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All the Right Moves: Retiring Abroad 2009

The formula for retirement is changing, of course, with 401(k) balances and home prices taking a huge hit. Retiring abroad can bring high-quality living and health care to you for less than what it might cost in the United States. Kicking back south of the border can work well in today’s environment.

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David Huff and his wife, Catherine, left St. Joseph, Mo., in August 2007 to resettle in Mexico’s Lake Chapala area. The couple rent a two-bedroom, fully furnished home for $650 a month. David knows enough Spanish to get by, and Catherine is fluent. He says the area is a “wonderful blend” of American and Mexican cultures, but he worries that it will become “too Americanized.”

How is the Huffs’ bank account faring while they’re abroad? “While the economy is hurting worldwide,” David says, “we’ve had a break here in the fact that the peso has devalued some against the U.S. dollar.”

The Huffs are fortunate. Finding a budget-friendly area abroad for retirement that is just foreign (or homey) enough and that fits your lifestyle is no vacation. Elena Carrillo of National Association of Realtors (NAR) says investors who buy property overseas usually spend 18 months to 3 years making that decision. But the global financial crisis is likely, she predicts, to spur many who have been planning a move to act fast before prices start to rebound. With the dollar strengthening and housing markets weakening across the globe, it’s a good time to bargain-hunt for an imminent move. Carrillo believes that the window of opportunity certainly will last until later this year.

GLOBALIZING THE GOLDEN YEARS. Regardless of the economic downturn, David Truly, associate professor of geography at Central Connecticut State University, expects that the number of Americans who retire overseas will swell. He pins this on the premise that the global economy brings distant cultures into closer contact with one another. He also points to how baby boomers are more educated, wealthier and more well-traveled than previous generations.

Truly sees boomers’ willingness to retire abroad as an outgrowth of the generation’s identity and points out that more than any other preceding generation, boomers have redefined U.S. life.

The cultural and economic dynamics of retiree strongholds abroad have changed. Sizable expat communities have cropped up, for example, in Mexico, Costa Rica and Panama. Rosanne Knorr, author of “The Grown-Up’s Guide to Retiring Abroad,” calls Mexico “a suburb of the United States.” Peronet Despeignes of Serenity Real Estate in Nicaragua agrees with many in his area that Costa Rica and Panama are becoming retirement destinations. This has real estate agents calling the two countries the California or Florida of Central American real estate.

A Taxing Process

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There are advantages to picking a spot where the path already has been forged. In the regions of Mexico and Central America that have American communities, English-speaking doctors who were trained in the United States are commonplace. Health-care facilities and quality of care generally meet Americans’ standards. In Panama City, Hospital Punta Pacifica, which is affiliated with Johns Hopkins International, opened in 2006.

Mary and Matt Strociek retired to Panama in 2005. In 2008, Matt fell ill and spent three nights in Penomene Hospital in northern Panama. He needed X-rays, an electrocardiogram and blood work. The bill? A grand total of $65. Later that same year, Matt had cataract surgery that cost $1,800, including follow-up. Mary says her full-price pharmacy tab in Panama is just about the same as her $15 insurance co-pay while living in Illinois. Mary and Matt covered these and other medical costs without private health insurance

Although retiring to a European country seems to have fallen out of favor, it can’t be because of health costs, even though American retirees almost never qualify for health insurance under the nationalized programs in much of Europe. Paying out of pocket for services still can cost less than paying while insured in the States, says Victor Rodwin, a professor of health policy and management at New York University.

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