Retire in Panama - Pros and Cons

Many North Americans are retiring in Panama. Why?

Mainly because it's warmer and cheaper than than where they are living. Sitting on a beach in February with 80 degree heat beats shoveling snow back home. And apart from the economics, many people have harbored lifetime dreams of living a life abroad.

But Panama isn't as cheap as Ecuador*, another retirement haven. In fact it is probably double the cost of living found in Ecuador. But Panama, like Costa Rica, is safe and allows easier assimilation. It's a stable country offering more discounts and amenities to expat retirees than any other country in Central and South America. AARP rates it as one of the top 10 places in the world to retire.

Panama has been using the American dollar since 1904. It's globalized and one of the most developed countries in Central and South America. It's a bank haven home to 80 international banks. More than 100 top American corporations like Dell, Procter and Gamble and Caterpillar have regional headquarters here. It's only a 3-5 hour plane ride to the States. It has a stable democracy, no military and the USA guarantees its territorial sovereignty.

Up till 1999, when the canal zone was managed by the Americans, more than 50,000 Americans were employed here. Panamanians are used to interacting with gringos. Panama also offers familiar products like fast food outlets, grocery brands familiar to North Americans and great baseball. It has one of the largest duty free zones outside of Hong Kong and the cost of living is half of what it is in Europe and North America.

A bottle of wine can be had for $6, a bottle of a national beer in a bar $1, $5 cocktails and simple lunches in local restaurants for $6. Health and auto insurance are a lot cheaper here, The hospitals are modern, many affiliated with American hospitals - like John Hopkins, and a lot of the doctors speak English.

How easy is it to retire here?

The Panamanian government welcomes foreign retirees like no other. They want retirees to come down and spend their retirement checks.

So they offer a pension visa program where people can live in Panama as long as they want - as long as they have $1,000 a month in income coming from social security and/or dividends and annuities plus another. That figure goes up $250 for every dependent on the application. A married couple only needs a combined income of $1,250 and if one invests at least $100,000 in real estate the income requirement drops to $750 a month.

It's a relatively painless process which requires an immigration lawyer costing $1,500 per person. One has to show proof of a pension income and have it stamped at a Panamanian embassy back home. A valid passport, a clean police record for the last 5 years, and a physical showing one is HIV free is also required. After all this they issue you a Panamanian 'cedula' or resident identity card enabling you to live there indefinitely.

There are a number of organized relocation tours, many sponsored by International Living, which will take you around Panama showing interested people the country and explaining the process.

But maybe the best part of retiring in Panama is their famous retiree discounts. Women over 55 and men over 60 can use these discounts if they can prove Panamanian citizenship or show the cedula - the i.d. card proving residency.

The discounts cover 3 areas: services, medical and entertainment.

Discounted Services:
25% electric bills
25% phone service
25% off water bills

Medical benefits:
15% off services in hospitals and private clinics
20% off doctor visits
15% discount dentist and optometrist visits
10% prescription meds

Entertainment discounts:
50% off ticked for movies, theaters and sporting events
30% discounts on city buses, trains and boats
25% off airfare on all flights within Panama and international flights originating in Panama.
30%-50% off hotels
25% off restaurants
15% off fast food restaurants

There are also good tax exemptions.

Retirees who can bring in up to $10,000 of household goods into the country tax free. They can import a car every 2 years tax free. And all one needs to drive in Panama is an international driving license obtained through AAA by simply showing your current driver's license. One can even bring the family pet from abroad as long as you keep it quarantined in their home for 40 days.

Panama is building up fast, there is construction all over the place with plenty of villas and condos for sale or rent. Numerous retired North Americans can be found in Panama City and in the towns of Boquet, home to one of the largest communities of foreign retirees in the world. Smaller retirement communities exist in the remote Pacific towns of Pedasi, Boca Chica and on Colon Island off the Atlantic coast - all offering a rustic coastal lifestyle.

The biggest down side is Panama isn't as cheap as most people think.
It's not screaming bargains like it was 20 years ago. The standard of living has been rapidly rising.

Today it can cost up to $2,000 a month to rent a nice condo in Panama City and up to $1,000 outside the city. For those who have more than $5,000 a month to spend - luxury living is a bargain in Panama. But if people plan to live on less than $1,500 a month, Panama might not be the country for them. And it's still hard to get by without speaking Spanish as only 15% of Panamanians speak English. And the infrastructure outside of Panama City may seem inadequate for many, a bit third-world as Panama is still rough around the edges.

But to get more bang for your buck and to stretch those retirement dollars farther than they can be stretched back home, retirement in Panama offers an interesting solution.

For more information on Panama see:

Panama City - a cosmopolitan city

Panama - the beaches and highlands

See also

Retire in Colombia - pros and cons

Retiring in Ecuador - pros and cons

Snowbird Tourism in Colombia