With our recent announcement of us moving up our early retirement date to the end of 2018, the pressure’s now on. We’re now planning to retire abroad to Panama in the summer of 2019.
The news was exciting for us to share, but now reality’s setting in. Although a year seems like a lot of time, there’s really a lot that needs to be done.
It would be one thing if we were just moving to another country for a couple of years. However, we’re planning to actually retire abroad for the long haul.
And with that, comes the need to sell everything. Not only our house, but our cars, furniture, TVs, books – you name it! We’re planning to walk into the country with a couple big suitcases each… and that’s it.
But that’s only part of what needs to be done. We need to figure out where we’re going to live, schooling for our daughter, applying for our Visas, healthcare, and more.
I’m starting to stress just thinking about it!
Let’s go through some of the fun that’s bobbing around in my head as considerations we have to take into account for planning to retire abroad…
Just in case
Our full intention is to stay in Panama for the long haul, but we’re also realistic. What if we hate it or things don’t work out for one reason or another? Although we can’t plan for everything, we at least want to consider the possibility we might decide to move back.
So there are a few pieces of our plan to help us accommodate this…
This is the most important one for us. If we planned our FIRE numbers around living in Panama and then decided to come back, we’d have a problem.
The cost of living is much cheaper in Panama than it is here. Check out some of the examples in my post The Cost of Living in Panama… Geoarbitrage at Work! – that’s insane to me.
So our choices would be either to stay in Panama regardless or to come back to the U.S but need to go back to work… yuck!
To avoid that, we planned our expenses as if we’re going to be staying here in the U.S. That gives us the flexibility to move back if needed and still not have to worry about money.
In the meantime, that should give us some more breathing room in Panama to splurge a little more.
Remember the part about selling all our stuff before we retire abroad? Well, I lied a little bit. We’re temporarily keeping some of our stuff.
We could keep everything and have it shipped down to Panama in one of those monster shipping containers, but it doesn’t make sense for us to do that. It would cost us at least $10k to make this happen and most of our stuff is just crap we really don’t need to hold onto anymore.
Our couches also wouldn’t do well with Panama’s humidity. And although we could bring our cars, I’m told that it’s expensive to get parts and have them worked on there. In essence, they become foreign cars once taken out of the U.S.
So, we made the decision to get rid of it all… to a point. The mindset we’re aiming for is that we want to store some things for about a year in case we decide to come back. That way we won’t have to start completely from scratch.
We have a lot of things that are on their last legs so to speak. Our living room furniture, barbecue grill, weed eater, refrigerator, etc. are really hanging on by a thread and should be replaced very soon.
Since we’re leaving though, we’ll just sell, giveaway, or dispose of that stuff. If we come back, we’ll buy replacements for those things as needed.
We’ll also get rid of all our winter stuff since we’re never coming back to live in the cold… ever! Our snow blower, snow shovels, winter clothes, etc. are not items we’ll ever need when we retire abroad to a country like Panama!
However, we have a number of items that wouldn’t make sense to get rid of… yet. For example:
- Tools – Years of acquiring hand tools and outdoor tools ran up quite a hefty price tag. We wouldn’t be able to get our money back from selling them and we would definitely need most of these if we came back. We’ll get rid of some of them, but the rest will go into storage.
- Some furniture / Small appliances – We’ll hang onto a couple beds (at least the bed frames and headboards), dining room table and chairs, small kitchen appliances, etc. In other words, things we’d need if we came back.
- Memories – I’ve digitized most of our stuff – photos, journals, old home movies, etc. However, there are still some things that we can’t digitize. It won’t be very much stuff, but we’ll have a small box or two to hang onto. Eventually, those boxes could end up making their way down to Panama.
We’re planning to use PODS (Portable On Demand Storage) for our needs. We’ll fill one up and have them store it for us for about a year.
If after that time frame, we decide to stay in Panama, we’ll come back and go through the POD. We’ll grab some of the stuff to take back with us and the rest we’ll sell or give away.
There is storage that we could find for cheaper. However, if we do decide to come back, we’re not coming back to Ohio… probably Tennessee. Having a POD would allow us to just have it shipped to wherever we would live – no muss, no fuss.
3) Hold up on our Visas
The easy thing for us to do would just be to apply for residency in Panama right out of the chute. We wouldn’t have to worry about the tourist requirements like leaving the country for at least 30 days every 180 days. Or even more fun, our U.S. driver’s licenses are only good for 90 days at a time while down there.
These requirements add to the complexity of our plan. For instance, we’ll need to homeschool our daughter while we’re non-residents because we’ll have to leave the country for 30 days at a time periodically. For some reason, schools don’t seem to like when you pull your kid out for a couple months out of the year.
We decided that this extra bout of fun details is worth it for us though. The reason being is that the cost of an attorney to make residency happen is expensive. It’ll likely cost us upwards of $5,000-$10,000 to make it happen.
That’s a lot of money. That’s Ok though – the cost is already baked into our plans.
Nevertheless, I don’t want to drop $10k right off the bat and then decide after a few months that Panama’s just not our thing and we move back. That would truly be one big waste of money.
So we’ve set one year to be our number. If we’re closing in on a year and everything’s good, we’ll apply for residency (the Friendly Nations Visa). On the other hand, if we decide we’d rather not stay after a year, we won’t have that guilty feeling of spending so much money.
4) Decide on our “next place”
The last component of the just-in-case part of our plan is just to rent for the first year. We know the general vicinity of where we want to live and we’ll rent a house thereabouts.
We want to make sure that we’re planning to stay for good though before committing to buying a place. In fact, it’s very probable that we’ll just continue to rent down there even if we do stay.
Regardless, we don’t want to go all-in before we’re comfortable with staying. Besides, being down there for a year first will give us a chance to get to know the area better and figure out specifically where we want to live.
The good news is that moving won’t be that big of a deal. Most of the places are fully furnished and like I mentioned earlier, we’re not bringing a lot of stuff with us.
We’re not renouncing our citizenship with this move, which means we’ll still want to have a U.S. address.
Joshua Sheats from Radical Personal Finance had a podcast episode where he talked about establishing a domicile when deciding to retire abroad. It was only a part of a Q&A show, but I’m so glad I caught it.
One of the points he makes is that in certain states, you can register your state of domicile without needing to live there. The three he mentioned were Florida, Texas, and South Dakota.
The advantages to Texas or Florida are that you can avoid state income tax if you make that your domicile. You can then use a mail forwarding company such as a Commercial Mail Receiving Agency (CMRA) to forward your mail to your actual address (Panama, in our case).
This gives us an official address that we can use for our driver’s licenses, government docs, estate planning, voting, and more.
It also provides us some advantages if we died while we’re in Panama as a will filed in a state of domicile for guardianship will be returned back to the U.S. We would, however, need to make some changes to our estate planning documents, but this seems to be a very smart move to make.
Obviously, this doesn’t apply to someone that decides to retire abroad without kids, but school’s something that we personally need to think through.
Assuming we plan to stay, things shouldn’t be that complicated for us. We’ll just dig into the international schools and enroll her in whichever one makes the most sense.
But, for at least that first year, we’re going to be homeschooling our daughter. I’m excited about this, but there’s one problem – I know nothing about it.
So on top of the learning curve of no longer working, preparation for retirement, and planning to move to a foreign country, we need to figure out the ins and outs of homeschooling.
The good news is that there are many good resources out there that didn’t previously exist.
On top of that, there are a number of Facebook groups that not only focus on homeschooling but specifically that as an expat. That makes the whole idea a little less stressful to think about.
Mrs. R2R’s going to handle digging into finding the right curriculum and the ins and the outs of things. However, once we get down there, I get to be the teacher. Do teachers still get to crack students on the knuckles with a ruler or not so much?
Healthcare in Panama is cheap… crazy cheap. A doctor’s appointment might run you $25. That’s not a copay – that’s the cost out the door. Oh, yeah, that’s without insurance, too.
So if healthcare is so cheap, why even think about insurance?
The big reason is that we’re not going to be in Panama all the time. What if we’re on one of our 30-day trips to the U.S. and we get in a major car accident?
Pleasant thought, right?
Regardless, it’s something we need to consider to protect ourselves. And we all know how the healthcare system is in the U.S. is overpriced and overly complex.
We haven’t decided for sure what we’re going to do, but we’ll be seriously looking into the health care sharing ministries as an option. But that might not be possible. Maybe you can’t sign up if you live outside of the country. We’ll have to do some digging.
If not, we’ll look at expat insurance. It’s likely more expensive, but it might be our best option.
Either way, if you’re going to retire abroad, you have to think of what’s going to work best for you. Maybe you even chance it and go with no insurance? That’s a scary thought, but still an option.
Visiting family and friends
Although deciding to retire abroad sets you up for a new adventure that can be both adventurous and educational, there’s usually one big problem… you usually end up leaving family and friends behind.
Sure they can come down to visit you, but will they? Maybe some, but it’s probably not going to be very often and it’s possible to get homesick and miss them pretty quickly.
Ours are kind of stuck with us. We’re planning to come back to visit when we can. The issue is that this can get expensive for the travel.
One solution we started digging into is travel hacking with credit card rewards. I’ll do a post about this in the future, but the gist of it is that you take advantage of credit card sign-up bonuses in a methodical and organized way to acquire large amounts of points/miles.
We just started this about six months ago and have already racked up about 215,000 points. That equates to a lot of free flights for not changing our spending habits at all. We can also use the points for staying at hotels if we need to (or just want to!).
We’ll continue doing this for sure until we leave and that should make it quite a bit easier to fly back and forth. This will come in handy particularly in that first year as a tourist during those times we need to leave the country for a month at a time.
The other cool strategy we’re planning for is to each get a credit card that reimburses for Global Entry. It’s focused on getting you through customs much faster.
The program is like a step above the TSA Pre✓ program – in fact, it includes TSA Pre✓ eligibility as part of it. It’s good for five years before you need to renew.
It’s also $100 for each person – including kids. So, signing up for a good travel card like the Chase Sapphire Reserve will allow us to take advantage of this (we’ll do this for each of us). Plus, it will get us the sign-up bonus and give us some other perks that will make the $450 annual fee make us want to throw up less… yeah, I said $450!!
This will be the one card that we’ll pay the fee for the first year to take advantage of the goodies and then dump before the year is up.
Taxes / Financial Planning
Another piece to the puzzle of deciding to retire abroad is financial planning. The rules of the game change once you leave the country. If you play right, you can come out far ahead. If played wrong though, you could waste a lot of money for no reason.
I currently have three side hustles out there. None of them brings in huge money right now (though the rental property income is pretty nice!). The thing is there are ways to structure these businesses to legally come out further ahead than you could if you didn’t understand all the rules.
You don’t know what you don’t know!
This is a piece that I’m not confident in enough myself. It’s also one of the reasons I brought in a financial planner that understands the tax considerations of other countries.
He’s already given me a better understanding of some of the general strategies to keep in mind. And as we continue down the road, I’ll probably use his knowledge to help us continue to optimize our taxes and $$$$.
Our Rules for When We Retire Abroad to Panama
This is a new one that I’m working on. I want us to enjoy this adventure, but I want to be smart about it as well. So here’s the start of “the rules” we’re putting in place:
- We give it at least a year
- It’s an adventure – we have to try new things and give everything a chance
- Two out of three votes to move back wins
My thinking is that this is going to be an enormous change for all of us – not only my wife and I retiring but deciding to retire abroad as well! The cultural differences can be fun but also frustrating.
I want to make sure that we don’t just bail for the wrong reasons. It’s going to be different – no doubt about it.
There will be pros and cons to this move and I think the good will far outweigh the bad, but you never know. Regardless, we need to give it a shot and get used to the differences.
So we’re going to put these rules in place from the beginning. We’ll add more along the way as well. This will give us a fair opportunity to immerse ourselves in the culture and get used to everything there.
Holy macaroni, this was a lot of fun thoughts spewed out about what we need to plan for on this adventure. I hope you found it helpful or interesting!
I’m sure that I’m forgetting to mention some things. Any thoughts on what we should be thinking about during our plans to retire abroad?
Thanks for reading!!