There are huge masses of retiring baby boomers heading to Panama (or wanting to) to retire. Not only because it’s fairly inexpensive, but it’s at the top of many wish lists, even those of digital nomads) because the country is just so inviting to foreign retirees. Panama makes it almost impossible to say no.
With its central location, Panama is a great home base for exploring South and Central America from the Tocumen International Airport where you will find flights to the U.S., Canada, Europe, and every other Latin American country.
The cost of living, however, is going up, but don’t worry, it’s still much less expensive to live in Panama than it is to live in the United States. Put very generally, you can live quite happily in Panama for between $800 and $1,500 a month if you don’t want an extravagant lifestyle.
You will be able to easily establish a bona fide foreign residence, for Americans, which means you can qualify for foreign earned income exclusion. This can greatly reduce your taxable income and could also exclude your housing expenses. Speaking of expenses, there’s very little worry of the out-of-control inflation other Latin American economies have suffered from , both in the past and present, because the Constitution forbids the government from printing paper money.
In 2019, a monthly budget of around $2,200 will allow you to live comfortably in central Panama City. That will get you rent or mortgage on a two-bedroom apartment ($1,200); utilities including reasonable air conditioning usage ($100); groceries and household items ($300); fuel and maintenance for a small car ($200); phone, Internet, and cable TV ($50); health care ($150); and even entertainment for two people for movies two times a month and dinner four times each month ($200).
You’ll save a lot if you learn to shop at the same places as the locals.
The Pensionado Program
What is truly amazing about Panama is its Pensionado, or Retiree, program. While it was designed to give its local retirees discounts on many services and products, it’s also available to foreigners who qualify.
The program offers foreigners the option to buy and own property in Panama, and to benefit from the same protections and rights as the native residents. To be accepted, as of 2019, an applicant has to be healthy, have a current passport, and a verifiable monthly income of at least $1,000 a month for a single person or $1,250 for a couple. Each dependent will require an additional $250 in monthly income.
Pensionados get a wide range of discounts and exemptions:
30% off bus, train, and ferry fares;
25% off in-country flights;
30% off other transportation;
50% off hotel rooms Mon-Thurs, and 30% off weekends;
15% discount on loans made in your name;
1% reduction on home mortgages used for personal residence;
50% off entertainment costs; movies, cultural, sporting events;
15 to 20% off at restaurants;
10 to 20% off a broad range of medical costs;
20% discount on doctor’s bills;
15% discount on hospital services if no insurance applies;
15% off dental work and eye exams;
10% discount on medicines;
50% off closing costs for home purchases;
25% off monthly energy and utility bills;
20% discount on professional and technical services;
a one-time exemption from import duties on household goods up to $10,000; and
the option to buy a imported or local tax-exempt car every other year.
City Rent vs Rural Rent
Panama City is a thriving city filled with all the conveniences you would want in a modern city, but it’s not cheap to live there. You’ll pay over $800 for a one-bedroom apartment in the city center; a three-bedroom will run you an average of $1,500.
If you’re choosing to purchase a home, expect to pay around $100 per square foot if you choose to live in the city center. Rents can easily reach $2,400 downtown in the high-rise apartment buildings.
If you are willing to live more like a local, you will be able to find more affordable spots to buy or rent, farther from downtown, where a one-bedroom can be rented for about $550 a month.
Outside of Panama City you will find a slower pace, more desirable for a lot of those looking to have a quiet retirement. You’ll pay much less for housing when you choose to live outside of Panama City.
Just five hours from Panama City in the Pedasí region a couple can live quite comfortably on around $1,300 a month. Rental homes cost around $500 a month and if you’re looking to purchase, a home near the ocean will average $135,000.
Lovers of luxury will live really well in Panama for much less than it would cost in the U.S. Gourmet restaurants, high-end fashion outlets, and exclusive apartments are all available to those who want to splash out more money in their retirement in Panama.
Health Care in Panama
Healthcare in Panama is relatively inexpensive, so many Panamanians don’t purchase health insurance, but there are inexpensive Insurance plans available to those who want the peace of mind. Plans cost under $100 a month per person, and a visit to the doctor usually costs under $30.
For those who can’t afford medical services, the country runs public hospitals that offer free services.
Some private hospitals offer discounts to members, just like loyalty programs used by retailers in the U.S. and Canada.
Your power costs will depend on where you live. Cooler areas like in the mountains will require less air conditioning whereas places like Panama City and other sea-level destinations are very warm and you will require air conditioning.
In Panama City you can enjoy a fine meal for two, with a bottle of wine, for just $30.
The cost for importing food from Canada, the U.S., and Europe can vary, some of it is more than what you would pay in your home country. Native fruits are easily available and wonderfully inexpensive. Buy your fresh produce at specialty stores, produce stalls, and upscale supermarket chains like El Rey and Riba Smith. If it’s canned goods you’re after, the best price can be found at Panama’s Super 99 supermarket stores.
You might find it hard to resist hiring a maid once you get to Panama and see how inexpensive maid services cost. A part-time maid will cost you around $15 a visit, and a full-time, live-in maid will cost as little as $250 per month.