Women retiring in Panama: difficult choices

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Through my years as a lawyer, I’ve seen many couples retire to Panama, but few single women retiring in Panama.

Occasionally, I will have a widow who chooses to stay in Panama after the death of her spouse. Nonetheless, it is also equally likely that she will choose to move “back home”, closer to family and friends. Unless she has built up a strong network in the expat community where she lives, she will sell up the home and simply move to where she has a better support system. So, while the theme of this blog post is in part about women retiring to Panama as a choice, there is also the aspect of involuntarily being left alone in Panama.

On the other hand, I know many single men that choose to move overseas alone. Men are happy to live out their days as expats. And I’m curious about the differences.

The biases against women retiring

Reading through the myriad of information available online, I find women typically squirrel away 10% of their income into savings. Men, on the other hand, might only save 8%. Unfortunately, with a gender pay gap of anywhere from 20-33%, even with saving a higher percentage of their earnings, women are still saving less than men!

I have no idea what those numbers are for Panama.

At the end of the day, women are making decisions about their financial future, but with less money.

The challenges we face include:

earning less
working fewer years (at least if you take time off for having a family)
living longer
making conservative investment choices

Additionally, women are more likely than men to take time off work to serve as caregivers to ageing family members. This is even true in Panama, in spite of the fact that here it is easier to have a full-time carer in the home.

At the same time, women fail to plan for the life events that affect money. These include marriage, kids, divorce, caring for ageing parents, widowhood, and their end-of-life care.

While women might keep an emergency fund for the washing machine breaking down, they don’t have an emergency fund for life emergencies!

How a woman chooses to invest:

Another difference between ladies and gentlemen is their choice of investments. Women save. Men invest. For example, if you look at the statistics for an online brokerage account, women hold only 28-33% of these accounts. The rest are all men.

Most retirement and financial advisors indicate that the ladies are more conservative in their strategies.

From where I sit as a lawyer, the ladies that I have known that were financially set had made investments in real estate or sold their businesses. They were not retiring with savings from a retirement plan or pension fund.

The gender of money

One of the curiosities that I came across as I prepared this post was the following:

Women blog about being thrifty & frugal
Men blog about investing and growing their wealth

In fact, if I look at girlie magazines, the focus appears to be on buying, rather than spending money as an investment. Men, on the other hand, read articles that emphasise money – notice the language used!

According to a 2018 UBS study, 59% of widows and divorcees wished they had been more involved in their long-term financial decisions and a whopping 74% did not consider themselves knowledgeable about investing!

As if these biases were not enough of a challenge, a woman will use her credit card when strapped for cash, whereas a man is more likely to get a personal loan from the bank. This is, in part, a woman receives fewer loan approvals!

As I already mentioned, even when you are reading a magazine, you are getting subtle messages. Women are told how to save money as they spend. Men are told to save and invest their money.

The small differences that make a difference

While most married couples consider that they are modern and go 50-50 on the bills, data and research show spending happens differently between the sexes. Mums outspend dads on:

clothes
childcare
food
toys
learning activities
entertainment

So, while the couple may go 50-50 on the base household items, the wife then picks up the extra tabs on the unseen. Unfortunately, a mother will look at the day-to-day necessities, rather than looking at the long-term necessities of her retirement.

Even if we look at separate accounts, we find something curious.

A woman will often have a separate credit card she hasn’t told her husband about.
A man will be more likely to have separate savings account he hasn’t told his wife about.

Women, family responsibilities and retirement:

Here’s the kicker:

80% of women will die either single, divorced or widowed!

Yeap… you read that right. Because it is very likely that a woman will outlive her spouse. This often means that women find themselves with less support – financial and emotional – as they age. They find themselves caring for their husbands and then alone.

If you are a woman planning to retire to Panama – what contingency plans have you included?

Over the past five years, I watched one of my clients care for her husband with dementia. He had taken care of all their financial matters throughout their marriage. Now, in the end, she knew of his investment accounts but was locked out of them. He had only arranged his financial matters in Panama – not the international ones which were theoretically taken care of by counsel overseas. He hadn’t bothered to get that paperwork updated. I’m sure he thought there would always be time. She had no access to any of those funds in order to care for him, without going through a custodianship process in the courts in Panama.

So, while there is a fairy tale part of living overseas, for women retiring in Panama, they also need to take into account «what if». Estate planning needs to take into account all of the possibilities, including the probability of being alone.

I’ve watched many older women struggle with the loneliness of living in Panama and yet feeling that they don’t want to move back to the US or Canada.