There's no such thing as "the best place to retire overseas." Nowhere is perfect, and certainly no single choice would be perfectly suited to every would-be retiree. Your ideal place to retire overseas depends entirely on what you're looking for.
I'd name Panama City, Panama, and Medellin, Colombia, as two of the best places in the world to think about retiring right now. At the same time, these two cities couldn't be more different from each other. You might even call them the retirement haven yin and yang of each other.
I've been spending time in Panama City for about 15 years and living here full time for five. I know this city well, both its pluses and its minuses.
Arriving in Panama City, you recognize instantly that this town is open for business, pushing for growth and both embracing and chasing prosperity. Everywhere you look, in every direction you turn, something is being torn down, put up or rebuilt. Your heart rate quickens, and your mind works quicker, too, trying to keep up with the commotion all around.
I discovered Medellin more recently, about three years ago. This city has the opposite physical effects. Touching down in Medellin, your heart slows a bit, your mind settles.
Unlike Panama City, Medellin's cityscape isn't all high-rise condo towers built of glass and steel. Most every structure in Medellin is of red brick, topped with a red clay tile roof and surrounded by foliage and flowers. This is a city of parks and green spaces. The effect, again, is calming, peaceful.
You can learn a lot about a place both from and by its taxi drivers. They're a top source of getting-to-know-a-city information and insights, of course, but they're also a barometer of the mood of a place. In Panama City, taxi drivers are in a hurry. They honk their horns constantly. They weave in and out of traffic, from lane to lane, pushing for constant progress. They can't abide sitting still or even slowing down and tend to run traffic lights and ignore things like "Stop" signs. They also tend to be unhelpful, even rude. A Panamanian friend describes them as "among the least appealing people on earth." Based on long experience with them, I'd have to agree.
In Medellin, the taxi drivers, like their city, are gentler and calmer, happy to stop to offer directions or even to chat. In Medellin, you rarely hear the honking of a car horn, not by a taxi driver and not by anyone else either. It's also worth noting that, in Medellin, taxis are not only ever-present, but also always painted yellow and metered, unlike in many of the places where we recommend you spend time. Again, orderly... genteel.
As I said, Medellin is impressively green, with trees, plants and small gardens everywhere. It's also remarkably clean. In the central neighborhoods, you see no litter. The metro, a point of pride for the local population, is spotless and like new.
Panama is working hard to clean up and green up its capital city. The long stretch of parkland along the bay known as the Cinta Costera has dramatically changed the face of Panama City for the better (and is being expanded). Still, while one might describe Medellin as genteel, an appropriate adjective for Panama City might be gritty.
Walking around Medellin, especially outside the central tourist zone, you might feel like an anomaly. This is less and less true, as Medellin becomes more discovered by expats and retirees. However, in Panama City, Americans are everywhere. We have been part of the landscape in this city for nearly a hundred years.
From a cost of living perspective, I'd put these two cities on par... depending on the relative strength of the Colombian peso. This suggests an important potential downside for the retiree in Medellin versus the retiree in Panama City. In Colombia, someone whose income is in dollars faces an exchange risk. In Panama, which uses the U.S. dollar as its currency, this isn't an issue.
One of the biggest pluses of Medellin is the cost of real estate in this city. The real estate market in Panama City has settled noticeably from its boom-time highs of five or six years ago. Today, you can buy in this market for $1,500 to $2,200 per square meter (down from the $2,000 to $3,000 per square meter of the golden age of last decade). In Medellin, you can buy in El Poblado, considered the best address in the city, for as little as $1,200 per square meter (resale). In less central, more local neighborhoods, you can buy for less.
Panama is one of the world's most welcoming countries when it comes to establishing residency. In Panama, the would-be expat, retiree or entrepreneur has more than a dozen options for how to establish full-time residency, including the new "Specific Countries" visa option, which amounts not only to the most user-friendly, turn-key residency option in the world today but also the most user-friendly, turn-key residency option in the history of residency options. Plus, this new residency option can lead to a work permit, which is a big deal.
Colombia, too, though, offers good foreign residency options, including one for pensioners and another for investors. The minimum investment requirement in each case can be less than for comparable options in Panama.
One practical matter that is not as straightforward in Colombia as it is in Panama is opening a bank account. It's not possible as a foreigner to open a local bank account in Colombia unless you have a personal introduction to the bank. The alternative is to open an account with what's called a "fiduciary," the local equivalent of Charles Schwab. Unlike opening a bank account, this is relatively straightforward and a reasonable strategy for dealing with local bills. The downside is that transaction fees can be high.
The other downside to Medellin compared with Panama City is that few in Medellin speak English, whereas, in Panama City, it's very possible to get by speaking no Spanish.
What's the bottom line? Which city might make more sense for you? Again, it depends entirely on what you're looking for.
To help you process the factors you should process as you consider these top options, here's how I'd break all this down...
Panama City Versus Medellin:
Cost of Living: It's a tie, more or less, depending on the relative strength of the Colombian peso.
Cost of Real Estate: As much as 50 percent less expensive in Medellin.
Climate: Way more comfortable in Medellin.
Ease of Residency: Panama is one of the easiest places in the world for a foreigner to establish full-time legal residency, especially if he comes from one of the countries included in the new "Friends of Panama" visa program. However, Colombia is also a very straightforward option in this regard. Certainly, I wouldn't take Colombia off my list for fear of a complicated struggle related to becoming a resident.
Ease of Banking and Doing Business: Here, Panama wins hands down, with its international banking industry (the exchange-of-information treaty the country signed with the United States in 2010 notwithstanding); its lack of any exchange controls; the absence in this market of any currency exchange risk (as Panama uses the U.S. dollar as its currency); and its greater prevalence of English-language speakers.
Infrastructure and Accessibility: Another tie.
Taxes: Panama is the screaming champion on this score, a true tax haven, while Colombia qualifies as a high-tax jurisdiction. Note, however, that if you're a retiree making a move with retirement income, you probably don't have to care about this. Relocating overseas should be a tax-neutral event for a retiree with only retirement income (no matter where you decide to move).
Health Care: Top notch on an international scale in both cities.
Ease of Settling In: Panama City is a kind of halfway house for expats, a very easy and comfortable first step overseas. Medellin is more an emerging expat destination, though it is more discovered and therefore easier to navigate as an expat or foreign retiree all the time.