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Cheap real estate, a low cost of living, fabulous scenery and relaxed pace should put this gem at the top of the list for Americans on a fixed income.

By Kathleen Peddicord, International Living

Panama is one of the best places in the world for retirees today, combining a low cost of living, near-perfect weather and one of the world’s best discount programs for retirees, with up to 50% off everything from public transport to movies, mortgage rates, doctor’s visits, electricity, restaurants and airfares.

When you compare Panama with its neighbors, you’ll see that it has more amenities than traditional retirement spots such as Mexico and Costa Rica, but costs and crime rates are lower. In Panama, you’ll encounter less red tape and less interference from local authorities.

To encourage long-term foreign investment, Panama requires no special authorizations, permits or prior registration for foreign investors. The Investment Stability Law, passed in 1998, protects foreign investors from any change in tax, customs, municipal and labor rules for a period of 10 years after an investment is registered. Major companies doing business in Panama include Federal Express, DHL, Sears, Price Costco, BellSouth, Kansas City Southern Railways, Continental and American Airlines, Warranty Company of the Americas and Hutchison Whampoa. Plus, you’ll find just about every American franchise you can imagine on the streets of Panama City.

And there are other incentives for foreigners to spend time here, invest here – or even live here. For example: If you buy or build a new house, you won’t owe any property taxes for 20 years.

Residents pay no taxes on foreign-earned income.

Tourism investments have 20-year exemptions from import duties, fees for construction materials and equipment, and income, real estate and other taxes.

Panama uses the U.S. dollar as its legal tender, which insulates its economy from global shocks. During the Asian monetary crisis of 1998, Panama became one of the healthiest economies in Latin America.

Panama’s pensionado program

Once you become a resident “pensioner” of Panama under the Tourist Pensionado Visa, you are eligible for the most appealing program of benefits for retirees available anywhere in the world right now.

Now, you may be thinking: “Pensioner” Retiree? That leaves me out.?

Not necessarily. The rules for becoming a “pensioner” and qualifying for this visa program in Panama are probably not what you’d expect.

In fact, anyone over the age of 18 may apply and can qualify as a pensionado in Panama. All you need is a guaranteed pension income of $500 per month ($600 for a couple). It must be a pension from a government agency (e.g. Social Security, disability, armed forces, etc.) or a defined-benefit pension from a private company. Sorry, but an immediate, fixed annuity doesn’t qualify.

As a qualified pensioner in Panama, you would be entitled to:

  • 50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events, etc.)
  • 30% off bus, boat, and train fares
  • 25% off airline tickets
  • 50% off hotel stays Monday through Thursday, 30% off Friday through Sunday
  • 25% off restaurant meals
  • 15% off at fast-food restaurants
  • 15% off hospital bills (if no insurance applies)
  • 10% off prescription medicines
  • 20% off doctors’ consultations
  • 15% off dental and eye exams
  • 20% off professional and technical services
  • 50% off closing costs for home loans and more

Crossroads of the Americas

Panama is also perhaps the most accessible retirement haven for Americans.

There is frequent nonstop service to Panama City’s Tocumen International Airport. It’s a 2-hour flight from Miami on American Airlines and COPA, Panama’s national airline, which also flies from Los Angeles and Orlando. Continental flies from Houston, and Delta flies from Atlanta. Aeroperlas and Mapiex Aero are two domestic carriers that offer daily flights throughout Panama.

Beware, however, that as accessible as Panama is to the States, it’s still a foreign country. There are certain cultural differences that you can either accept and embrace . . . or try to ignore and become miserable and frustrated.

Time moves at a more leisurely pace in Panama. A one-hour wait might mean two, and a simple meal out with friends can turn into dancing tipico at a local disco until 5 in the morning. It takes a certain disposition not to lose your cool when, for example — and this happened to a friend living in Panama City — the computer repair man phones to say he is estoy llegando (on his way over to your house), only to arrive two days later without explanation . . . but ready to work.

Kathleen Peddicord is the publisher of International Living, a 25-year-old publication detailing the best places in the world for Americans to live, travel and invest. She is the editor of “The World’s Best,” “The World’s Top Retirement Havens” and other books. In 1999, she finally took her own advice and moved her family to Ireland. She is currently restoring a charming Georgian Manor House and publishing International Living from its new offices in Waterford, on Ireland’s southeast coast.