The 2006 Annual Global Retirement Index

by Laura Sheridan

For the sixth year running…you guessed it…Panama comes out on top in our Annual Global Retirement Index.

Panama’s top ranking again this year comes as no surprise to us…and shouldn’t raise your eyebrows either if you’ve been reading these pages carefully in recent months and years. We remind you often of the advantages and attractions of the world’s top retirement haven.

In brief: This country currently boasts the world’s most appealing program of special benefits, discounts, and perks for foreign retirees (see below); it’s easily accessible from the U.S.; its cost of living is low; its landscapes and coastlines are beautiful; its population is friendly and welcomes foreign residents and investors; and its capital city, Panama City, is without peer in the region. This is still the developing world, no question, but in Panama City you can enjoy all the amenities and conveniences of First World living. A friend in the country for the first time as I write reports, “The grocery store where I shopped this morning is better than my grocery store back home in the States. It had everything…including special French cheeses…even French butter…and an impressive selection of wines from around the world.”

The Infamous Pensionado Program

Panama’s pensionado program is without serious competition worldwide. If you can document a minimum monthly pension of $500 (plus another $100 per dependent), you are eligible for a long list of perks, including:

Import duty exemption for household goods
Tax exemption to import a new car every two years
50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events)
30% off in-country bus, boat, and train fares
25% off in-country airline tickets
50% off hotel stays Monday through Thursday
30% off hotels stays Friday through Sunday
25% off restaurant bills
15% off at fast-food restaurants
15% off hospital bills (if no insurance applies)
10% off prescription medicines
20% off medical consultations
15% off dental and eye exams
20% off professional and technical services
50% reduction in closing costs for home loans
25% discounts on utility bills
15% off loans made in your name
1% less on home mortgages for homes used for personal residence

But it’s not just these benefits that are luring more and more retirees to this country every year. And it’s not just IL staff singing Panama’s praises. Most recently (June 2006), the LA Times reported: “Today, Panama doesn’t seem at all like a banana republic. Visitors to Panama City will be instantly struck by the multimillion-dollar building boom that is transforming the capital’s skyline with new office towers, hotels, condominiums and casinos.”

Before I go further reviewing for you the final rankings of this year’s Index, I want to make two points. First, no place is perfect. Every country, including Panama, has its drawbacks and downsides. We assume you realize this and point out particular disadvantages or challenges when appropriate but, generally, focus on the benefits each destination offers.

Second, numbers can be misleading…and ours, in cases, are subjective.

To prepare our annual survey each year, we begin by sourcing statistics on everything from Real Estate to Special Benefits, from Culture to Infrastructure, and from Climate to Health Care from official government websites and Interpol data.

We use the numbers we search out on the web as a starting point. Then we move from the Internet to the streets…for the real-life story. We ask our correspondents and contributors living and spending time in each country included in the Survey to review our compiled data…and to give us the real scoop. Roving Euro Editor Steenie Harvey, for example, had this reaction to the original Climate numbers: “Poland has a better climate than Cyprus? Tell THAT to the Poles!”

We adjusted accordingly…not only the Climate figures for Poland and Cyprus…but nearly every figure we’d collected in our Internet research, based on feedback from our in-country experts. As I said, numbers can be misleading…and compiled numbers can be meaningless.

The numbers you see presented here, therefore, began as compiled, government-approved statistics…then went through our filters. We believe they are far more representative of real life in these places than any numbers you’ll find on the State Department or World Bank websites.

Valley of Flowers and Eternal Spring

Back to Panama. Panama City is lively, sophisticated, cosmopolitan, and historic. It’s also hot. This is reflected in its low score in the Climate category (28 points). But the good news is that it’s not hot and humid countrywide. If you don’t like the heat, no problem. Get out of the city. For mild, spring-like temperatures year-round, escape to the interior of this country, to the mountainous Chiriqui region. Specifically, we recommend the little town of Boquete, at the base of the tallest peak in Panama, an extinct volcano called Baru. The surrounding mountains are covered with coffee, banana, mango, palm trees, and wildflowers of every tropical color. This is a lush and verdant hideaway; the Panamanians call it the “Valley of flowers and eternal spring.” It’s the place for the outdoorsman in you. You can hike, bike, watch the birds, ride horseback in the hills, take a raft down the white water, fish for trout, even tend your own little coffee plantation.

On May 31 of this year, Boquete was featured in a Reuters report (“Pensioners seek paradise in Panama mountain idyll”). Reuters wrote: “Politically and economically stable, its turbulent history all but forgotten by visitors, Panama is luring U.S. and European retiree baby-boomers dreaming of a millionaire lifestyle on the cheap.”

The article included an interview with Michigan-born Casey Koehler, who moved to Boquete last year. The reporter also interviewed others who had moved to Boquete, attracted by its temperate climate and low cost of living. The conclusion in the article was resounding – all interviewees agreed that they are living in Paradise, and spending far less than they would back in the States. In Koehler’s case, $3,800 a month less.

Escape to the Beaches

Or perhaps you’re dreaming of a home at the beach…and don’t mind the heat. Cross the Canal from Panama City, continue over the Bridge of the Americas, then onto the Pan American Highway for 50 miles, and you are beach bound. The beaches here are wide and perfect for surfing, snorkeling, swimming, and fishing. We recommend, in particular, the beaches at Chame, Gorgona, Coronado, Rio Mar, Santa Clara, Playa Blanca, and Farallon. This part of Panama is known as Arco Seco (dry arc), because it is an arc-shaped region along the Pacific Coast where it rains significantly less than it does in the rest of the country.

These beach towns are quiet and restful during the week, then often jam-packed and lively on the weekends, when the city folk arrive. These aren’t rustic fishing villages. Still, it’s possible to find a little beach house to call your own, with all the modern conveniences, for less than $100,000.

The Heart of the Med

Malta, which is, in fact, twin islands of Malta and Gozo, together promoted as “the heart of the Mediterranean,” takes silver in this year’s Retirement Index. Steeped in history and tradition, these small islands, with near-perfect climates year-round, offer a simple, relaxed lifestyle.

The cost of living remains low on these islands, and permanent foreign residents can take advantage of a 15% tax rate. Plus, property taxes don’t exist. Crime, too, is practically non-existent. The locals are helpful and friendly – and everyone speaks English. You can fill your days with golf, tennis, sailing, and horse riding.

The climate and opportunities for recreation should keep you fit and healthy, but, should you require medical care, you’ll find yourself in good hands. The World Health Organization ranks Malta 10th in the world for its medical standards.

Don’t be embarrassed if you can’t pinpoint Malta on a map. It’s not on everyone’s radar. However, it’s tiny sister island of Gozo is even less well-known. Only a mile of sea separates Malta from Gozo, but the two islands are distinctly different, each appealing to a different type of retiree. If you enjoy people, choose Malta – this bursting-at-the-seams island is effectively a city-state.

Home to about 30,000 inhabitants, a miniscule 26 square miles in size, tranquil Gozo, on the other hand, provides a nostalgic escape. This is a world of deep-blue seas and hidden coves…green fields and scattered windmills…church spires and ancient, sleepy villages.

Home prices on Gozo are cheaper than in most parts of Malta, but word is getting out about slow-paced Gozo. Increasingly sought-after by foreign buyers, its flat-roofed, honey-hued stone farmhouses today are changing hands for around $150,000.

In Third Place…

Our third-place winner has a fly in its retirement soup. In fact, New Zealand isn’t in the market of attracting foreign retirees. Instead, this country is looking for younger, professionally qualified immigrants. To obtain full-time residency here, you must qualify through a point system…with points awarded the younger and more qualified for particular types of work you show yourself to be.

No problem unless you’re looking only for a full-time overseas retirement haven. For, though it’s not easy to become a permanent resident in retirement in New Zealand…you’ll have no trouble spending up to six months a year in the country. And the reasons to want to spend time here are many. Indeed, New Zealand scores well in every category in our Survey…except Special Benefits for Retirees.

In addition to its magnificent scenery and an array of activities to keep you busy and fit, New Zealand has a favorable exchange rate (US$1 equals 1.62 NZ dollars), a low cost of living, an English-speaking population, great infrastructure, and one of the world’s highest “healthy longevity” figures.

As Lord of the Rings showed the world, perhaps New Zealand’s greatest asset is the country itself. Not only can you go from the beach to the mountains, swimming and skiing in the same day – seeing tropical forests and snowy scapes in the same island – but when it’s winter in the U.S., it’s summer in New Zealand. Divide your time right between the two, and you could enjoy an endless summer.

Food lovers are catered for with innovative cuisine; thrill-seekers can enjoy bungee jumping, skydiving, and rafting; and nature-lovers are spoilt for choice with all the national parks, bird sanctuaries, and stunning natural phenomena, from geysers to snowfields to primeval forests.

In fact, Conde Nast Traveler named New Zealand “The Best Country In The World” in 2005.

Furthermore, New Zealand hides some of the best real estate bargains in the world. According to the Real Estate Institute of New Zealand (, the average house prices as of June 2006 is $190,000.In addition, the country imposes no capital gains tax.

The downside (besides the residency requirements)? The country’s proximity to the States. It’s a 12-hour flight away from Los Angeles.

Moving up Five Places

From ninth position last year to fourth place this year, Uruguay is a paradox. South America’s second-smallest country – about the size of Missouri – looks like Europe and feels like Europe…but its price tags will remind you that this is the Third World. Wedged between Brazil and Argentina, Uruguay has the lowest poverty level in Latin America, the longest life expectancy, and (as of October 2004) the second lowest level of corruption. The literacy rate is 98%.

Uruguay sits in the Southern Hemisphere at about the same location that North Carolina occupies in the Northern, and it has four seasons. The average daytime high is about 85° F in summer (December through February), and the low is 65° F. In winter, highs run around 60° F, with lows near 42° F. Spring and fall temperatures fall in between.

Just across the river from Buenos Aires, Montevideo is a big city with a small city charm. It’s a South American capital that feels like Europe. Perhaps most remarkable, it’s an attractive city where you can still buy a small apartment for less than $30,000. In fact, Mercer HR Consulting recently named Montevideo the second least expensive city in the world. Only Asuncion, Paraguay, was cheaper of the 144 cities surveyed. And we recommend Uruguay as the best value for your second-home dollar.

Pros…and Cons

Uruguay’s pros: Modern, first-world infrastructure, excellent highways, drinkable water, good communications, and stunning beaches. During high season, it is fun and lively. During low season, it is quiet and peaceful. Prices – for just about everything – are excellent.

Uruguay’s cons: It may be too slow for some during low season. And, though not as distance as New Zealand, Uruguay’s not as close as Panama either.

Lee Harrison, our Roving Latin America Editor, is especially enamored with Punta del Este. Read his detailed report on property opportunities in this city in this month’s issue.

Mexico’s top 10

Mexico comes in fifth position this year.

Unless you’ve been living in a cave for the past half-dozen years, you know as well as we do the attractions of Mexico for the foreign retiree. You also know, I’m sure, that this country is attracting more attention than any other, not only among foreign retirees, but also foreign investors. The Great Mexican Land Rush is well on.

Our parents retired to Florida and Arizona. Today’s baby boomers are heading South of the Border.

Mexico is the United States’ closest neighbor to the south (to state the obvious), and at no other time in the long history of that relationship have the benefits of living and investing in Mexico been more apparent…or easier to take advantage of. Not only for U.S. citizens, but Canadians and Europeans, too.

Mexico has it all…rich culture, perfect climate…affordable living…not to mention mountains, beaches, deserts, and just about everything in between. Geographically and culturally, this country is enviably diverse.

Little silver mining towns where the winding streets seem to run straight up into the clouds, and $3 can fill your shopping tote to the brim with fresh fruits and vegetables from the weekly market.

Fishing villages where the boats land in the morning with the giant snapper you’ll have for lunch, sautéed with garlic or simmered in a Diablo sauce that will make you call out for another ice-cold cerveza. Or buy the whole fish right off the boat for $2.

For all these reasons and more, Mexico is one of the world’s top destinations for retiring. This makes it not only a great lifestyle choice…but also one of the hottest real estate investment markets in the hemisphere.

Beaches, mountains, deserts, forests, plains, and fertile valleys…sophisticated cities and quiet villages. Once you’ve made the decision to move to Mexico, you’re left with the mind-boggling decision of where, specifically, to settle. It’s a big country…covering more than 750,000 square miles and three time zones.

To help start you on your way to your new life in Mexico, below are the 10 places we think make the most sense for expatriate living in this country, based on criteria such as health care, climate, infrastructure, and housing costs. These are places our husband-and-wife team in Mexico, Dan Prescher and Suzan Haskins, have personally scouted and personally recommend above other options in this great big country south of the Rio Grande.

1. Rosarito Beach
2. Puerto Vallarta
3. Querétaro
4. Mazatlan
5. Mérida
6. La Paz
7. Campeche
8. Playa del Carmen/Riviera Maya
9. Ajijic/Chapala
10. Sayulita/San Pancho (San Francisco)

Editor’s Note: Laura Sheridan is the managing editor of International Living. She has traveled extensively throughout Australia, New Zealand, North America and Europe. She has a BA honors degree in print journalism and has worked for International Living for the past three years.