If you could live anywhere you wanted to, where would you choose to live? I suspect that your answer would be that you would choose to live where you live now. So, let me rephrase the question: If you HAD to live somewhere else, where would you choose to live?
It is a question that more baby boomers are beginning to ask themselves as their generation moves into the retirement phase and have more discretion in where to live. Add to that the fact that there are more jobs than ever that do not rely on place. It used to be that companies that manufactured things needed to be close to their customers, and that dictated where the company was located. Companies can take now take advantage of technology and cheap foreign labor to the extent that economics and even management’s personal preferences can play a significant role in the location of the headquarters or branch offices.
It appears that a new factor may take on more prominence in where individuals and companies choose to relocate. And that factor is cost of living, especially the cost of taxes. When one pauses to take notice of what is paid in taxes of all kinds, and what one receives in turn, it can make even the proudest American say, “Hey wait a minute. It’s getting expensive to live here.” After all, when they consider that half the people in the U.S. do not pay income taxes and that the government must get income from somewhere to meet the growing demand for services and for payment of debt, it can be tempting to think of leaving. Enter real estate developments in foreign countries, especially those to the south of the United States.
A recent Business Week article titled “Retirement: Why Panama is the New Florida” discusses why Panama is a growing haven for retirees who want to get away from the U.S. recession and the higher costs that they believe will come to live in America. According the Migration Policy Institute, there are now approximately 25,000 American expatriates living in Panama. Of course, it does not hurt that Panama offers quality healthcare, low costs and proximity to the states. The plane ride to Miami is two and a half hours.
The average American does not think of quality healthcare when thinking of Central America. After all, how many churches in the United States send medical missions to Honduras and Guatemala? Well, those missions go to the rural areas, not to new medical facilities located in urban areas. The Business Week article reveals that at Panama City’s new Hospital Punta Pacifica, managed by Johns Hopkins Medicine International, a complete blood workup is $36 and a checkup with a physician is $50. Not only are medical costs low, but real estate prices are a bargain. Seniors get steep discounts on just about everything, and expatriates pay no income tax on foreign income. Oh, and they pay no property taxes for the first 20 years.
Americans are discovering such places from an increasing variety of sources. For example, a popular show on the HGTV cable channel is “House Hunters International,” where real estate agents take buyers on tours of three properties in a foreign country. Buyers discuss the advantages and disadvantages of each property and then make a decision. The host then follows up a few months later. Viewers to these types of shows often see Americans buying homes out of the U.S. A recent episode featured a couple from Dallas who moved their business and home to Honduras. They discussed the pros and cons of what they were giving up and what they were getting by moving to another country. There are even places in Mexico where Americans are buying real estate. Merida, which is the capitol of Yucatana, is an arts and cultural center has been featured on Martha Stewart’s show and is attracting more attention from Americans who want to be close, but in another country. The plane ride from Merida to Houston on Continental Air Lines is approximately two hours.
“With Americans aging, the economy in shambles, and, possibly, Medicare benefits on the cutting block, it is reasonable to assume that more Americans will retire abroad, particularly to warm, sunny locations such as Panama, where they can get more value for their dollar,” says the Migration Policy Institute’s president Demetrios Papademetriou.
It is too early to label this phenomenon a trend. But as boomers with assets begin to realize that their cost of living is growing they will probably start to look at the cost of government in the United States and wonder about their futures. Many will probably consider moving out of the country.
But retirement is not just about cost of living, economics and even medical care. There is that thing called sense of place. And there is also that secret weapon known as grandchildren. These things will keep retirement boomers in the U.S.
Nevertheless, any country that makes it overly expensive for those who can afford to move must does so at its own peril.
Phil Hardwick is coordinator of capacity development at the John C. Stennis Institute of Government. Contact him at email@example.com.