Today's comment is by Bob Bauman, our Legal Counsel and expert speaker at this week's Total Wealth Symposium in Panama City, Panama.
Dear A-Letter Reader,
As you read this I will be winging my way south to Panama, where this week I will be speaking at The Sovereign Society's 2007 Total Wealth Symposium.
In recent years, a steady stream of Americans has headed south of the border to live and retire in this new land. And as the baby boomers age, the number of retirees heading south is predicted to grow.
Retirees are heading south for greater liberty, lower healthcare costs than here in the U.S., and the lure of cheaper cost of living in places like Panama.
Migrating Retirees under the Microscope
For quite a while now we have been explaining the advantages of Panama as a retirement haven for Americans. Now comes the Migration Policy Institute (MPI), publisher of a new study on the U.S. retiree population abroad and their experiences. It focused on two countries, Mexico and Panama that have exhibited dramatic growth in their U.S. retiree populations in recent years.
The Institute analyzed Panamanian census and other data to determine the size and demographic characteristics of Americans living there. The Institute also conducted interviews and focus groups with U.S. retirees, exploring the decision-making process to move abroad and the retirees' experiences as expatriates.
The size of the American-born senior population (those aged 55 or older) grew substantially in Panama between 1990 and 2000, and these flows continue to increase rapidly.
According to census figures, the number of all U.S.-born residents in Panama, now estimated at over 5,000, saw a 136% increase during the 1990s. Panamanian real estate agents, developers, attorneys, and insurance brokers point out that this growth has continued since 2000. And some say there is a current "frenzy" in Panama, as evidenced in the construction and real estate boom.
Panama offers a variety of official visas permitting foreigners to become residents, but Panama is best known for its pensionado program. Statistics from Panama show that the number of U.S. citizens obtaining pensionado visas more than tripled between 2003 and 2005. This program offers income tax-free living and a host of real discounts on goods and services, as well as a possible exemption from real estate taxes for up to 20 years.
Panama deliberately has positioned itself as a first-class retirement haven, with the most appealing programs of special benefits for foreign residents and retirees you'll find anywhere in the world today. It also offers a variety of other visas for investors, persons of high net worth, wealthy retirees, small business and agricultural business entrepreneurs. Plus, Panama offers special programs for those who simply want to immigrate and become Panamanian citizens, a process that usually requires five years of residence. (The pensionado program does not lead to citizenship.)
Why Panamanian Tourists Came, Saw and Stayed
By making generous offerings with Panamanian resident status, the government knows that once you see this country for yourself, you might just decide to stay. This has happened to our Symposium attendees in the past and thousands of others before them.
The Migration Policy Institute study notes that while retirees often choose retirement destinations based on the basic characteristics of a place -- proximity to mountains or the oceans, climate or local culture, they also indicated that visa, tax, and property policies were important factors in their decision to move.
Retirees said other policies, such as Panama's use of the U.S. dollar as its currency, impacted their choices. Some American retirees indicated that U.S. domestic policies had pushed them to move abroad, citing post-9/11 the PATRIOT Act and Bush policies that have curtailed civil liberties.
Economic factors weigh heavily on retirees' decisions to move south. Many retirees mentioned the lower cost of living as a key factor. And in Panama that cost is measurably lower. In Panama, where the government has instituted a wide range of discounts on airfare, restaurant meals and other purchases by retirees, focus MPI group respondents said they were aware of and attracted to these offers. For foreigners, Panama can also be a place for lower taxes. Panama has a territorial tax system that taxes only income earned within the country. Offshore income and pensions are tax exempt.
The MPI study only confirms what The Sovereign Society has been explaining for years. The Republic of Panama is indeed a leading retirement destination for Americans and others -- and it's one you too should consider -- and we can help you.
BOB BAUMAN, Legal Counsel
P.S. Check back in tomorrow's A-Letter for an inside look at the Total Wealth Symposium from our "global market gumshoe" on the ground in Panama City, Panama.