Why are so many baby boomers retiring in Central America?

PANAMA CITY – Bill Dorgan, a former management consultant with a bit of a wandering soul, gave up on his first attempt at retirement in Fort Lauderdale to move to Panama to seek new adventure.

And adventure he found.

“I drove out to Lake Gatun to visit the Embera Indians,” Dorgan recalls with a flicker in his eye. “They picked me up in a dugout canoe and took me across the lake to spend the day in their community, where I danced with bare-chested women. That was an adventure!”

Back in the capital city, Dorgan lives a more urbane lifestyle with his partner Raymond in a spacious and elegantly remodeled 12th-floor apartment overlooking the shimmering glass towers of Panama City’s oceanfront banking district.

Here he has found more modest adventure in daily tasks such as learning to speak Spanish, opening a bank account in a foreign country, making new friends and buying and remodeling an apartment.

Dorgan, like thousands of other North American retirees from his generation, has taken moving south for retirement to new latitudes.

A 2007 survey by New Global Initiatives, in conjunction with the Zogby International, found that more than 3 million U.S. citizens have decided to relocate outside of the United States, and another 17 million were considering making the move. The survey showed that Central America ranked second behind Europe among 55 to 69 year-olds who plan to retire abroad.

That was before the financial crisis hit like a tsunami at the end of the decade, wiping out millions of retirement funds and stock portfolios. Now Central America’s relatively low costs, adjusted property prices and promising economic recovery makes it an even more attractive destination for folks who need to make their retirement dollars stretch further than previously planned.

And within Central America, Nicaragua, Costa Rica and Panama have positioned themselves as the top three picks for retirement – each with its own unique set of pros and cons.

With 73 million U.S. baby boomers set to retire over the next 10 years, this region’s broad offering has something for almost everyone.

Ryan Piercy, head of the Association of Residents of Costa Rica (ARCR), says Central America is sitting pretty when it comes to attracting the baby boomers, whose retirement wave officially started in 2011.

“Central America and Latin America are going to receive at least 250,000 American retirees over the next 15 years. And of all the options in the region, the majority, in my opinion, will go to Panama, Costa Rica and Nicaragua,” Piercy told The Nica Times in an interview in his office in downtown San José, Costa Rica.

Piercy says that Mexico, once considered the preferred Latin American retirement destination for North Americans, has become too dangerous with all the drug violence – a similar plague afflicting Guatemala and, more recently, Honduras.

And while several South American options such as Peru, Colombia, Paraguay, Uruguay, Argentina and Chile have become attractive, they are half a world away from the U.S. Cuba remains a Caribbean wildcard, but the baby boomer generation might have already come and gone by the time the communist island opens fully.

In other parts of the world, Europe has become too expensive for many bargain hunters, and places such as the Philippines and Thailand, with their different time zones and cultural differences, might be “too foreign” for many U.S. retirees.

While (thankfully) not all baby boomers seeking warming weather will settle on Central America, if even a small percentage come it will have an enormous impact on small countries such as Costa Rica, Nicaragua and Panama.

“If we get 100,000 new retirees in a small country like this, it would be huge,” Piercy said, noting that Costa Rica, despite its advanced “gringoification,” only has somewhere between 25,000 to 50,000 North American residents at the moment.

Positive Press

In a recent U.S. News and World Report article on the “World’s Top Retirement Havens for 2011,” Nicaragua is now ranked the No. 1 foreign destination in the world in the “super affordable category,” while Panama is ranked No. 1 in the “moderately priced” category.

“Nicaragua is more attractive than ever for one important reason: It’s a super cheap place to live,” writes magazine author Kathleen Peddicord, who notes that Nicaragua’s post-bubble property prices have reached “more realistic and negotiable” levels while cost of living has remained “seriously low.”

Javier Chamorro, executive director of investment promotion agency ProNicaragua, notes that Nicaragua’s recent reforms to its Retirement and Pensioners’ Law gives the country some of the most competitive incentives in the region. However, he stressed, more import than the government incentives are “the conditions that the country offers in terms of quality of life and cost of life.”

Nicaragua’s cost of living, culture, citizen security and affordable private health care in Managua give the country a competitive edge, Chamorro said.

Further to the south, Panama is also on the rise. Literally.

“Panama City,” Peddicord writes, “has the best infrastructure in all of Central America, but it no longer qualifies as super-cheap.”

First-world glimmer, however, can also be deceiving.

Relocation expert Sandra Snyder, author of the retirement guide “Living in Panama,” describes her adoptive country as a “third-world country with a first-world façade.”

It’s a city with all the modern conveniences of a U.S. city, but without proper infrastructure, no urban planning and no zoning, she says. 

From her balcony overlooking Panama Bay, Snyder surveys the skyline of metallic skeletons of new buildings under construction across the city, reaching upwards towards the sky like giant metallic plants competing for sun.

“If you look out the back window of my apartment, there are just as many buildings under construction there,” she said remorsefully. “Someday they are going to wall off the entire city.”

That’s the way it feels to Brandon Clogston, of Omaha, Nebraska.

After renting an apartment for two years while carefully scouting the real estate market in search for the perfect ocean-view pad, Clogston finally took the plunge and bought a beautiful 17th floor apartment unit overlooking the bay. But no sooner had he moved in when he discovered that the vacant lot next to his building was slated for a new high-rise that would soon block his newly acquired ocean view.

For those who have a tropical fix but less patience for a third-world adventure in their golden years, Costa Rica continues to be a perennial favorite. With a resilient reputation as a safe, secure and democratic country, Costa Rica has been luring foreign expats for decades longer than Nicaragua and Panama, and now has a foreign community with deep roots and a palpable presence.

While Costa Rica’s real estate prices and cost of living are now higher than many places in the U.S., the country continues to attract a certain segment that is willing to pay more for brand-name recognition and premium offering – especially in health care.

 Retiring Abroad is Common

What was once considered a gypsy lifestyle of uprooting and moving from one country to another has become increasingly common among baby boomers seeking an “active retirement.”

Not everyone who moves to Central America is hiding from the law or trying to escape personal demons. Lots of otherwise normal and socially adjusted people are also making the move these days, removing some of the negative stigma that was once attached to relocating to a “banana republic.”

The U.S., with its expensive health care, slumping real-estate market, nine-to-five blur and constant terror-alertness, has become a less-fun place to live for many people. And with the advances of broadband Internet, many expats have come to realize that the rest of world is not as big and mysterious a place as they once thought.

With the click of a mouse, people in Maine can instantly read about retirement benefits in Panama, or compare real estate prices in Costa Rica. And even blogs, online communities and e-mail groups, as recklessly misinformed as they often are, can also offer an overwhelming variety of first-person narrative information from folks who have already made the move.

As the World Wide Web expands to parts of the world without roads and running water, it has also become less important where people are in the world, as long as they have a Skype and e-mail account. As it becomes more commonplace to stay in touch and communicate with family over the Internet, it’s become less important if you live 30 miles apart or 3,000 miles apart.

This is especially true now that grandparents are more computer literate, even if they still peck at the keyboard like it’s their first time seeing one.

Central America’s airline connectivity with the U.S. also makes it relatively easy for folks to head up north for the holidays, especially for people living in Costa Rica and Panama, both of which are regional airline hubs. Nicaragua offers fewer daily flights, but Managua’s Augusto Sandino International Airport is so remarkably efficient and easy that it makes up for it.

The airline connectivity also makes it easy for families to visit their grandparents in Central America. And for a 10-year-old kid, getting on an airplane to visit grandma and grandpa in their new and exotic jungle playground in Costa Rica is much cooler than getting in the car to go visit grandma and grandpa in their overly sterilized retirement community in Pittsburgh, where you’re not allowed to walk on the grass.

While Central America has its share of problems (anyone who uses the words “paradise” and “Central America” in the same sentence should be regarded with the same respect as e-mail spam), the entire world – if you haven’t noticed – has become a pretty dysfunctional place.

With the future equally uncertain at virtually all latitudes, you may as well be somewhere that’s beautiful, tropical and friendly.

Then again, if you want to spend your retirement shoveling snow off your driveway, New England is lovely this time of year.