| | |  Vallarta Living | September 2008 
Boomers Look Beyond Florida for Retirement Options
 Trista Winnie - NuWire Investor
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| | For an aging generation that is still young at heart, the adventure itself - the chance to live abroad - may be just as important a factor as the lower cost of living, beaches and sunshine. | | |
Americans are choosing to retire abroad in rapidly increasing numbers. The number of Americans over 65 years old is expected to double by 2030, according to a U.S. Census estimate, and many of those Americans will reside outside the U.S.
Retired Americans are eligible to receive Social Security benefits even if they live abroad; 255,000 Americans received their Social Security checks abroad in 2004. In addition, many retirees prefer to use American bank accounts, so their checks are deposited into U.S. banks and withdrawn abroad.
Many baby boomers have traveled more than their parents did, according to the Association of Travel Marketing Executives. In addition, a 2005 Harris Interactive study shows that baby boomers want to travel more than anything else during their retirement.
"As capitalism and, more important, tourism are embraced as a way of life, these [baby boomers] will want to see it all and experience it all in their lifetime," Bob Froelich wrote in his book Where the Money Is. As a result, more and more people are choosing to retire abroad.
Central America and Mexico are among the most popular destinations for retired Americans. The number of U.S. senior citizens living in Panama doubled between 1990 and 2000, Panama’s Census showed. The significantly lower cost of living is one of the biggest draws for retirees. In addition, there are other financial benefits for Americans, such as tax deferrals, tax exemptions and special discounts. Such incentives have been put in place to draw expatriates, tourists and foreign investments to the area.
Shelley and Craig Dewey, baby boomers from Oregon, own one house in Lake Oswego and a second on the Oregon coast. They don’t plan to retire to their second home full time, but they do plan to live there part of the year. "I wouldn’t mind spending summers at my second home on the Oregon coast and winters in a sunny climate," Craig said, "possibly Arizona, New Mexico, Honduras, Mexico or Costa Rica."
Central America and Mexico are close to the U.S., allowing retirees to move abroad without being too far from their friends and family. The areas also feature sunshine and beaches, which retirees - commonly called pensionados - have flocked to for decades.
There are many benefits to retiring abroad, but it is important to do a lot of research before taking such a plunge. "We would definitely plan to first spend some vacation time in any location we would seriously consider," Shelley said.
Mexico is one of the most popular destinations for American retirees, offering tax-free importation of household goods to anyone who has an income of $500 per month and owns a home in Mexico.
Costa Rica, Nicaragua and Panama are especially popular destinations for retirees relocating to Central America. In Costa Rica, many expatriates are offered tax deferrals, and income earned abroad is not taxed at all. Costa Rica has been gradually phasing out some of the other available incentives, though - the incentives were such a success in drawing people to Costa Rica that they are no longer necessary.
In Nicaragua, anyone over 45 years old with a monthly income of $400 can import their earnings and goods tax-free, according to International Living. $10,000 worth of household goods can be imported duty-free. Every five years, retirees can import a car tax-free. After five years, the car can be sold, tax-free. In addition, those willing to invest in the tourism industry - by opening a restaurant, for instance - can qualify for tax breaks of up to 100 percent of related costs for up to 10 years.
In Panama, retirees are offered 20 years of deferred property taxes; tax exemptions of up to $10,000 in imported goods; the right to import a car, tax-free, every two years; and discounts of up to 50 percent on entertainment, travel and medical care and prescriptions.
Another reason why many baby boomers plan to retire abroad is that medical care - even medical care from doctors trained and certified in the U.S. - is far cheaper in other countries than it is in the U.S. That is important to take into account, especially in light of a study released last spring by Fidelity Investments, which predicts that the average couple will spend $200,000 on out-of-pocket medical costs during their retirement.
Retiring outside the U.S. does not necessarily exclude people from the benefits they earned as American citizens. Medicare recipients are eligible to receive medical care when they travel back to the U.S. There are even U.S.-based companies that provide health insurance for Americans who live abroad.
Medical care abroad is often a fraction of the cost of medical care in the U.S. In Nicaragua, for example, a visit to a U.S.-trained physician can cost as little as $12 and a prescription can often cost less than $5, according to Jeff Finch, a real estate developer who moved from Virginia to Nicaragua with his family two years ago.
Many baby boomers will live for 20 or 30 years after retirement. For an aging generation that is still young at heart, the adventure itself - the chance to live abroad - may be just as important a factor as the lower cost of living, beaches and sunshine. |
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