Panama Retirement Guide for US Citizens

Country Population: 4,515,662

Panama’s tropical climate is marked by a distinct dry season from December to April, characterized by less rainfall and sunny days, ideal for tourism and outdoor activities. The wet season, spanning May to November, sees increased precipitation, particularly heavy from June to November, though temperatures remain warm and the landscape lush. Different regions experience varied weather patterns, with the Caribbean coast receiving consistent rainfall year-round and the Pacific coast, including areas like Panama City, enjoying clearer skies during the dry season.

In the highlands, such as Boquete and El Valle de Antón, the climate is cooler, providing a pleasant contrast to the country’s coastal areas. While these regions receive significant rainfall, especially in the wet season, the higher elevation results in milder temperatures, ranging from 10°C to 18°C (50°F to 64°F), offering a refreshing escape from the tropical heat.

Temperature and precipitation in Panama vary considerably across regions. Coastal areas typically experience temperatures between 24°C to 30°C (75°F to 86°F), with the Caribbean coast receiving more consistent rainfall compared to the Pacific coast. The annual rainfall differs starkly between regions, with the Caribbean coast and rainforest areas receiving over 3,000 mm of rain annually, whereas the Pacific coast sees less, illustrating Panama’s diverse and region-specific climate patterns.

In Panama, while the public healthcare system is accessible and affordable, foreigners often opt for private healthcare due to its higher quality and reduced wait times. Expats can contribute to Panama’s state health insurance, CSS, with the right visa, or choose local private insurance options offering various coverage levels. However, international health insurance is recommended for comprehensive coverage, language compatibility, and access to top-tier private hospitals. Costs for private local insurance range from $50 to $125 per month, while international plans can cost between $2,800 and $5,700 annually.

Flights from Panama City to Miami typically last about 2.5 to 3 hours with numerous direct options available daily, costing between $200 to $600. The journey to New York is around 5 to 6 hours on direct flights, with prices ranging from $300 to $800, while trips to San Francisco, less frequent in direct offerings, take about 7 to 8 hours, potentially costing $400 to over $1000. Prices and availability can vary significantly based on the season.

Panama is considered one of the safer countries in Central America. The capital, Panama City, and other tourist areas are generally safe, but, as with any urban area, they have neighborhoods that are best avoided. Petty crimes like pickpocketing and theft are the most common concerns, especially in crowded areas and on public transport.

The US State Department’s travel guide assigns Panama a Level 2 advisory, urging travelers to exercise increased caution due to crime. Specific regions like the Darien Gap and the Mosquito Gulf receive a Level 4 advisory, signaling “Do Not Travel” due to elevated crime and security risks. These advisories underscore the variable safety landscape across Panama, with certain remote areas presenting considerable dangers from criminal activities and lawlessness.

In a broader scope, Panama’s 68th place out of 163 countries in the Global Peace Index denotes a medium security level, indicating that while Panama is relatively more peaceful than many countries, it still confronts issues that influence its peace and security standing. This index’s position reflects Panama’s overall security environment, suggesting a nuanced security landscape that varies significantly by region and community.

Notably, expat zones in Panama generally enjoy a higher degree of safety, largely attributable to enhanced police protection in these areas, which tend to be well-monitored to safeguard the expatriate community.

Panama’s ranking as the 100th out of 138 countries in the Gallup Migrants Acceptance Index contrasts significantly with its position in the 2023 Expat Insider survey, where it’s ranked as the 3rd best country for expats to live. This stark difference highlights the multifaceted nature of expatriate experiences. While the Migrant Acceptance Index reflects broader societal attitudes towards migrants, the Expat Insider survey focuses on the expatriates’ personal experiences and satisfaction in various domains. Notably, Panama’s top rankings for finding friends (1st) and its culture and welcoming attitude (2nd) in the Expat Insider survey suggest that individual expats feel a strong sense of community and cultural integration, despite the broader challenges indicated by the Gallup Index.

Panama’s English proficiency, as indicated by its ranking of 71st out of 113 countries in the EF English Proficiency Index (EF EPI), suggests a moderate level of English skills among its population. With an EPI score of 486, Panama falls slightly below the global average score of 493. Within Latin America, Panama is ranked 16th out of 20 countries, indicating that while there are English speakers, the overall proficiency level is lower compared to other countries in the region. While English is spoken, particularly in business sectors and tourist areas, the moderate proficiency ranking suggests that knowledge of Spanish, Panama’s official language, can significantly enhance interactions and experiences in the country.

The cost of living in Panama City is significantly lower compared to New York City across various categories. Consumer prices in Panama City are 52.1% lower than in New York when excluding rent. When including rent, the overall consumer prices in Panama City are 63.5% lower. Specifically, rent prices in Panama City are 76.1% less expensive, indicating a substantial difference in housing costs. Dining out in Panama City also costs considerably less, with restaurant prices being 53.8% lower. Grocery shopping shows a similar trend, with prices 51.1% lower in Panama City compared to New York. However, it’s noteworthy that the local purchasing power in Panama City is 61.2% lower than in New York, which reflects the disparity in income and the capacity to buy goods and services between the two cities.

In a cost comparison between New York City and Panama City, a meal at an inexpensive restaurant is $30.00 in New York versus $12.00 in Panama City, reflecting substantial savings. Grocery items show notable differences as well; for example, a gallon of milk is slightly more expensive in Panama City at $6.57 compared to $5.91 in New York, while a pound of rice is much cheaper at $0.94 in Panama versus $3.25. Rent prices reveal significant disparities, with a 1-bedroom city center apartment costing $4,189.81 in New York against Panama City’s $938.33.

Panama operates on a territorial tax system, meaning that residents are only taxed on income earned within Panama. Foreign income, including most pensions or Social Security benefits received from the US, is not taxed in Panama. This can be particularly advantageous for US retirees living in Panama.

Panama offers the Pensionado visa, which is popular among retirees due to its minimal income requirements and numerous discounts on services and entertainment in Panama. While this program provides financial benefits, it doesn’t exempt US citizens from their US tax obligations.

Panama’s Pensionado Program offers foreign retirees attractive incentives, including substantial discounts on transportation, entertainment, utilities, medical services, and more, alongside a one-time duty exemption for household goods and periodic vehicle import tax exemptions. Eligibility hinges on proving a stable monthly pension, with a typical requirement of around $1,000, although this can be reduced if property is purchased in Panama. The program grants permanent residency, allowing retirees to enjoy Panama’s lower cost of living and high-quality, affordable healthcare. With benefits extending to various aspects of daily life and the relatively straightforward application process, the Pensionado visa is a compelling option for retirees seeking a comfortable lifestyle in a welcoming country.