It’s common sense we should start saving as early as possible.
There are serious ramifications of neglecting to develop an early and executable plan. Easier said than done usually pops into my head, but saving 5% here, a thousand there steady– year after year saving– will accumulate over a working lifetime. According to experts, people should save around 15% of their salary, starting in their 20s, to have enough money for a solid retirement.
There are a lot of variables. What percent of growth will be realized? Will an employer match your savings? Are stocks still the best bet when an investor is young? What financial vehicles will provide the best, safe return? Not to mention, figuring out how long you might live and how you might pay for medical treatment. It’s overwhelming and almost always unpredictable. You just do the best you can after careful planning and research.
Don’t Expect Miracles in Panama
Pretty much daily, I come face-to-face with people who have not saved enough. Many are looking for real estate bargains which they think will provide them with a pleasant, but on-the-cheap retirement. It’s not always possible– at least, not to a miraculous extent. A typical downpayment in Panama is still 20-30%. If you don’t have a chunk to invest, it’s not going to be easy to find that dream property.
While your real estate dollar will certainly go further in Panama than in many other parts of the world including North America, Panamanian real estate is not a cure for neglect. When I work with people I try to find and offer the best possible options for their budget, working the angles and figuring the possibilities. Good investments are here, but miracles are few.
Planning Ahead in Your 50s
Ten thousand Baby Boomers turn 65 every day in the United States, and many of them are retiring. If they haven’t saved enough by then, it’s probably too late. But, for the millions more who are celebrating their 52nd birthday or their 55th birthday, it may be the perfect time to capitalize on Panamanian real estate. Even better, the ones celebrating only thirty candles on their cake should consider real estate abroad.
Let’s say your dream is to retire in an absolute beach-front home, looking over the ocean with tons of amenities. Should you patiently save and hope that in 30 years you’ll be able to hand over cash for the property of your dreams? Will your money grown enough in the stock market or in a savings account to accommodate the consistently increasing price tag for the property? What about letting other people help you pay for that dream?
Consider Pre-construction
First, consider pre-construction pricing because you’ll immediately realize, on average, a 15% increase in equity. Purchase the property as early as possible before you plan to retire. Take advantage of the tax benefits now being offered in Panama on real estate purchases. Once you take possession of the property, rent it through a management company and let the income cover all or much of your monthly payments. Watch your property increase in value while the amount you owe decreases. Month after month, steady growth and astute planning for your retirement.
Naturally the management company will take their cut for maintaining your property and finding renters, depositing the income and cutting you a check, but it’s worth it if you are not on-site in Panama and the handyman type. Work your job and let the property in Panama work for you.
Double Dipping for Profit
Retirement savings through a 401K offers the attractive fact that employers match a portion of what you put away. I encourage everyone to take advantage of that perk, but you can still use the 401K money to purchase property if you utilize the property just for investment. It’s always fun to double-dip for profit!
One of my biggest issues is the current lack of inventory. More and more are realizing the benefits of investing in foreign real estate and it seems there aren’t enough units to offer. The building boom continues so pre-construction pricing is possible allowing not only for the discount, but for design involvement.
With the realization of Brexit and the impact that has had on the global economy, it is even more apparent what happens elsewhere can directly affect your investments at home. What would have seemed exotic and risky even 10 years ago, now seems simple and solid. Panama is a plane ride away and filled with North Americans who are capitalizing daily on the solid economy, global growth and infrastructure investments which are taking Panama from a developing country world to first-world destination at dizzying speeds.
Don’t Rely on a Pension
Just a generation ago it was realistic for people to work 40 years and retire with a pension from their company. Now pensions are few and far between. People must take responsibility for their own long-term income. Social Security will help, but it won’t be enough.
Start saving now and consider all the opportunities, including foreign real estate, to make sure you have enough for a long and happy retirement. It’s never soon enough!
