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Retire in Panama

If you plan correctly, retirement can be one of the great adventures of your life. What is more adventurous than packing your bags, leaving America behind and spending your golden years immersed in a completely new culture? One option to consider is Panama, a central American country, popular with American, that offers a number of perks for retirees. Just make sure, though, that you know everything you need to know so your retirement in Panama comes without any unpleasant surprises. A financial advisor can help you plan for your retirement, wherever it is you want to hang your hat.

Retiring in Panama: Cost of Living

Panama’s beautiful beaches and warm climate have made it a popular location for Americans to retire in recent years. While this means you’ll likely be able to find some fellow American retirees to befriend, simple economics means that the influx of American immigrants has resulted in a rise in the cost of living.

Cost of living estimates for a retirement in Panama vary, but generally you can expect to spend between $1,500 and $3,000 per month to live in Panama. Your spending level will depend somewhat on where you live. Living in Panama City, the country’s capital, is going to result in higher housing prices than living in the countryside or in a smaller city.

Other choices you make will also impact your cost of living. Having a car, for instance, is an expense you can choose to go without. You also can choose to live a much simpler life than you did during your career. For instance, living in a small apartment rather than a house will cut down your costs. Choosing to eat out less often is another choice you can make to lower your cost of living. This is especially true if you live in a big city or a place popular with tourists, where the cost of food in restaurants tends to be very high.

Retiring in Panama: Emigration Programs

Retire in Panama

If you think you can financially handle a Panamanian retirement, there are still logistical issues to consider. Namely, you have to make sure make you move to Panama legally, which requires a bit of finesse.

American citizens do not need a visa to enter Panama. However, you will need a valid passport if you plan to stay in the country for at least three months. Upon entry you can get a tourist card, which lasts for 30 days and can be extended for an additional 60 days.

To file an application to be a permanent resident in the country, you’ll need to go through an immigration attorney in Panama. For retiree residence status, you must show that you have an income or pension of at least $1,000 per month and $250 for each dependent.

Additionally you must meet the following requirements to apply to settle permanently in Panama:

  • Complete your application in Panama
  • Be at least 18 years old
  • Have a Panamanian attorney process your application
  • Fill out a registration form, obtained at the Immigration Office in Panama City
  • Obtain a letter from a public company or public entity showing showing you meet the minimum income requirements (this could be salary from a company, a pension or a retirement fund)
  • Have proof of the amount received duly authenticated by either Panamanian Consulate or apostille seal
  • Obtain a health certificate from a Panamanian doctor
  • Get a police record from the place you have lived for the past five years (the same applies for your spouse and any children over 18 also moving)
  • If single, obtain a bachelorhood certificate or notary public certification of your singleness
  • If married, obtain an authenticated marriage certificate
  • Provide four photographs (and four photographs each of any dependents)
  • Provide a photocopy of your passport, including all pages and cover, notarized and authenticated by Panamanian consulate
  • Give a sworn statement on personal background, done through a lawyer in Panama
  • Provide an original passport
  • Be physically located in Panama when your visa is issued

Retiring in Panama: Housing

Retire in Panama

One of the most important decisions you’ll make when you retire in Panama is where you will live. Housing costs are among the biggest expenses for anyone, so you’ll want to know how much you are likely to be spending before you head for Central America.

The cost of housing varies based on where you live and what you are looking for. In smaller cities or towns, you may end up paying less than $400 per month. For a large luxury apartment in Panama City, you could end up looking at more than $5,000 a month.

Utilities are also important to consider. It gets hot in Panama, so you may be tempted to run your air conditioning all the time. This can get expensive, so consider only running the A/C when you absolutely need it.

Retiring in Panama: Safety

The U.S. State Department cautions against travel in Panama for two reasons, Covid and safety concerns in two parts of the Central American nation. The department says Panama has an elevated level of the highly contagious disease.

It also notes that two areas, the Mosquito Gulf and the Darién Region, are prone to crime. Regarding the former, the department’s website states, “Do not travel within 10 miles of the coastline, from Boca de Rio, Chiriqui to Cocle del Norte. Drug trafficking and other illicit activities occur in this area.” Regarding the latter, the department warns against travel to all areas south of Jaque to Manene to Yaviza to Lajas Blancas cities to the Colombian border, the city of Lajas Blancas and the city of El Salto. “Criminal elements and drug and human trafficking networks operate in these areas,” the department’s website states.

Benefits of Retiring in Panama

The biggest benefit to retiring in Panama is the Panama Pensionado program. To be eligible, you must have an income or pension of at least $1,000 a month. There is no minimum age requirement for this program.

Incentives offered by this program include:

  • One-time duty tax exemption for household goods (up to $10,000)
  • Exemption to import tax for a new car every two years
  • 25% discount on utility bills
  • 25% discount on airline tickets and 30% on other transportation
  • 15% discount on loans in your name
  • 1% reduction on mortgages for homes used for personal residence
  • 20% discount on medical bills
  • 15% discount on hospital bills if insurance does not apply
  • 15% discount on dental and eye exams
  • 10% discount on prescription medications
  • 20% discount on bills for professional and technical services
  • 50% discount on entrance to movie theaters, cultural events and sporting events
  • 50% discount on hotels Monday to Thursday; 30% discount on weekends

These discounts will also surely bring down the overall cost of living in Panama.

Bottom Line

Panama can be a good place to retire, if you plan for it. The cost of living is less than in America, but it is rising due to the country’s popularity among American retirees and other expats. Housing costs largely depend on where and how you live. However, one offset to the cost of living is the great Panama Pensianado plan, which provides a number of discounts to retirees.

Retirement Tips

  • No matter where you want to retire, you should consider working with a financial advisor to prepare. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • If Panama doesn’t seem like your speed, there are other countries you could consider moving to. Check out our guides on Costa Rica, Israel, Argentina and Portugal.

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Ben Geier, CEPF® Ben Geier is an experienced financial writer currently serving as a retirement and investing expert at SmartAsset. His work has appeared on Fortune, and CNNMoney. Ben is a graduate of Northwestern University and a part-time student at the City University of New York Graduate Center. He is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance (CEPF®). When he isn’t helping people understand their finances, Ben likes watching hockey, listening to music and experimenting in the kitchen. Originally from Alexandria, VA, he now lives in Brooklyn with his wife.
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