If you happen to be just a tiny bit concerned about your retirement planning program and achieving your financial "number", or if you simply wish to review your available retirement options and long-term retirement risks. then here is an interesting and true story that will provide some comfort. 

My wife and I recently decided to "gear down" and work more relaxing careers in art and writing. 

We will stay busy but we want the option to take time off whenever we wish to travel or just relax. Of highest importance we want to ensure our chosen lifestyle for many years with a comfortable cash flow "cushion"

This was due in large part to a single major investment setback relatively late in our careers. 

Lee Eisenberg's recent best-seller "The Number" (the amount of money needed before one should retire) strongly suggests that one may require substantially more than $1,000,000 to avoid a serious "lifestyle relapse" during the last third of your life.

In short, a million bucks ain't what it used to be!

In fact, we did not even achieve HALF the minimum recommended million dollars INCLUDING our home equity. A failure, that in the view of most financial advisors, would oblige most couples to hold down part-time jobs well into their 80's and even beyond. 

The standard prognosis for a "long and happy" retirement with such meager assets in North America or Europe is definitely NOT encouraging particularly if one happens to aspire to a "millionaire" lifestyle (whatever that may mean for you). 

The much advertised, "start late finish rich" strategy, did not work very well for us either. "Late" and "finish" are such highly subjective terms they became meaningless concepts. 

It was clear to me that if we chose to retire in North America or in Europe, we would not have to worry much about "dying broke" as suggested by author Stephen Pollan in a book of the same name, our main problem would be "living broke".

We were never "fully vested" in a corporate or government pension plan which can be boon for poor savers. Neither did we have the potential of a significant inheritance income. 

We would be entirely dependent on government social security checks (both American and Canadian), any investment returns on our savings, hopefully some rental income, and then any second career income. Everyone knows that writers and painters are filthy rich!

As a development economist and international pharmaceutical consultant, we had the opportunity to reside in and visit many countries from Canada, the USA, Thailand, France, Singapore, the UK, Mexico, Switzerland, etc. 

On three occasions, we thought we had finally found our perfect "retirement haven" in Boca Raton FL, then Kata Beach Thailand, and finally in Puerto Vallarta Mexico. Each time we were disappointed for various reasons and made the decision to move on and keep looking. 

In retrospect, it was definitely not that easy to find exactly what we were looking for! Hence this book "Retirement Planning for Offshore Living"

• We have always wished to live on or near a sandy beach fringed by swaying palm trees with a warm swimmable ocean and views even. 
• We enjoy dining at "linen-cloth", gourmet restaurants several times per week even though Lise is a great chef. 
• As a teenager, I loved golf and finally shot to a 10 handicap. However, in the urban centers where I had to live for my work, golf was outrageously priced at private clubs and the public courses were too packed for a pleasant game. 
• I absolutely must have the latest computer technology and software. I cannot survive without high speed DSL internet, cable TV, and inexpensive, high quality phone systems. 
• I also thrive in a "highly entrepreneurial" environment where one can experiment with new business ideas without endless "red tape". 
• Although in good health, we demand quick and inexpensive access to top quality medical facilities with English speaking doctors. We need ready access to the latest brand name pharmaceuticals and high quality, low cost health insurance which is renewable forever.
• We want a practical and affordable solution to the high risk of "assisted living" at some later time. Plans to organize a co-housing project remain high on our agenda. 
• We found we could not tolerate living without potable tap water. 
• Friendly people in a tolerant and democratic society are one of the most critical factors for our long-term happiness.

Finally, we love to entertain friends at home on a regular basis. This desire requires access to good friends and reasonable prices. 

Our home is situated a mere 400 feet from an outstanding, sandy swimming beach guarded by swaying palm trees and bougainvillea. 

This country is NOT located in North America but is still less than a five hour and $500 round trip, direct flight from New York City. 

Our new home is in a "gated resort community" comprising about 600 to 700 residences including a number of well-designed condominium properties and ocean mansions. 

This "resort" golf and country club community was planned and constructed 50 years ago as a weekend retreat for wealthy local families. 

This tropical country is not impacted by hurricanes, earthquakes or other natural disasters. 

We could have chosen, for the same price, a beautiful home in a cooler, pristine mountain resort community only 25 minutes from the beach. The soaring dramatic peaks are clearly visible from our property. 

On the weekends and during high season, "our beach" buzzes with gaggles of teenagers, surfers, lazing sunbathers and frolicking children with picnicking families. 

In April 2006, the world famous Tim Curran (winner of several world surfing titles) was surfing on our little beach. He gave a free lesson to a good Canadian friend of mine who happened to be staying at our house for the month. 

Incidentally, my friend just purchased a 180 meter (about 1900 square feet) condo in Panama City for investment purposes for the grand price of $125,000.

In less than two months, in the summer 2005, which happens to be low season, we made more good friends in this small resort community than we have in the past five years in New Jersey. 

Our new friends are mostly Americans and Canadians but also many locals. 

Several friends hail from Ottawa which was our previous home in Canada. Each month there is an "expat night" or a "special social event" such as a fashion show. Depending on the time of year, as many as 140 people turn up at a local restaurant which is a mere 2 miles from our house. 

Making friends could not be easier. These are "expats" and NOT tourists.

At night, we hear the occasional gecko as well as what I call "stereophonic wave sounds". Our house happens to be located on a small spit of land that is almost, but not quite, a "peninsula" (which makes the surfing excellent). As a Zen Buddhist might ask ... what is the sound of two shores lapping .... 

In the morning, we are awakened by the inevitable rooster calls followed by chattering parrots. At first, the rooster calls were a bit much but one adjusts quite quickly.

Because real estate is such a major decision area for a move offshore, most people are happy to get as much information as might be available on this subject. 

My book "Retirement Planning for Offshore Living" gives you all of the details and then some. 

There were three detached buildings on our property when we purchased it. In addition to our main 1300 square foot, 4 bedroom home, we have a bright and airy 480 square foot, fully finished, tiled, air conditioned, "family room" with a modern two piece vanity. This was used as a "party room" by the former owners. 

We will convert this studio into a "one bedroom guest house" for our friends and possibly for extra income in high season and for holidays. We plan to add a small 8' x 12' private swimming pool to this unit with a large ceramic terrace and privacy walls with plantings. 

The third building is only 350 square feet in size. It was designed as a self-contained "maid's quarters". We attached a small "tool shed" to this "casita" for storage of garden implements and pool supplies. 

The combined size of the three buildings is about 2100 square feet. Two of the buildings have "central air" and all buildings are in excellent condition.

Upon taking possession, we built a 15' x 22' swimming pool fully lined with ceramic tile for ease of cleaning. It includes three curved, walk-down steps, a submerged "massage bed" serviced by several Jacuzzi jets, an underwater light, and a "fountain jet" for "white noise" if required. 

I will tell you the total cost to build this pool later ....

The main property is completely enclosed by a 6 foot high, whitewashed, cement block, privacy wall. The arched gate leads to our 5000 square foot "back orchard". It will also be enhanced and developed when we move permanently later this year (2006).

One enters the property through an ornate wrought iron gate which is the preferred style in this community. 

Our half-acre of land is flat without rocks. On purchase, it contained landscaped lawns, mature flowering shrubs, many tree orchids, four or five coconut palm trees, and several fruiting trees. 

There is a huge "papaya mango" tree which yields hundreds if not thousands of delicious mangoes for our voracious "smoothie" blender. 

Our ocean resort community is a one hour drive (less than 50 miles), on a well maintained four lane highway, to a modern, dynamic city. If something is not for sale here, it probably does not exist anywhere in the world. 

The city skyline comprises about 150 modern commercial and residential skyscrapers of 40-60 stories with another 30 similar projects rising from the ground. A building boom is in clear evidence. 

Most importantly, the city is populated by one million extremely friendly people. This was one of our most important factors for an offshore decision! 

Many city shops offer "world class" goods. You can buy the latest "designer labels" from Paris or Milan in exclusive boutiques. You can visit the new 1,000,000 square foot shopping center comprising 200+ stores, restaurants and cinemas. 

"Global goods" such as automobiles and electronic items have the same prices as in North America. Perhaps the latest electronic goods are 5% more expensive than in the USA. Otherwise most prices are substantially lower than in North America or Europe.

In this "first world" city, there are four excellent hospitals with English speaking and North American or European trained doctors. A brand new, state-of-the-art "John's Hopkins" hospital just opened in early 2006.

Medical tourism is now a dynamic industry.

On the "ocean side" of our street, there are perhaps 75-100 elegant mansions that would be priced anywhere from $7,000,000 to $30,000,000 in the Santa Barbara or San Diego coastal areas of California and perhaps 50% less along the eastern seaboard. 

There are 5 or 6 high quality, high-rise condominiums in this resort community. The unit sizes range from 1000 to 7000 square feet. Virtually all have gorgeous ocean views and easy access to the beach plus a large social area with swimming pool. 

A brand new "ultra-modern", 64 unit luxury condominium project will "break ground" this summer (2006). 60% of the units have been "pre-sold" with 30% deposits, mostly to expats. 

This project, called "El Alcazar", and will enhance the "profile" and property values of our entire community. The average sized unit is 3000 square feet with incredible views of the Pacific Ocean, the golf course, and the surrounding mountains. 

There are several two story penthouses available with 7000 square feet. Lower floor units are priced at about $300,000. The project is located in the center of the golf club. On completion this project will be easily visible from our house.

In fact, our property backs onto an 18-hole, "Tom Fazio", PGA Golf and Country Club. The air conditioned, equestrian facilities feature a "performance stadium" and a high quality restaurant for weekly special events. 

You might have noted that Donald Trump engaged the same Mr. Tom Fazio to design his two luxury golf courses located in the states of New York and Florida. 

Speaking of Donald Trump, he is planning to construct the largest casino in Latin America only one hour from our house. Units apparently went on sale in April 2006. His first little venture "offshore" so to speak.

Our golf club includes four wonderful restaurants (two of which are top quality), a small discothèque, an elegant European spa, a well stocked "pro shop", a supervised children's play area, and four tennis courts for night playing.

There is the "Olympic-sized" swimming pool at the main Club House plus a spectacular "infinity pool" right on the beach served by a smaller "snack" restaurant and bar. We can walk to either of these "club pools" from our house in about 5 minutes.

By owning a home in this resort community, the "initiation fee" for full club membership, is waived. Our monthly "maintenance fee" will be about $145 after an additional discount available to pensioned expats.

We paid a total of $136,000 for our original property fully furnished, including all closing costs. By the way, we paid the full "asking price" which is totally out of character for me. 

The annual taxes on our property are $123 or $10.25 per month. In comparison, our rather modest, 4 bedroom house in New Jersey, has a 2006 municipal tax bill of $6300 per annum, or $525 per month, and it is rising more rapidly than inflation. 

On possession of our 5 year old house, we spent an additional $15,000 on some enhancements including a new swimming pool, privacy walls, etc. The property is now in first class condition. Our total out-of-pocket costs are $151,000. We were immediately able to rent the property for 6 months for $1200 per month. Our property management costs are $100 per month.

For the same amount of money in the "City", we could have purchased a 6-7 year old, three bedroom, 3.5 bath room, 1800 square foot well-designed condo with separate maid's quarters, on the 15th floor of a high rise apartment building, overlooking the Pacific Ocean in the best part of town with NO municipal taxes for 13 years. Everyone gets a 20 year tax exemption on a new property. In this building there were only two units per floor so we would have had a 180 degree view. The unit came with two garage parking spots plus a large social area with pool, exercise room, party room, security guards etc. The monthly condo fee was $215. 

But, we preferred the beach .....

I recently hired an electrician in NJ for a minor electrical problem in the panel. He and his "apprentice helper" took 40 minutes to fix the problem and charged $240. No materials required. 

In 2003, a plumber completed several small repairs on my NJ house which took 6 hours of work. He worked alone and charged me $1850. In this case, he used $200 of his own materials. Amazing! A good painter or carpenter in NJ runs about $40+ per hour. This same service runs $400 per day in Manhattan.

During the summer of 2005, I engaged and managed 10 skilled construction workers for two months. They worked a total of 3000 hours and cost me $7,000 for the labor component only. They used up about $8000 of materials. 

This same amount of work would have cost me at least $125,000 in New Jersey (and much more in California) because there were many plumbing, electrical and other skilled tasks involved.

My non-English speaking, construction "team" enhanced our property enormously. They installed, flawlessly I might add, and to the highest standards, our 15' x 22' ceramic-lined swimming pool.

The total cost of the pool was just less than $5,000 including everything (all materials, pumps, filters, excavation, labor etc.). 

A similar New Jersey pool would cost $35-40,000 and in sunny California it would run in excess of $60,000.

This would become our "primary" home and comprise 1350 square feet (under air). The house would have another 500-800 square feet of shaded terrace right up to the swimming pool. It would be integrated with our pool and include a "studio" for Lise. I would use the present poolside "casita" as my office. 

In this manner, we can rent out the original 4 bedroom house on a long term basis and still maintain our complete privacy at the rear of the property. We will construct a second, smaller swimming pool in front of the original house. 

The expected construction cost for our new pool home (about 1350 square feet) is $30,000 or about $22 per square foot. This budget is based on detailed knowledge of current material costs and labor rates. I have also been a "small-time" real estate developer for the past 30 years in my spare time. 

The costs to convert the existing "studio" into a one-bedroom, "guest house" with private pool will be another $6,000. The budget to improve the existing 4 bedroom house with a private pool and a closed/screened balcony will also be $6,000.

The total budget to complete everything is $42,000 and the time to complete will be about 4-5 months.

The "fair market rent" for the two larger houses, each with private swimming pools and of course fully furnished, would be $1300 per month or about $31,000 per annum at the end of 2006. The smaller guest house, also with a private 8' x 12' pool and privacy walls, should rent easily for $650 per month for a grand total of about $39,000. These are rather conservative numbers. 

These rental rates are also based on "long term" annual or at least 6 month rates with full property management services plus a reasonable vacancy rate. More aggressive short term rental practices would gross higher dollars but require more active management. 

Our estimated net income from the entire property, if rented in this manner, would be about $34,000. 

On a worst case basis using a "cap rate" of 8% (about three times the current average American rate), the property would have a fair market value of $400,000 representing a tax free, "capital gain" of about $200,000 earned in just 18 months of ownership. 

Using a more reasonable "cap rate" of say 5%, which is still twice the "average" for North America and Europe, the fair market value of the property would be in the $675,000 range.

The long term (30 year) mortgage rates in this particular country are identical to those available in North America indicating considerable economic stability.

Notice that for an "additional investment" of $42,000, we can create a long term "passive income flow", from two rental units, fully protected against inflation, of about $1600 per month ... net net net ..after taxes and expenses. 

Remember that the "average" American Social Security payment is only $1000 after a lifetime of work. At death, about 50% or this payment is available to the surviving spouse. On the demise of the surviving spouse, there is nothing left "for the kids". 

In contrast, our rental income and the underlying assets continue forever. 

If today you deposited $1,000,000 into a long term "annuity" (or Certificate of Deposit) in the USA, you would earn approximately $50,000 per annum at existing 5% rates.

After paying average US taxes of say 25% on these earnings, you would have $37,500 left. After making provision for inflation, at say 2.5%, or $25,000, you would have $1000 per month left of "net spendable" cash. If you spend more than this amount, you start to erode your capital base which is not a great idea when you may live a lot longer than you expect. 

In contrast, our little $42,000 property investment creates two new rental income streams while we continue to live in our private "pool house" with an orchard as a back yard. Of course we already own the property although we did not buy the property with this option in mind. 

Our $1600 per month of "net spendable" cash flow is protected against inflation because we can raise our rental rates to match inflation. Furthermore, the property has an excellent chance of increasing in value over time for additional capital gains most of which are not taxable. 

Our new "income stream", generated from the $42,000 investment, produces a "net spendable income" equal that of a $1,600,000 annuity or CD (Certificate of Deposit).

This budget is one third of our current New Jersey budget where our standard of living is much lower. In NJ we eat out in fewer fancy restaurants, we do not have a beach house or a private country club membership. We do much less entertaining. We do not have an in-ground pool on our tiny, albeit standard, 4000 square foot lot.

At our new offshore home we can (and do) engage a gardener for $10 a day, one day a week, to clean the swimming pool and manicure the property. 

We live within 2 miles of a clean, modern food market that is open 24x7 where huge juicy pineapples cost less than $1.00. Top quality rib-eye steak is priced at $2.25 per pound; delicious sea bass costs $1.25 per pound. Three large avocadoes set you back $1.00. Bananas are 5 cents each. 

I refuse to tell you about the low cost of the excellent imported wines and hard alcohol! 

One should not be surprised that health insurance costs are also about 33% of American or Canadian rates (considering the higher marginal tax rates that apply in Canada).

In summary, one dollar spent in our new tropical paradise buys three times as much as it would in the USA considering an average basket of goods and services. 

Without any financial planning, we instantly created a "triple cushion" on our required "number". Not bad ..... 

Incidentally, the official currency used in this country is the American dollar which makes keeping track of costs a lot easier.

In New Jersey or Florida, this "offshore lifestyle" would clearly be considered that of a "millionaire". In California, this is a slam dunk "multi-millionaire lifestyle". 

Just buying a house within one or two blocks of the ocean along the "Jersey Shores", in Southern Florida or anywhere along the Pacific Coastal Highway in California would set you back $2-5,000,000. Your municipal taxes and insurance alone would exceed our annual cost of living. 

Such properties in the US are typically next to a busy highway with awkward beach access to water that is too cold for swimming at least 5 months a year (and sometimes all year) and is often relatively polluted. 

A modest 650 square foot condo in downtown Carlsbad, one block to the beach at Lincoln and Pine has an asking price of $800 per square foot. This unit does not have ocean views, there is no swimming pool, and "floating" floors transmit sound to the unit below. The ocean water temperature as of May 1 was 60 degrees. 

All income that you earn outside of this particular tropical country is potentially "tax free" although it is "reportable" to the tax authorities. 

• If you happen to be a Canadian or a European this means "tax free" for unlimited offshore earnings from any source. 
• If you are an American, and you have lived outside the USA for 330 days in a "calendar year" then you and your spouse may quality for an IRS annual exemption of approximately $80,000 each on income earned through regular salaries. This does not apply to "passive" or investment incomes. 

To obtain "Pensionado Status" you must be 18 years of age or older. 

You require proof of an "after tax" pension income of USD$500 per month plus $100 per dependent.

Different rules apply for investor visas and other visa types but they are all very generous. 

A clean criminal and health record are needed.

Your legal and application costs for residency will be in the $1500 to $2000 range for a couple.

You have the option of purchasing a 5 year Certificate of Deposit at the Central Bank sufficient to generate $750 per month and obtain residency for your family in this manner.

• You can reside permanently in the country. 
• On moving, you will receive an Import Tax exemption for personal household goods up to $10,000. 
• You have an Import Tax exemption for a new car, for personal use, every two years 
• You can purchase tickets for the cinema, sport events and entertainment at a 50% discount 
• You can enjoy public transportation for 30% less on buses, trains and boats and less 25% for internal travel on airlines. 
• You can stay at hotels for 50% less from Monday through Thursday and less 30% from Friday to Sunday 
• Your restaurant meals will be discounted by 25% 
• Fast food restaurant meals are discounted by 15% 
• Visits and services received at hospitals and clinics are discounted 15% 
• Medical prescriptions and most medical services and special consultations are discounted from 10% to 20%. 
• The mortgage rate on your personal residence is reduced by 1 percentage point. 
• Your monthly electric bill, up to 600 kwh, enjoys a 25% discount. 
• Your water bill is reduced by 25%. 

Other Visa Options

$200,000 invested in a home, registered in your own name, can also provide you with a permanent resident visa as a "person of means". 

My book "Retirement Planning for Offshore Living" explains many other visa options.

The country just described happens to be Panama as you have have already guessed.

I wish to go on record that there are many other "low cost developing" countries in the world that offer some very interesting incentives as well. 

Many of these countries have lower costs of living than Panama. You could probably live very well on perhaps 10-15% of your current budget in Ecuador, Uruguay, Argentina, Thailand, or Nicaragua. You can often purchase substantial houses in such countries for $25,000 to $50,000.

The Escape Artist, AARP, Fortune Magazine, and many others have written very favorably about Panama. Panama was chosen as the "best country in the world" to live and retire by International Living... five times in a row. 

If "offshore living" is in your contingency plans, then the main problem is to identify the best or optimal country for your desired lifestyle, second career or retirement home.

• This book will help you to make a sound judgment concerning the advantages of offshore living and retirement. 
• The full range of retirement issues are reviewed in a long term perspective with a focus on financial and medical risks that could lead to a "lifestyle relapse" as you live longer than expected.
• It directly addresses the long-term financial risk of "assisted living" in a developed country and provides a sensible alternative. 
• It will save you a considerable time and money by helping you avoid common "mistakes" that the author has already made.
• It provides you with a valuable "standard of measure" and a "checklist" so that you can quickly determine and compare the most optimal retirement locations for your particular needs and interests.
• It will permit you to better understand the risks and advantages of retiring or downsizing in a developed country. 
• It will introduce you to the various types of small business opportunities that could be successful in such a country and the advantages you would have in a second career. 

Act today!