ANDREA PETERSEN, Staff Reporter of THE WALL STREET JOURNAL
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 , Mexico 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 countries including 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 income of $1,500 a month.

A home like this in Palmetto Bay Plantation, Roatan , Honduras , runs about $350,000.

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 sizeable 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 off-the-beaten-path destinations is being driven partly by rising prices in some of 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% to 11% 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 Mrs. LaFoley's orchids.

BEYOND FLORIDA

See the growing number of countries that are courting retirees to leave the U.S. "The quality of life, the cost of living is a lot better" than the U.S., says Mr. LaFoley, 56 years old, who owns a shopping center in Massachusetts.

Countries like these are rolling out the welcome mat to Americans with a variety of financial 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 apiece 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.

Countries like Costa Rica have been so successful at luring retirees, it's starting to eliminate some of the perks it 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 , D.C.

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 expat 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 Inc., and Agora Travel, a related travel agency. International Living (http://www.internationalliving.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 Web site for the Association of American Residents Overseas (http://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 U.S. 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. Mr. 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.

Write to Andrea Petersen at andrea.petersen@wsj.com

Country	Where the Expats Are	House Shopping	Perks	Downside
Panama	Boquete, Panama City	Three-bedroom home overlooking a golf course, $175,000	Good medical care, American-style malls, great bird-watching	No direct flights between the U.S. and the nearest airport to Boquete
Honduras	Roatan Island	1,500 square foot beachfont two bedroom, $229,900	Gorgeous beaches, Direct flights to Miami and Houston	The bugs: biting sand flies and mosquitoes that can carry malaria
Nicaragua	Granada 'Las Islas'	15-acre island with two houses, electricity and water, $494,000	Deserted beaches, bragging rights to your own island	Crime, dodgy phone service, poor medical care
Mexico	San Miguel de Allende, Lake Chapala area	Three bedroom, three bath with pool, $369,000	Great restaurants, lively expat scene, beautiful colonial architecture	All the other Americans, the high prices
Costa Rica	All Over	Three bedroom home with swimming pool near Lake Arenal, $212,000	English spoken, solid infrastructure, stable government, lush landscape and lovely beaches	Higher prices and fewer finacial advantages