If you’re looking for an exotic retirement that’s not too terribly far from the grandkids, consider Central America. You can’t beat it for gorgeous beaches, lush hillsides, low cost of living and friendly natives.
There’s a long-running debate over whether Panama or Costa Rica is the ultimate retirement destination. International Living named Panama the best place to retire abroad in 2019, but Costa Rica was a close second. Each has its pros and cons, so do your homework.
Location and Features
Panama and Costa Rica are situated on the isthmus connecting North America and South America. There’s no shortage of beachfront living with stunning views in either country; the isthmus is smack in between the Pacific Ocean and the Caribbean Sea.
The region is well south of most hurricane activity, and the climate is mostly pleasant year-round. However, Panama is flatter and lower lying, so its summers are hotter and more humid than Costa Rica’s. There is also a longer rainy season in Panama.
Both countries are rich in biodiversity and fascinating wildlife. Agriculture drives the economy, and local organic foods are never in short supply.
Expect considerably slower service in Central America. “Mañana” could mean tomorrow, next week or an eternity, but you’ll come to love the relaxed pace of life.
Despite the online bickering (Google search “Panama vs Costa Rica Retirement”), the countries are so similar that you have to dig deep to form a preference. It really boils down to geographical features, communities or amenities that strike your fancy.
Panama vs Costa Rica Retirement
Costa Rica’s laid-back lifestyle and friendly people appeal to those looking to retire overseas. Fans appreciate its progressive, peace-loving culture; there’s not even an army. The stable democratic government provides universal health care.
Traditionally, Costa Rica lagged behind Panama in essential services and luxury amenities, but it is improving. Steady economic growth and foreign investment have created thriving, largely upper-middle income communities, especially in the Costa Ballena region on the southern Pacific. Restaurants, boutiques and clinics are springing up everywhere.
The Central Valley is surrounded by mountains and is popular for its spring-like climate. Atenas, for example, is often said to have the world’s best weather. Options in beach living, such as Jacó and Guanacaste, are seemingly endless along the Pacific Coast. If you prefer the more rustic Caribbean side, check out Puerto Viejo or Manzanillo.
Cost of living in both countries is significantly lower than in the U.S. or Canada, but Costa Rica is somewhat more expensive than Panama. Rental income is a burgeoning opportunity for retirees who can afford real estate in hot markets. Most properties cost more than comparable real estate in Panama, but owners pay a ridiculously low 0.25 percent of the registered value in taxes.
In January 2020, the U.S. Department of State advised travelers to exercise “increased caution” in Costa Rica. Violent crime has gone up slightly.
It may cost more to live in Costa Rica, but can you put a price on happiness? The Happy Planet Index ranked it as the happiest country in the world in 2008, 2010 and 2016. The local greeting or farewell is “¡Pura vida!” That’s one way of saying that life is good.
City slickers favor Panama City for its cosmopolitan vibe, glittering skyscrapers, music scene, diverse cuisines, golf courses and shopping.
For a calmer, cooler existence, head for the hills or the beach. Coronado has great amenities and miles of beaches, and there’s still plenty of room. Boquete, Santa Fe and La Concepcion are also popular destinations.
Overall, Panama is slightly more affordable than Costa Rica. Depending on location and lifestyle, most couples who retire abroad here get by on $2,000 per month for expenses and suitable housing. Real estate prices are usually lower in Panama, and there are fewer restrictions on foreign ownership.
Panama awards generous senior perks on air travel, public transportation, utilities, restaurants and entertainment. You’ll also save a fortune on health care. There are both public and private systems, but insurance plans cost a fraction of what they do in the U.S. Aside from antibiotics and some painkillers, seniors get most meds at a discount and without a prescription.
Another big advantage to living in Panama is its open trade policy. Disposable goods are cheaper and more widely available than in Costa Rica, and big-ticket items like cars and appliances are not taxed as heavily.
Drawbacks include a high poverty rate and a strong military presence. Armed soldiers guard many businesses and attractions. Just like in Costa Rica, heavy rains and a strong aversion to signage make for horrendous road conditions outside the cities. Panama is safer than most U.S. cities, but you still have to lock up and use common sense.
Residency in Costa Rica
The Pensionado program makes it easy to retire overseas in Costa Rica. It was designed specifically for North American expats. Here are the requirements:
• You have already retired and are receiving pension benefits.
• You can show proof of monthly income of at least $1,000 from a qualified, lifetime pension plan.
Examples of qualified plans include local, state and federal government pensions; U.S. Social Security or Railroad Retirement Board benefits; the Canadian Old Age Pension System; private company pensions; 401(k)s; and some lifetime annuities.
• If you’re married, just one monthly pension of at least $1,000 covers both you and your spouse. Either of you can show proof.
For the time being, Costa Rica doesn’t recognize same-gender unions of any kind. Each partner in a same-gender marriage or relationship must apply and show proof of pension independently.
• If you’re approved, you must agree to live in Costa Rica at least once a year for 72 hours. Yes, it’s a dirty job, but somebody has to do it.
• You may renew the visa, which is temporary, every two years or apply for permanent residency after three years.
• If you’re over 65, you can opt into the Ciudadano de Oro, or Golden Citizen, program. You’ll enjoy discounts at clinics, pharmacies and grocery stores as well as free bus rides.
The Inversionista residency program is another option. To qualify, you must invest at least $200,000 in Costa Rican business or real estate or at least $100,000 in a forestry project.
Residency in Panama
The Panama retirement visa, also called Pensionado, has many of the same requirements as Costa Rica’s. There are, though, some tempting added benefits to residency. Here’s what you need to know:
• You must have a minimum lifetime pension or Social Security income of at least $1,000 per month. Spouses may combine their incomes to meet this requirement.
• Purchasing Panama real estate valued at $100,000 or more drops the monthly income requirement to $750.
• Passive income, such as from rental property, doesn’t apply.
• Unlike Costa Rica’s program, Panama’s grants permanent residency immediately upon approval.
• Imported household goods are duty-free up to the first $10,000. Every two years, you can import a car tax-free.
• An exhaustive list of benefits comes with the Panama retirement visa. Enjoy 50 percent off on entertainment, hotel stays, and even closing costs for home loans. All kinds of other goods and services have great discounts as well.
In both countries, the list of required documents — including a police certificate of good conduct — is long. Start gathering paperwork as soon as you make a decision, and behave yourself in the meantime.