2020 has been one helluva year, hasn’t it? For us, this pandemic could be the sole catalyst in our possibly moving back to the U.S. from Panama.
Not only did our first year there get severely hindered by this mess, but it might also be the reason we don’t go back for a second year.
That’s a tough enough pill to swallow considering how much we were enjoying our time there. But life happens and you just gotta adapt accordingly. We’re pretty good at that.
The bigger issue though isn’t Panama – it’s the part about living in the U.S. Not only do we need to figure out where we’ll live, but our cost of living will likely make a big jump in cost.
So really one of the biggest questions for us as early retirees is going to be “how much of a financial impact would moving back to the U.S. have on us?”
The Panama recap
For those new to our story, I retired at the end of 2018 at the age of 43 with my wife, Lisa, and our daughter, Faith. We planned to move to Panama in the summer of 2019, explore the new culture, and homeschool our daughter.
After staying at an Airbnb place for about a month, we found a place to rent that we really liked and was close to town. This was in the mountains of Boquete where the temperature is consistently 75 degrees every day year-round… perfect for weather wimps like myself!
Life was good. We had fun walking through town, learning more about the Panamanian culture, eating at different places, and just trying different things. Some days we’d go hiking, while others we’d play cards together at the local cantina, or take the bus down to David for some shopping. We also eventually made it to the beach for a mini get-away, which just added to the good times.
Lisa took the bull by the horns with homeschooling Faith and then we chased after learning Spanish more. We started to fall into a routine and it was good. The big thing that was missing was friends and family, but we slowly started to make some friends (most folks there are extremely friendly and helpful).
We came back to the U.S. in November for about a month since we didn’t have residency and needed to leave periodically to follow their tourist rules. We took a cruise in December and then got back to Boquete a couple of days before Christmas.
It took a little bit, but we started to fall back into our routine again over the next few months and we were back to having fun. We even had several groups of friends and family booking their trips to visit us. That was about to make things busy as all get-out (in a good way!) for our next several months… and then it happened.
Yes, you know what I’m talking about – the emergence of COVID-19 taking center stage in everyone’s lives. That’s the point when everything changed for us.
Panama took the virus very seriously from the start and things started to change drastically throughout the latter half of March. In a nutshell, everyone was put on lockdown mode – quarantined to their homes except to go to grocery stores, pharmacies, or banks. And you could only head to those places during the gender-separated two-hour time slots you were given.
It wasn’t the end of the world. We had a balcony in our condo overlooking the mountains and 75-degree weather every day. We would order groceries and sometimes dinner to be delivered and we’d entertain ourselves as best as we could. But after a few months of not being able to leave your place (Faith wasn’t allowed to go out at all), it started to become tougher.
When you’re stuck alone with your thoughts all day because you can’t do anything, the mind finds a tendency to wander. Lisa and Faith started to get more and more homesick. So we eventually made one of the hardest decisions we’ve ever had to make – we decided to come back to the U.S. This was difficult because the airports were closed down for commercial flights and only humanitarian flights were allowed in.
We left knowing we had absolutely no idea when we would be allowed back in. And as of now (late August 2020), they’re just starting to allow residents back into the country but only residents. We don’t have residency there so as a tourist, we’re not able to get back.
So here we are trying to figure out when we’ll be able to get back to our home there. It’s not looking good on opening up anytime soon and so now we’re waking up to the reality that our retirement in Panama might just be over.
Moving back to the U.S. – the plan?
We don’t have too much of a plan right now – how’s that for scary?
Well, it’s not too scary, but it is a little unnerving not knowing what moving back to the U.S. truly entails for us. We were making Panama a year-by-year decision on whether to stay, go back to the U.S., or move somewhere else. However, we weren’t anticipating having the decision forced onto us.
We’re still in the middle of our road trip, but eventually, that has to come to an end. So where in the United States is our new home going to be if we’re moving back?
I don’t have an answer… we don’t have an answer. Luckily though, we have the flexibility to take our time in deciding and the world is our oyster right now.
And here’s the best news – once I know the plan, you’ll know it too since I blab everything here!
Can you stay retired after moving back to the U.S.?
We should be able to continue our retired life even after moving back here. When we first decided on using Panama as an opportunity for geoarbitrage, Lisa had a super-smart thought… what if we didn’t like living in Panama? Would our only choices be to either stay there and be unhappy or come back to the U.S. and I’d have to go back to work (strange that the thought was that I had to be the one to go back to work!).
That small bit of forward-thinking from Lisa became invaluable in our early retirement. I kept working to save up enough money to cover our expenses just in case we decided to move back to the U.S. That way, we’d have a little more breathing room while in Panama but could still look at coming back without too much a problem.
As a side note, that also became important because Boquete isn’t as cheap as we had envisioned. It’s definitely less expensive than the cost of living in Ohio (which is already low) but as the expats have continued to flood in over the past decade, prices have continued to rise.
So we should be good to cover our expenses here in the U.S. without needing to go back to work. But Lisa has also talked about going back to work part-time if moving back here becomes a reality just to have something “fun” to do. I’m sure her pay won’t be anything crazy, but every little bit of income helps alleviate some strain on your portfolio.
But can we truly afford it?
The first consideration that we have to take into consideration if moving back to the U.S. is going to be our housing costs. If that wasn’t relevant, we’d be living in a place like San Diego enjoying the beautiful weather there every day!
However, we don’t have “baller” money so we need to think a little smarter. Right now, I think the two places we’re considering living are Tennessee and Ohio… and both of these places offer some affordable living in some great areas.
We had a good thing going in Panama with respect to costs. We were renting a 3-bedroom, fully-furnished condo in the gated community of Valle Escondido that was walking distance to town. The development gave us access to two swimming pools, a hot tub, a full gym, and more. Our rent was $1,100/month and the resort access cost us a total of $162 for the year – that’s for all three of us!
Most utilities were included in our rent except for electric bills and propane. Don’t forget that we don’t need heat or A/C because there because of moderate temperature every day… just some ceiling fans to get the temperature just right. The electric bill floated around $85/month and the propane (for the stove) only needed to be swapped out once in March, which ran us about $80. I doubt we would need to, but let’s assume that we would swap out the propane twice per year.
|Paid Monthly||Paid Annually||Cost Per Year|
|Total Per Year:||$14,542|
|Average Per Month:||$1,211.83|
Um, that’s about it. How the @#$% am I going to beat that if we’re moving back to the States? There’s no way we’d get the same quality of life for such a low cost.
Sure, we might be able to find a cheaper place to rent, but we’d most likely be compromising our location to do it. We’ll obviously lose all the amenities that we were getting in Panama plus we’ll pick up a lot more costs with utilities we’ll have to pay.
There’s also the minor factor that most places we’d find here in the U.S. will be unfurnished. That means we’ll have to spend some bucks for silly things like, oh, I don’t know… furniture! That’s not going to be cheap but at least it’s a one-time cost.
Additionally, we didn’t pay renters insurance in Panama. My understanding is that it’s not easy to get that there and why would you? We didn’t have anything there except our two suitcases each containing our stuff and that didn’t come out to be any crazy amount of money anyway. Guess what – we’ll want renters insurance here in the U.S. and they tend not to give that away for free.
I can’t tell you how much everything will cost us in the U.S. because there are just too many variables. Where we might move, the types of furniture we could get, etc. are going to vary so wildly that it’s just too hard to call. But I can tell you this – it’ll be a lot pricier than it was for us in Boquete.
This is another costly category in the budget of most Americans’ lives. In Boquete, it’s so beautiful every day that I wanted to walk around all the time. We didn’t own a car because we were less than a mile from town so we mostly walked everywhere. Better for the pocketbook, our health, and the environment!
One exception was going to David (about 45 minutes away) for some bigger shopping. This might be a run to PriceSmart (a warehouse club like Costco) or Conway (like a giant Target). We’d generally go once every month or so and either take the bus or a taxi there and back.
Mint is telling me that we were spending around $100-$200/month in transportation. That’ll be hard to beat when moving back to the U.S. unless we’re in a small town somewhere. That means we’ll need a car. We could keep the 2012 Honda Pilot we just bought for about $12k for our road trip or we could sell it and buy something less expensive. Either way, we’ll only need one car since we’re not working.
But a car then means you pay for car insurance, gas costs (unless it’s electric), and repairs and maintenance. That’s going to be a lot more than the $200 we’re now accustomed to spending each month!
Now, this is an area we might actually do a little better in by moving back to the U.S.! Believe it or not, we came out ahead on our grocery shopping in Ohio compared to shopping in Boquete, Panama.
Why? Only one reason – Aldi.
We did almost all our shopping at Aldi before we moved and we were always in disbelief at how much we saved every time. And the food was great so we weren’t sacrificing to do it.
Now, I will say that most grocery stores in Boquete are cheaper than the stores here in the U.S., but it ain’t beating Aldi prices! So our cost of groceries probably got close to doubling when we moved to Panama.
Regardless, if we were spending $500/month on groceries in Panama, that was a big month. That will probably make a lot of folks’ jaws drop but we just seem to do well in this area.
And if you’re thinking that it’s because we’re dining out all the time, you’re in for a shock. When we moved to Boquete, I wanted us to eat out more often just because we could, so why not try out all the different restaurants there (I’m told that we have around 75 of them in town)? But in actuality, we probably ate out once a week, although we might stop for a beer or two at the local cantina once every week or two as well.
The other reason I wanted to dine out more in Panama is that it was so much less expensive. Going out to a high-end dinner (i.e. Boulder 54) for the three of us might run us around $75. Going to a mid-level restaurant (i.e. Big Daddy’s Grill) might be around $40 for us. And we’ve also eaten at Panamanian restaurants where we paid $11 for breakfast for the three of us.
In other words, it’s dramatically cheaper to eat out there. Before moving to Panama, we probably ate out once or twice a month while in Ohio.
So I think we’ll come out ahead in the food category overall being in the U.S. However, if we’re moving back, we’ll be missing the Boom Boom Shrimp Tacos from Big Daddy’s for sure – those things are delicious!
Oh, boy – it’s time for the dreaded anchor in the plans of most early retirees… health insurance.
In my last year of work in 2018, I was paying $190.01 per paycheck for health insurance for me and my family. I can only imagine what my employer was paying on their end but it sure was appreciated! That number was every two weeks, so that comes out to be about $412/month for health insurance.
If you live 100% of the time in Panama, you could get away without insurance (I wouldn’t do it though!) or you can buy cheap insurance directly with specific hospitals. When we moved there though, we knew that we’d be coming back to the cesspool of health costs in the U.S. which are unlike the entire rest of the world.
So we decided to get expat insurance through IMG Global. That covered us wherever we were (including the U.S.) as long we stayed out of our home country for at least 6 months out of the year. Perfect. We didn’t even anticipate using it while in Panama but if we got into a car accident while visiting in the U.S., we were covered.
This actually ran us less than the subsidized payment with my former employer. We paid a total of $299.10/month for a nice plan to cover the three of us. That goes up to a whopping $317.05/month starting in September. I’ll be more than glad to take in that $18 increase if we can get back there!
All of this becomes meaningless if we’re moving back to the States. We won’t qualify to keep our expat insurance and I don’t have an employer to absorb the bulk of our costs. This is the reason many people don’t retire even if they have the money to cover all their other costs. Health insurance is stupidly insane in the U.S. until you’re eligible for Medicare at 65.
I refuse to throw in the towel though – this is an early retirement blog after all and I’m here for you!
There are two possibilities I’m considering for us:
Liberty HealthShare is not an insurance company. It’s a health care sharing ministry. If you’re not familiar, these ministries act as co-ops where members throw in money every month, and then if someone needs medical, they review it and reimburse you if approved.
Let me repeat this – it is NOT an insurance company. That means you need to be able to front the costs, which can be tough for a lot of folks. And then they review your claim that you submit to them. Unlike an insurance company though, they can refuse to reimburse you for whatever reason. Imagine paying $10k (or more) out-of-pocket and then finding out they don’t want to reimburse you for whatever basis – that can be crushing to anyone’s plan!
We used them from the time I left my job until we headed to Panama in the summer of 2019, which was about half a year. We submitted claims to them for a few things like physicals and Lisa had to go to the doctor once. Here we are a year later and we’re STILL trying to get reimbursed for our costs.
They’re not denying the claims, but coincidentally, they upgraded their entire system about the time we joined and it almost destroyed them. Everyone I talked to and everything I read talked about what a disaster this was for them. So now, Lisa calls them every month or so to say, “Where’s our money?”
That said, I’ve heard that before this upgrade and now that the dust is settling claims are handled much better. So it’s a consideration for us. I believe we were paying $479/month for our family… that’s not too shabby.
But remember that there are stipulations to join (they want healthy people as members) and again, it’s not real insurance.
Affordable Care Act marketplace (HealthCare.gov)
This is an area I’m not as familiar with but will be learning more about very soon if we determine we’re moving back for sure.
Although you might think that ACA plans can be crazy expensive, there’s one interesting facet of this that’s an important caveat. Right now, the government provides subsidies for those with lower incomes.
That becomes a unique opportunity for early retirees. Even though we have a high net worth, we don’t have a lot of income coming in. Really, almost all of our “income” revolves around the Roth IRA Conversions that we’re doing every year.
Because of that, we’re a family “making” about $60,000/year. When I went through eHealth, a third party company I heard about during episode 131 on the Earn & Invest podcast (Will Healthcare Costs Kill Your Early Retirement Plans?), it shows that we should be able to save $758/month on our premium… that’s incredible. It said that I should be able to find plans for us for as low as $110/month. I couldn’t go any further though because we won’t be eligible until open enrollment in November but I’m amazed.
I can’t stop you from lashing out in the comments about how this is unfair (well, I guess I could!), but this is how the law is currently written. And it can (and probably should) change.
In the meantime, it’s something we’ll need to consider. Come open enrollment in November, I’ll review the market to see where we stand. That means that our healthcare coverage might actually be cheaper than what we were paying for expat coverage this past year.
Justin from Root of Good talks about ACA coverage and the subsidies periodically on his blog. He’s a smart guy – check out his blog and consider getting on his email list.
As a matter of fact, it’s time to remind you to sign up for mine. One email per week to give you a head’s up on the latest blog posts and fill you in on what’s going on with us – no spam – it’s just little old me. Sign up here and I’ll send you a welcome email with some cool spreadsheet templates. You’ll love ’em! Go ahead, I’ll wait…
Aw, that was nice of you to sign up. Glad to have you onboard – you’re gonna love it!
Is moving back to the U.S. the end of our early retirement?
I really don’t think so. Moving back here will put a pinch on some aspects of our life and in the end will likely increase our monthly expenses.
But the shift upwards shouldn’t be dramatic enough that it’ll crush our life in early retirement. And, as I mentioned, Lisa is anticipating doing some part-time work once we get settled as well. So that can help fill in the holes somewhat along the way. Maybe the income from this site will grow some as well.
There are so many variables in this transition, but if it happens, we’ll need to re-evaluate everything. Thank God we built our plan around living in the U.S. – that may have been one of the most important choices we made in our FIRE planning.
We targeted a safe withdrawal of about $55,000/year (adjusted each year for inflation). In Panama, we were spending more than we anticipated, but we were still only heading toward roughly $42,000 for the year… that’s a good amount of breathing room. I think we should be just fine in the U.S. even with the increased costs.
Hopefully, a miracle happens and we get back to the beauty Panama has to offer. But as each day passes, I’m becoming less and less confident and I think staying here in the U.S. is going to be it for the long haul (at least until Faith gets older).
Thanks for reading!!