Is Panama a Cheap Place to Live? It Depends…

Panama beach

Panama can be one of the world’s greatest places to live on a lower budget than you could in a developed country, especially if you’re a retiree. It’s also a place favored by thousands of very wealthy Latin Americans and business tycoons, however. So whether you find the place a bargain largely depends on where you live and how you live.

As I’ve been mentioning lately, I’m working on a book called A Better Life for Half the Price, about moving abroad to a cheaper destination to lower your monthly expenses. Panama doesn’t figure into my World’s Cheapest Destinations travel book except as a brief honorable mention. While it’s cheaper than Costa Rica, it’s nowhere near as good a value as some other countries in Central America. It is a poster child for publications such as International Living though and has been for at least a decade. That’s for a lot of good reasons:

– It’s a very stable country politically.
– It uses the US dollar as its currency and inflation is minimal.
– The banking system is good.
– Health care is excellent and affordable in the cities.
– Taxes are low, including on alcohol and electronics.
– Regulations are minimal for setting up a business.
– It’s easy to get a residency visa.
– The pensionada program for retirees has terrific benefits.

Panama is no backwater dirt-poor country though relying on what they can grow or dig out of the ground to build wealth. There’s a large middle class employed in all kinds of decent-paying jobs, from call centers to quality construction to the Panama Canal to banking. Most multinational companies have a base here and the whole country is like a big duty free zone.

luxury real estate Panama City

I did an interview that will air soon with Taylor White of the Overseas Property Insider Podcast. He’s stacking cash buying and selling real estate in Panama City, so he subscribes to the philosophy of “You’re going to spend what you’re going to spend, no matter where you are.” For some people that’s true and they didn’t move to Panama City to save money. Taylor spends about as much as he did in San Diego. You can spend a few hundred grand on a fancy condo with a view and there are plenty of temptations in terms of high-end restaurants, clubs, casinos, and beach resort excursions. For many, especially wealthy Latinos, the capital of this country is a “work hard, play hard” city akin to Miami. Living here can cost far less than Miami if you’re careful, but you can easily spend as much as you would there if you want.

There are retirees living in Panama City for less and the live abroad magazines and newsletters continually highlight people getting by on two U.S. social security checks—around $2,400 per month. A typical basket of goods and services is lower here, especially domestic help, transportation, domestic food, wine, and entertainment. Real estate is high for the region though as this is considered a “safe haven” investment for Venezuelans, Argentines, and others.

Outside the Big City

There are plenty of other places to live in Panama, however. Many retirees are attracted to the Chiriqui highlands around David and Boquete or the Bocas del Toro islands. Both these areas have far lower prices to rent or buy.

Panama adventure

Former Texan Richard Kongable lived in a few places in Panama before moving to a rural area near Volcan, on the side of a mountain. I tried a few other places in Panama before settling here,” he says. “I like that I never need heat, I never need air conditioning, and there’’s always a gentle breeze. I’m on the edge of a valley, with a volcano on the left and two rivers. I can see islands in the ocean even though it’s an hour and 20 minutes away.”

Richard rented his house for years for $300 a month and thought he was going to have to leave eventually when the American owner put it up for sale. Instead the owner fell into health problems and needed to sell in a hurry, so with no buyers in sight Richard got the 1,600 square foot house for half price: $25,000. He estimates that his family of three spends about $1,700 a month, including car expenses and about $300 a month for his son’s private school.

Retirees Kris and Joel Cunningham pay $385 per month for a house in a nice middle class neighborhood on the edge of David, Panama and they love it. “We have woods and a river behind us, there’s only one way into the neighborhood so it feels really safe. We’re surrounded by local professionals who are just lovely people.”

The Cunninghams were paying $1,200 per month in Sarasota, Florida where they lived before on their mortgage and taxes. If they had been renting, it would have been more. “The house next to us, similar to what we have now, was renting for $1,500 per month,” she adds.

They have been living on her husband’s social security payment and have a little savings from selling their house in Florida. Kris was about to start receiving her own social security payment when I talked to her, which will double their income and enable them to meet the income requirements for the pensionada program: $1,000 for one person plus $250 for each dependent. “It’s already so cheap though, I feel kind of guilty getting all those extra discounts,” she says.

Kris Cunningham says she has been pleasantly surprised by low costs in Panama, particularly groceries. “Food is definitely a great deal, especially fruit and vegetables. If you spend $20 on those in our local market it will be more than you can carry. We paid two or three times more for almost everything at home, including meat and fish. If you buy what the locals buy and cook, living here is very cheap.”

There’s the key advice that applies almost anywhere in the world: eat what’s local and you’ll probably be both healthier and wealthier. The usual advice that goes with that is to avoid imported products. With some of the cheapest wine and liquor prices in the world here though, you don’t have to make any adjustments in what you drink. This is one of the few places in the world where California wine is cheaper than in Napa Valley and Chilean wine is cheaper than in Santiago. (See this post on prices to booze it up in Panama.)

Comments
  1. Anthony

    Thanks Tim and I will checkout the podcast when its ready just post a link. I have done my research and Panama is less worse than Costa Rica in my estimation. Neither of them are attractive to me however.

    For others it is an attractive place to vacation or live on a fixed income.

  2. Mark Sandman

    I recently went to Panama and had a great time. I used the following resource for information which was great!
    http://www.visitpanama.com/

  3. Sunny Hobbs

    I thoroughly enjoyed your articles on the cheapest places to live. I am in my late 50’s now and am thinking about retiring. I am a Family Nurse Practitioner with full prescriptive authority in the USA. I am also a dive master and teach scuba diving. If I decided to move to Panama and wanted to work occasionally in the medical field, how difficult would this be to accomplish? Also, do you recommend leaving most of your money in US banks or transferring it to a bank in Panama?

    • Tim Leffel

      You should be able to work in hospitals that are affiliated with ones in the USA without additional paperwork, but I don’t know for sure. Keep your money at home and use the ATM unless you need a local account for visa/business reasons. For instance in Ecuador you can get residency easier if you have a chunk of money in a local bank. Same in Thailand.

  4. Kim

    Please subscribe me to your blog

    • Tim Leffel

      You have to do it yourself to opt in. Right sidebar for the blog (Feedblitz), top bar for the living abroad list.

  5. Erick

    I am going to be moving to Panama for work and was wondering a decent yet inexpensive place to live near panama city panama. My goal is to save money while I’m there but I also dont intend on living in the ghetto or in a crime infested area. I can put up with a 20 to 30 mile commute if I can find a nice cheap place.

  6. andrew doyle

    My name is Andrew Doyle my profession is Tile contractor. My intentions is to teach people how to install tile showers,floors countertops stairs and waterproofing where it needs it. Is there a way to get a license for construction. high end homes with intricate design is what i do in San Diego The reason i’m writing you being in real estate can stear me in the write people to talk to Thank You

    • Tim Leffel

      I’m not in real estate, but in general few countries outside Europe are as license-obsessed as the USA is. Licensing is generally done to limit competition and keep wages high and in most developing countries that’s considered a job-killing move. So you get jobs based on connections and the quality of your work. Keep in mind though you could run courses on this via video and serve anyone in the world in addition to what you could do locally.

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