Today's guest post is from Jim at Route To Retire, an early retiree. His family of three decided to leverage international geoarbitrage to start a brand new life in Panama.
Jim is living a life that I eventually want to try once both our kids are old enough to remember their adventures (5+). If you've always wanted to learn how to move overseas to live a better life for less money, here's how they did it.
Becoming a millionaire was something I always dreamed of but, honestly, never really expected to become a reality. Through some intentionality in saving and investing though, that's exactly what happened by 2017.
The goal I was working toward was to retire early so I'd have freedom with each day. I wanted to enjoy the present more and be able to concentrate on time with my wife and young daughter. Seems like a reasonable goal, right?
However, I think we all know that a million dollars ain't what it used to be. And to make that last for possibly 45 years or more? That seemed like an impossibility.
So I started thinking that even though we lived in a pretty low cost-of-living area near Cleveland, Ohio, maybe there was somewhere else we could go that might be less expensive.
Then I realized that we weren't really limited to just the U.S. if we were no longer going to be working. Maybe we could move to another country and get more of a bang for our buck as well.
And that was it. Without even realizing it, I had discovered the idea of international geoarbitrage without even knowing that was a thing. The idea of taking your money and making it worth more by moving to a lower cost-of-living area can be an effective financial tool.
In our case, we decided to move to Boquete, Panama after going on a single vacation to the country in 2017.
An International Geoarbitrage Adventure To Boquete, Panama
I retired at the end of 2018 from a 20-year career as the Systems Engineers manager at an IT support company.
If I knew better, I would have used the strategies in Sam's How to Engineer Your Layoff book to secure a severance beforehand. I've read the book since and know that I was a perfect candidate and would have likely pocketed some good money. Live and learn, I guess!
I was 43 at the time of our retirement and our net worth was $1.2 million. That's a nice chunk of change but a little scary to know that we were counting on that to support me, my wife, and our daughter who was 8 at the time.
Still, we took the plunge and moved to Boquete, Panama in the summer of 2019. There are plenty of other places around the world that are a lot less expensive than Boquete. However, this transition was something pretty big for us already and we wanted to take a baby step.
Instead, we went with the approach of spending a little less money than we would in the U.S. but living a much better lifestyle. Boquete, Panama carries many similarities to the U.S. but that also means it’s more expensive than other places around the world.
Resort Living In Retirement
We're living in a beautiful fully-furnished 3-bedroom/2-bath condo in a higher-end resort on a golf course. We have access to a full gym, a couple of huge pools, and more. The mountain landscapes here are spectacular and everything's so lush and green with flowers so vivid it looks unreal. Our housing cost per month including utilities and internet… about $1,300.
Because it's 75 degrees here every day and we're only about a half-mile to town, we decided not to get a car. Walking to town with this mountain scenery is well worth not being cooped up in a car. Besides, taxis are everywhere and cost next to nothing when needed.
Essentially, we're getting beautiful San Diego temperatures for less than you'd pay for “standard” living in Ohio.
Censuses aren’t the norm here, but the population in Boquete is said to be about 35,000 with a ballpark of roughly 10% of that being expats. It’s not a huge town, it’s walkable, and there are a lot of others around who speak English (mostly expats). We are learning Spanish though because it does make like a lot easier.
Somehow in this small town, we have close to 100 restaurants serving up everything from Panamanian food to Italian, Mexican, American, Peruvian, Chinese, pizza places – you name it!
We also have a few grocery stores and can get almost everything we need here. Periodically, we head to David, a bigger city about 45 minutes from here for the things we can’t find here. Since we don’t have a car, we’ll usually take the bus ($1.75 each) there and take a taxi back ($25-30).
Let’s Talk Numbers On International Geoarbitrage
Ok, let’s get to the meat of things. International geoarbitrage can be beneficial for so many reasons. But, you probably want to know more about some of the numbers, especially if you want to retire early abroad.
You already know our housing expenses… and $1,300/month is actually pretty expensive. We’re living in a fancy-pants resort. If we lived elsewhere in Boquete, we could easily find another fully-furnished place to rent for $750/month (including most utilities).
The cost of real estate is also less expensive than in the U.S. But like the U.S. it varies based on location and what you’re getting.
Fresh fruits and vegetables are extremely cheap. We can easily get enough of these to fill a couple of canvas bags for $10.
Other groceries seem to be hit or miss. Items you wouldn’t think would make a difference are pricey here. Cheese, pickles, lunchmeat, bacon for example – they're almost twice as much as what we’d pay in the U.S. Other foods aren't too expensive, but they're still pricier than what we used to pay at Aldi.
On the plus side, beer is extremely cheap here. Usually less than $2.50 for a 6-pack.
I can also get U.S. beer here much cheaper than I can in the U.S. That might sound strange, but even with the additional cost of it being an import here, it’s not taxed out the yin-yang like it is in the U.S. I just bought a six-pack of Budweiser bottles on sale for $4.50 (usually $5.34).
We spend about $500/month on groceries for our family of three, including alcohol.
The Cost To Go To Restaurants
Dining-out costs depend on what you’re looking for to eat. You can eat a good meal in a small Panamanian restaurant for $5 for a meal. The three of us had a delicious and filling breakfast at one place for a total of $11.
Most standard, mid-level restaurants usually run the three of us $40-50 (including beer/wine). A high-end restaurant generally costs us $70-80 for all three of us. That’s without a tip, which is customary to be 10% in Panama though we usually go with 15%.
We’re spending less than a total of $45k/year and living an extremely comfortable lifestyle here. We live in a beautiful place in a nice condo, eat out once a week or so, and travel/vacation quite frequently. For a family of three, that’s about all I could ask for!
What About Medical Costs And Healthcare Quality Abroad?
Sure, you have some cheaper prices, Jim, and it sounds like the quality of life is pretty darn good. But the medical is crap, right?
This is one of the topics that comes up quite a bit with folks wondering about international geoarbitrage. That's reasonable since we’re from the U.S. and the cost of healthcare is both broken and stupidly insane. The average cost of family health insurance is outrageously high.
Health insurance is also the factor that keeps so many U.S. folks from being able to retire before the age of 65 when they can receive coverage through Medicare.
As far as the quality goes, the doctors are mostly trained in the U.S., France, and Mexico. I’ve been told that some of the equipment can be as good as and sometimes better than what we have in the U.S.
Although, we haven't frequented doctors offices or hospitals here, friends who have spent time there have told me that the quality of care they’ve received has been excellent.
I've been to a specialist here in Panama at a private hospital (as opposed to the less expensive public hospitals). It was a dermatologist appointment with an excellent doctor who spoke perfect English. The care was great and the cost with no insurance for my appointment… $60.
I paid in cash on the way out. No one cared that I didn't have insurance. There were no weird copays or waiting for months to know what my payment responsibility would be, and no arguing that something got coded wrong. Yup, $60 and I was on my way. And this is for extremely good medical care.
To Get Healthcare Insurance Or Not While Living Abroad
Some expats who live here pay to insure directly through the hospitals. Costs can be less than $150/month. Other folks get insurance through regular insurance companies where they pay less than $100/month with a deductible of $5,000.
And many expats just don’t get insurance at all. The costs are so cheap that they just self-insure and pay in cash when things come up.
In our case, we have very good expat insurance that covers us wherever we are. We signed up for that not specifically for Panama but mostly for when we travel back to the U.S. If we got in a car accident or something there, the costs could be insane.
Our expat coverage requires that we be out of our home country (the U.S.) for 6 months out of the year. Other than that, our premium for the silver plan is a total of $317.05/month for the three of us. Our deductible is $1,000. Not too shabby, right?
What’s It Like To Actually Live Abroad?
It's not perfect here (no place is), but I'm so glad we decided to give this a shot in Boquete. The people are friendly, the landscapes are beautiful, and it's hard to complain when your beer at a restaurant or bar costs only a buck!
It’s 75° here every day, which makes it perfect for taking a walk around the resort, walking around town, hiking, zip-lining, horseback riding, or most any daily activity. I know the golfers love it!
Maybe you’re thinking that's too cold – what about beach weather?!
Here’s the thing, we purposely moved to the mountains because it’s cooler and we don’t have to live in air conditioning. This is great for everything we want to do on a day-to-day basis.
And when we want to bask in the sun and spend a few nights at the beach, we just head an hour or two down from the mountains. Suddenly, we have access to some beautiful beaches and resorts and the temps are in the high 80s. We really get the best of both worlds.
Here’s something to consider though… we’re not living on a permanent vacation. Although we have a blast doing beach outings periodically, going on hikes, zip-lining, whale-watching, or other fun, we still have normal lives. It can’t always be a vacation.
We still have laundry to do, bills to pay, and homeschooling to do (well, Faith has homeschooling to do).
Just Another Typical International Geoarbitrage Day
On regular days, I head to the gym while Lisa works with Faith on homeschooling. Later, we might go grocery shopping or run some other errands. Occasionally, we’ll go to lunch or dinner at one of the many restaurants here.
Most of the locals here only speak Spanish. But sometimes we’ll run into someone who speaks English somewhat as well. We’ve gotten better with our Spanish and that’s made conversations much easier.
The Panamanians as a whole here are welcoming. And between our broken Spanish and their broken English, we always get things figured out.
Boquete is a big expat community so there are a lot of folks around from the U.S. or Canada who speak English as well. It makes it a whole lot easier to learn the ropes when you can meet people who’ve been there and done that.
We’ve made a lot of friends here and enjoy the camaraderie. COVID obviously threw a wrench in the works from hanging out with other people. But hopefully, we’ll be back to that again soon.
The Downsides Of Living Abroad
Life is good here and pretty easy-going, but there are downsides. We do miss family and friends. It’s hard to be away from everyone you know for so long.
The upshot is that since we’re living as tourists here, we have to leave Panama every 6 months for at least 30 days. That gives us an opportunity to head back at least a couple of times a year and spend a month or longer visiting everyone.
With regards to the expats, Boquete is mostly a community of older retirees. So there aren’t a lot of English-speaking kids here. Because of that, you can imagine that Faith (daughter) doesn’t have a lot of friends here. She does have one really good friend though. And they’re like two peas in a pod when they get to hang out together.
Is International Geoarbitrage For You?
International geoarbitrage isn’t for everyone. To appreciate it, you have to be someone with a sense of adventure. You also need to be willing to accept change and go with the flow.
It’s important to realize that homesickness could affect you dramatically while living far from home. Missing family, friends, and even the lifestyle you’re used to can weigh heavy on your shoulders. That has the power to drive you back to your home country.
If missing home is big concern, finding a place closer to your home country could be useful in giving you the ability to head back more often to visit.
Regardless of the country you might be considering, it will be different from your home country. Not only are laws different, but people and customs are also going to vary from what you’re used to. Certain things you might appreciate and others will drive you nuts.
But if you’re going to live abroad, you need to accept that not everything’s going to be the same as you're used to. Learn to appreciate those differences and you'll likely love living in another country. Be annoyed or upset about the differences and you’ll be miserable wherever you are.
Factors To Consider If You Want to Live Abroad
Every country's going to be unique. I can only speak about our experiences living in Panama. You need to consider some of the many factors that’ll come into play in choosing a place for international geoarbitrage. If you're determined to live abroad, here's a list of considerations when researching overseas locations.
- Cost of living: Some places are extremely cheap to live in but generally at the cost of being less developed. A great website to compare the cost of living difference between cities around the world is Numbeo.
- Weather: Is it hot, cold, rainy, or windy? Are there natural disasters you need to be concerned with?
- Healthcare: Is the healthcare in the country good? Is it readily available?
- Economy/Stability: Is the economy solid and growing or is the country on the downhill? Living in a struggling country could have a big effect on your future and safety.
- Crime/Safety: The above bullet is one concern, but how about in general? Are homicide rates, break-ins, or petty theft high in the area?
- Things to do: Does the area you’re looking at check the right boxes for restaurants, hiking, biking, entertainment etc.?
- Ease of gaining residency: Not every country is going to let you just waltz in and become a resident. In Panama, we decided to be perpetual tourists and that’s worked well for us. If you want or need to establish residency can you meet the requirements?
- Other expats/Welcoming to expats: Is the area you’re moving to filled with other expats? Having others around who have been in your shoes can be extremely helpful. It also makes life a little nicer if the locals are welcoming.
- Language: A lot of the countries people consider moving to aren’t English speaking. Learning another language can be challenging, but it can make life much easier.
- Distance to home country: If you’re unsure about leaving family and friends behind, perhaps distance is important in your choice.
No Perfect Place, But Lots Of Good Ones
Above are just some of the things you’ll want to consider. Making international geoarbitrage work means finding a place where the criteria that matter most to you rise to the top.
Chances are, you’re not going to find a place that checks everything on your list. No place is perfect and expect to make some concessions along the way. The goal is to find a country that meets as many of your important criteria as possible.
International geoarbitrage can be a powerful financial tool and can also provide for a better quality of life. It’s not for everyone. But if you’re up for it, it can make a tremendous impact on your life.
Readers, have you ever considered living in another country to take advantage of the cost-of-living or quality-of-life benefits?
From Sam: It's great Jim is maximizing his freedom in retirement. He hasn't let the pandemic slow them down. As someone who grew up overseas for 13 years, I know their travel experiences will only appreciate in value over time.
I also like how Jim touches upon the ups and downs of no longer having a steady paycheck.