4 Countries That Welcome American Retirees

These countries offer tax breaks and other perks to foreigners who retire there.

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Older couple
Jennifer Sharp/Getty Images
By Kathleen Peddicord

Some countries roll out the welcome mat for foreign retirees, offering sometimes significant tax breaks, in-country discounts and other perks to anyone who qualifies for resident retiree status. The age you qualify as a retiree can have a broad definition, depending on where you go. For example, in Belize you can qualify for retirement residency and the associated perks as young as 45, and Panama has no stated minimum age requirement for its Gold Standard retiree residency program.

Costa Rica was the first country to make a concerted effort to attract foreign retirees with a program of special benefits. Its pensionado program was responsible for bringing tens of thousands of foreign retirees, mostly Americans, to the country in the 1980s and 1990s. While the pensionado visa is still available in Costa Rica, many of the tax breaks and other special perks it once offered have been discontinued. Costa Rica has also become more expensive, both as a place to live and as a place to own a home. For these reasons, while Costa Rica is perhaps the world's best-known overseas retirement haven, it no longer qualifies as one of the best.

Today, these four countries are working hard to attract foreign retirees:

Belize. Just over a decade ago the government of Belize enacted legislation to allow qualified retired persons to obtain permanent residency in their country. This is a quick and efficient program. As a QRP you could become a full-time resident of the country, but you can also enjoy the benefits if you spend as little as one month a year in Belize.

Belize's QRP residency program isn't only for senior citizens. It's available to anyone age 45 or older, and it grants a host of incentives designed to encourage foreigners to come and bring their money. These incentives include a permanent exemption from Belizean taxes, including income tax, capital gains tax, estate tax and import tax on household goods, automobiles, boats and even airplanes.

The only requirements to qualify for Belize's QRP program are that you be 45 or older, consider yourself to be retired and have at least $2,000 a month in guaranteed income to support yourself in Belize. While pension income can be shown to meet the last requirement, the easiest way to prove financial means is simply to deposit a minimum of $24,000 per year into a Belizean bank account.

In practical terms, the "consider yourself to be retired" requirement means that, as a QRP, you can't apply for a work visa. This is not to say that you can't do international, Internet or even local Belize business as an entrepreneur. You just can't take a job working as an employee of someone else in Belize.

Even if you're not contemplating retiring in Belize for several years, this is the time to apply and lock in the benefits of the current QRP law. Once you've qualified, a one-month holiday in Belize each year will maintain your QRP residency status while you work toward your ultimate retirement plan.

Ecuador. In recent years, Ecuador has raced to the top spot on lists of the world's most desirable retirement destinations, especially for retirees on a budget. The country offers diverse lifestyle options, from colonial Cuenca to cosmopolitan Quito and from the sleepy mountain town of Cotacachi to the fishing village of Playas.

Ecuador's retiree residency program offers the following benefits:
  • 50 percent off all public transportation.
  • 50 percent off national and international airfare.
  • 50 percent off all cultural, sports, artistic and recreational events.
  • 50 percent off electricity, water and telephone service.
  • A special discount on property tax.
  • Relief from Ecuadorian income tax.
  • A discount on vehicle tax.
  • A discount on judicial fees.
  • A refund of value added tax (sales tax).
  • And, perhaps best of all, you never have to stand in line. Seniors age 65 and older always go to the front.
The process of applying for and receiving retiree residency status in Ecuador has gained a (probably deserved) reputation for being complicated. However, the government has made an effort to simplify things. In addition, a new immigration office has opened in Cuenca, where many foreign retirees are choosing to base themselves.

However, the program also has some restrictions. As a retiree resident of Ecuador, you can leave the country for no more than 90 days per year for each of the first two years or you lose your status. After the first two years, you cannot be out of the country for more than 18 consecutive months.

To qualify for Ecuador's retiree visa program, you must be able to show guaranteed income of at least $800 per month, plus an extra $100 for each dependent relocating with you. If the income you're using to qualify for the program is from a source other than a pension or Social Security (investment dividends, for example), the amount of $800 per month for five years ($48,000) must be deposited in a bank in the country in advance.

Nicaragua. Nicaragua is a land of contrasts at an interesting time in its development. The civil war is history, and Nicaraguans today want nothing more than peace and prosperity. Geographically, Nicaragua is blessed, with two long coastlines and two big lakes, plus volcanoes, highlands, rain forest and rivers. In this regard, it has everything Costa Rica has, while also being less discovered and less developed. It is available for adventurers, eco-travelers and budget-minded retirees at bargain rates compared with costs in the United States, Costa Rica and almost anywhere else in Central America. Nicaragua is one of the most affordable places in the world to enjoy a comfortable, full and rich retirement.

The challenge for Nicaragua is persuading the world to take the country seriously as a potential retirement option. Nicaragua continues to work hard to overcome its troubled past and the world's general misinterpretation of the current reality in this country. As part of this effort to attract foreign investment, the country has instituted a pensionado program that is competitive with those on offer in Panama, Belize and elsewhere in the region.

To qualify for retiree residency in Nicaragua, you can be as young as 45. The best part of Nicaragua's pensionado program is the minimum monthly income requirement, which is the lowest offered by any country. You need a pension or Social Security of just $600 per month (plus $100 per month for each dependent) to qualify.

As a pensionado in Nicaragua, you:
  • Pay no tax on out-of-country earnings.
  • Can bring up to $20,000 worth of household goods into the country with you duty-free.
  • Can import one automobile for personal use duty-free and sell it after five years, if you'd like, without incurring any sales tax.
Panama. Panama offers what has become the world's best-known pensionado program after the once-heralded program from Costa Rica. Panama's pensioner status offers some of the deepest retiree discounts available anywhere, making it one of the most generous retiree packages in the world.

The government of Panama is fairly relaxed with regard to the minimum age to apply for this visa. Typically if you are over the age of 18 and receive a guaranteed pension from any government entity, including Social Security, the Armed Forces or a private company, then you can apply.

Your pension must be at least $1,000 per month, plus $250 per month for each dependent, including children under 18. Once you've qualified, you enjoy all pensioner visa benefits for life. These include:
  • 50 percent off entertainment anywhere in the country, including movies, theaters and concerts.
  • 30 percent off bus, boat and train fares.
  • 25 percent off airline tickets.
  • 50 percent off hotel stays Monday through Thursday.
  • 25 percent off hotel stays Friday through Sunday.
  • 25 percent off at sit-down restaurants.
  • 15 percent off at fast food restaurants.
  • 15 percent off hospital bills (if no insurance applies).
  • 10 percent off prescription medications.
  • 20 percent off medical consultations.
  • 15 percent off dental and eye exams.
  • 20 percent off professional and technical services.
  • 50 percent off closing costs for home loans.
With Panama's pensionado visa, you are also entitled to a one-time tax exemption on the importation of household goods (up to $10,000) and a tax rebate on every two years of import duties for the importation of a car (sales tax and luxury tax still apply).

In the past it was possible to apply for pensionado visa status on your own. However, the Panamanian government has since enacted a law requiring a lawyer to submit all visa applications. Also, because of the great volume of foreign retirees applying for pensionado visa status in Panama, the process can take up to several months.

Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 28 years experience covering this beat, Kathleen reports daily on current opportunities for living, retiring and investing overseas in her free e-letter. Her newest book, "How To Buy Real Estate Overseas," published by Wiley & Sons, is the culmination of decades of personal experience living and investing around the world.


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