A GOLDEN OPPORTUNITY
Central American Countries Lure U.S. Retirees.

BY ANDREA PETERSEN
The Wall Street Journal


Add this to the gift list for new retirees: a Spanish-English dictionary.

As legions of baby boomers prepare to retire and relocate to warmer climates, a widening range of Central American countries are vying to be their new home. While places like Costa Rica and Belize have long lured U.S. retirees with pristine beaches and cheap living, prices in those countries have risen sharply during recent years.

As a result, a new breed of intrepid retirees is branching out to such countries as Panama, Honduras and Nicaragua. These countries, in turn, are rolling out the welcome mat in an attempt to snare Americans' retirement dollars.

In Panama, the hilltop town of Boquete now has a population of about 300 American retirees. Dozens live in the new real estate development, Valle Escondido, which has a nine-hole golf course, high-speed Internet access and a 24-hour manned security gate.

On the island of Roatan in Honduras, retirees have snapped up beachfront property and are taking advantage of ''pensionado'' visas that allow noncitizens to live in Honduras income-tax free if they can prove they have an income of $1,500 a month.

And while Nicaragua may conjure up images of civil war, real estate agents are offering entire islands off the Caribbean coast for less than the cost of a condo in Florida.

No one tracks the total number of Americans retiring abroad, but there are sizable settlements springing up.

Costa Rica, for instance, is home to between 20,000 and 30,000 Americans, according to the U.S. embassy there. Overall, in 2002, 242,128 American retirees had their Social Security benefits sent to foreign countries, according to the Social Security Administration. That is up slightly from the 219,504 who listed a foreign address in 1999. Those numbers don't represent all of those retiring overseas, since many people keep a U.S. mailing address.

The move by retirees to more remote destinations is being driven partly by rising prices in the more traditional hot spots. Home prices in San Miguel de Allende, a Mexican colonial hill town that is home to more than 10,000 Americans, have risen 8 percent to 11 percent a year for each of the past three years.

Annie and Michael LaFoley moved to Boquete, Panama, from Colorado in 2000, after deciding against Costa Rica. Instead, they plunked down $144,000 for six acres of land in Panama that include a working coffee plantation. They built a main house, a guesthouse and a greenhouse for Annie LaFoley's orchids.

''The quality of life, the cost of living is a lot better'' than in the United States, says Michael LaFoley, 56, who owns a shopping center in Massachusetts.

FINANCIAL INCENTIVES
Countries like these are rolling out the welcome mat to Americans with a variety of incentives. The LaFoleys, for instance, are in Panama on a pensionado visa similar to what is available in Honduras, which lets them live there after proving they have $500 a month each in income.

Panama also lets retirees import a car tax-free every two years, import $10,000 of household items tax-free and buy property tax-free if it is the owner's only home. In Honduras, those over age 65 receive a card good for discounts on airline tickets, medications and their electric and water bills.

The primary appeal is the cost of living, which can make it possible for retirees to live on nothing more than their Social Security benefits -- or live lavishly on a bit more money. Retirees are hiring live-in housekeepers for $150 a month in Panama City.

FEWER PERKS
Countries such as Costa Rica have been so successful at luring retirees that they are starting to eliminate some of the perks they once offered to lure Americans.

''We used to have incentives, but today there are not many,'' says Alejandro Cedeno, minister counselor and consul general at the Embassy of Costa Rica in Washington.

Next door in Nicaragua, real estate agents say that Costa Rica's cooler reception is partly what is driving some retirees to consider the formerly war-torn country. The expatriate community is small, and residential communities are just getting off the ground. On the Pacific Coast, Rancho Santana is a new beachfront community with pools, tennis courts and a helipad. Two-bedroom houses are selling for prices starting around $99,000. Quarter-acre ocean-view lots begin at $52,900. Some of the tiny islands that dot the coasts are also for sale: A five-acre Caribbean island with a two-bedroom house, a generator and coconut trees is currently being advertised online for $230,000.

One big promoter of retiring in Central America is International Living, a travel newsletter published by Baltimore-based Agora Publishing, and Agora Travel, a related travel agency. International Living ( www.international living.com) acts as a broker for real estate in Panama and is one of the backers of the Rancho Santana development in Nicaragua. Agora Travel runs real estate tours of Nicaragua, as well as Panama, Honduras and Europe.

A few other resources for people considering retiring abroad are ExpatExchange .com, which includes country-specific message boards, and the website for the Association of American Residents Overseas ( www.aaro.org), an advocacy group that has information on tax and health-insurance issues.

For retirees abroad, the living isn't always easy. For one thing, Medicare doesn't cover medical care received outside the United States. Many have the added expense of emergency-evacuation insurance, which pays for flights to U.S. hospitals in case of a serious illness.

Shopping can be tricky, too. Michael LaFoley, the retiree in Boquete, Panama, likes to cook but has trouble finding some ingredients at the markets in Boquete -- and even in the Costco nearby.

''I had someone bring me horseradish from Miami,'' he says.