress-free period in our lives, but it has become stress-ridden. We worry that we won’t have enough money to take care of ourselves. We worry that we will be a burden on others in our society if there is not enough money to support our government’s social programs for retirees. We worry that if the social programs fail, we will be a burden to our children. We worry about being old in a world of terrorism, unable to protect ourselves. These are all fears that weigh heavily on us as we plan for retirement. Worse yet, they are fears we know we will continue to face once we are actually retired. This is much too negative for what should be a positive period in our lives. It could be positive if only there was a practical way to protect ourselves, avoid being a burden to others, and perhaps even make a small contribution to reducing global tensions. There is.

Bob, I, and many others have found a way to do that by retiring in Panama. Here’s Bob Adams “10 Reasons to Retire in Panama” . .

Why retire in Panama? Here’s the short version based on my observations and experience following forty-five years of living and working all over the world.

panama flag1) It’s a democracy with freedom.

Freedom of the press, assembly, speech, and religion are all found here. Panamanians are not shy about sharing their feelings and their concerns. Elections are free, honest, and competitive.

2) There’s no military.

Following the dramatic end of General Noriega’s regime in 1989, Panamanians decided they would never again fear that a military general would become a dictator. They closed down the military. The national police force is just that, a police force, and the territorial integrity of Panama is guaranteed by the United States. They don’t need a military and they have the good sense to know it.

3) They have the Panama Canal…and more.

The Panama Canal does far more than provide 10% of Panama’s GDP (Gross Domestic Product – the total economy). Unlike many small nations that depend on tourism or some natural resource whose price varies depending on the market, the Panama Canal provides Panama with a large, steady, dependable income and will continue to for years to come. It also provides thousands of well-paid jobs for Panamanians. A multi-year, $5.2 billion expansion of the Panama Canal currently underway will add thousands more jobs. These are jobs that pay a great deal more than picking coffee beans or waiting on tourists. And the money from Panama Canal fees reaches out to touch people and businesses everywhere in the country. But there is more than the Canal to Panama. Unlike many other Latin American nations, agriculture plays an important, but relatively small role in the economy. International banking, maritime services, manufacturing, and shipping combine to provide more jobs and tax revenue than the Panama Canal. Panama is also home to the second-largest free trade zone in the world (Hong Kong is the largest) which has had a dramatic impact on the economy, employing twice as many people as the Canal. Panama’s economy is far more modern and service-oriented than you might expect. This means stability not only for Panamanians, but for those of us who retire there.

4) Panama has a thriving middle class.

With the Panama Canal and a number of other established sources of income as mentioned above, Panama’s middle class is growing. As Americans and Europeans know from their own experience, a healthy middle class is the foundation for a stable economy and a secure democracy. You don’t have to search for the middle class in Panama, you can find them everywhere.

5)  North Americans and Europeans are welcome.

I am struck by the fact that North Americans and Europeans are not looked at with awe nor are they disliked. Another contribution of the Panama Canal has been the introduction of hundreds of thousands of people from all over the world to Panama over the years, including tens of thousands of  US Americans assigned to support the Canal before its turn-over to Panama in 1999. Panamanians are perfectly comfortable with people from other nations. They’ve lived with them for decades and many of their “visitors” remained to become residents. English is widely-understood and also spoken by many of those who deal regularly with expatriates, although many Panamanians are hesitant to speak it at first, for fear of embarrassment, as is so often the case in reverse! In that regard, Spanish language instruction is readily and inexpensively available.

6) The currency is the US dollar.

There are two benefits to this. For Americans and others with dollars, there is no need for currency exchange or to worry about exchange rates. The Panamanian Constitution forbids the government from printing paper currency. Thus a second benefit is that, unlike most nations, the Panamanian government cannot just turn on the printing presses when it wants more money. Panamanians have to earn their currency from the world market through hard work and intelligence. There is none of the wild inflation that has plagued so many Latin American nations.

7) The climate and surroundings are beautiful.

Panama is basically a mountain range bordered by beautiful Panama beaches. However, these are not cold, barren mountains. They are “soft”, rounded volcanic Panamanian mountains and the volcanic soil provides an excellent base for lush vegetation. If you prefer a tropical climate, you won’t be disappointed on either the Atlantic or Pacific coasts. If, like me, you prefer a more temperate climate with easy access to the Panama beaches (it’s almost impossible to be more than an hour’s drive from a Panama beach; 30 minutes is more common), move up the mountainside and you’ll find it. The flowers, trees, birds and other animal life are varied and many are strikingly beautiful. It’s what you would expect in that part of the world and Panamanians are doing a decent job of protecting their environment, far more so than many nearby nations. Eco-tourism is a growing industry in Panama and for good reason.

8) The cost of living in Panama can be much less than in the US or Europe.

How much you will save by living in Panama will be determined both by the amount you spend in your home nation and the lifestyle you choose in Panama. There’s such a great variety among expatriates that it’s impossible to tell you how much you’ll save, but if you have any desire to spend less, you will find it far easier in Panama than in North America or Europe. Folks from low-cost rural areas express astonishment at how much cheaper it is to live comfortably in Panama. Those from higher-cost urban areas will save less, but they seem to have one thing in common: they live comfortably, cut their expenses, and save money. It’s always been a reason to relocate to Panama and it remains a big one today, but the final result for you will depend on your lifestyle. Panama has room for a very wide range of tastes and lifestyles.

9) The people of Panama are just plain friendly and a pleasure to know.

The factors above and others unmentioned in this “short” description leave Panamanians among the most pleasant, relaxed people I’ve ever met. They are more cosmopolitan and sophisticated than many who live in wealthier nations as a result of their long-term exposure to a wide variety of international visitors and Canal users. There are poor people in Panama, but there is none of the grinding, desperate poverty that is so common in much of the world. I have worked in poorer nations all over the globe for more than four decades. There are poor people here, but nothing to compare to the grinding poverty found elsewhere. International financial institutions rank Panama in the “upper-middle income” category and that sums it up well.

10) If you want to retire, Panama wants you.

All of the above makes retiring in Panama an excellent choice for retirement, but here are some very direct incentives. As a pensionado [retiree] in Panama, you receive:

  • 50% discount at most recreational, movie, and sporting events
  • 30% discount off public transportation (including buses and ships)
  • 25% discount off Copa airline flights
  • 50% discount off hotel stays on weekdays (30% on weekends)
  • 25% discount at selected restaurants
  • 15% discount at fast food restaurants
  • 10% discount off prescription drugs
  • 20% discount on doctor’s visits
  • 15% discount on dental work
  • 25% discount on your electric bill (if less than $50)
  • 25% discount on your telephone and water bills.
  • In addition, you can bring in all your household goods free of taxes and import a new car every two years for private use.

All that is required to qualify as a pensionado is that you must be in good health, AIDS-free, have an up-to-date passport from your country of citizenship and a verifiable monthly pension income of at least $1000 per month for an individual, $1250 for a couple, plus $250 for each additional dependent, if any. Foreigners who become pensionados can buy and own Panama property and enjoy exactly the same rights and protections as Panamanians, not always the case in many nations and an important point people often forget to consider. As for income taxes, you will be pleased to know that in Panama you pay no taxes on income earned outside of Panama.

Panama is not paradise, no nation is. Panama is still a relatively young nation and has its growing pains, but it’s made a great deal of progress already and it’s headed in the right direction. For the rest of us who are not Panamanians, it is a nation where we can live comfortably for much less money and far less stress than we have come to expect in our own societies. Best of all, we are “good” immigrants. We save money living in Panama, but we also bring with us the money that creates jobs and opens possibilities for Panamanians they would not have otherwise. They know that and so we are genuinely welcome.

Many would say “beautiful”, but if I had to choose one word to describe Panama, it would be “comfortable”. In this crazy world full of fear of terrorism and fear of not having enough money to pay the bills, that’s a description of a good place to retire.

VideoHere’s my take on the going on 16 years that we have lived an expat retirement in Panama.  Click and enjoy!

Now, the warnings …

Seven Reasons NOT To Move To Panama 

Reason #1 Not to Move to Panama: To escape the long arm of the law.  Panama is not the place to run to if you are looking to escape illegal activity in your home  country.  You will get caught!  You will spend some time in a Panamanian jail – and anything you have at home is better! – and you will be extradited back to your home country to face the music.   So con artists, murderers, child molesters, thieves and crooks take note!  The new hand-held “Pele Police” that Panamanian police have are linked to Interpol and US and other data bases.  If you have a bench warrant in the US, and  you’re stopped for a traffic violation in Panama, you may be headed home, after a week to several months in a Panamanian jail.

Reason #2 Not to Move to Panama: To run your Ponzi scheme off shore.  We had some folks who lived near us in Valle Escondido who promised amazing returns on investment; far more than anything you could make elsewhere.  Their scheme unraveled when they decided to buy some “blood diamonds” and send what they claimed was, I don’t know, say $30,000 worth of diamonds, shipped to their young child (if you can believe that level of scum) and when customs opened the package and discovered something like $150,000 worth of illegal diamonds – oops!  The scheme started to  unravel and they moved on.

Reason #3 Not to Move to Panama: To launder money or escape paying US taxes.  Panama never was a real “tax haven” for US citizens because the US, in its infinite greed, has, unlike many civilized countries, decided that Uncle Sam wants your money wherever you happen to live in the world.  So even if  you lived in Panama, as a US citizen you need to go through all the hassle of IRS paperwork and declare income and file returns.    And just to make sure you do, the IRS has opened an office in Panama City.  Not, mind you to assist expats who want to comply, but to search out those who aren’t paying what the IRS says you owe.  And if you think the IRS, and the tons of accountants and paperwork and tax provider software it spawns, is a major part of the “problem” that’s causing the collapse of the US, you may be right.

Of course if your permanent dwelling is outside the US, and you aren’t in the US more than 30 days a year, you can take advantage of a significant deduction of over $90K per person for income earned outside the US.  That’s earned income, not passive, investment or pension income.  And Panama doesn’t tax you for income earned outside Panama.  [You tax accountant, those people who make their living off the IRS, can give you details.]

Reason #4 Not to Move to Panama: chill, drink Balboa beer and lay in the hammock.  If you’re retiring and want an easy, no-challenge life, go to an assisted living complex and sit in a rocking chair, drink beer and watch TV and talk with the other folks.  Panama is for folks who aren’t ready to “give up” but are eager for new experiences, new adventures, new challenges, learning tons of new stuff, new language, new ways of doing things, new culture!  If you want an adventure and to stretch your life and mind, this is the place!

Reason #5 Not to Move to Panama: it’s cheap.  Well in many ways it is, or rather may be, depending on where  you are coming from.  We moved down to Panama from the Ventura-Santa Barbara “Gold Coast” of California and it is much cheaper here.  Are there places in the US where you can get more house for your money and the cost of living may be the same, or even a little cheaper than Panama?  Of course!  Try Phoenix, Bakersfield, Las Vegas, Western Pennsylvania and there are a lot more.  Nothing against those places, but they are not for me.  For many people you can live very well, make that VERY well in Panama for less than places in the US with attractive climate, etc.  Sure, Texas may be cheaper – if you like Texas.

Reason #6 Not to Move to Panama: it’s a lot like the US.  No way Jose!  If you like the US, stay there!  If you like where you are living don’t move.  Panama is different and that’s why it is attractive to many people who like different!  It is a different country with a different lifestyle,  different culture, different way of governance, different systems, yada yada.  Yes, sometimes the differences will drive you nuts!   But it can also be stimulating, challenging and fun.

Reason #7 Not to Move to Panama: to make a killing.  A lot of folks came down here from the US to make a fast buck.  It doesn’t work that way folks – anywhere!  The joke here is, “How do you get a million dollars in Panama?”   The answer, “Come to Panama with two million dollars.”  Yes, like anywhere else, there is opportunity, lots of it.  But it takes work and time to create anything.  There is no fast way to success in business or quick way to make a lot of money.  If  it were, everyone would do it.   If you come to Panama for the long haul, make a commitment, follow the rules, work hard and stick with the program, yes, you can create a good business and make some money, but forget it if you’re coming here to make a quick buck or live off the land.

I keep saying, “Panama is not for everyone” but for us it has been a wonderful adventure.   Yes, there are folks, and some of them I’m happy to say are contributors here, who tried it and it wasn’t for them.  So, now they know.  Maybe some of them didn’t really do their homework or analyze all the challenges they would face in a new culture.  Read their comments and read the stuff from the folks who promote Panama as the Promised Land.  Study, analyze not just Panama but yourself and then make a decision.

For us the real reason for moving to Panama is that our lifestyle is better, more fun, and more adventurous for less than in the US.