Living in Costa Rica or Panama?April 26, 2011 – Before I decided to leave the United States to enjoy a tropical retirement I traveled to several other countries around the world before deciding to live in Costa Rica

I had traveled to Spain, Germany, Thailand and Panama because according to several expat retirement websites. In the end, it was a choice between living in Costa Rica or Panama.

How I made my choice was based on several criteria where I will list the main ones here:


Climate – Costa Rica has perfect weather in the central valley that ranges from the high 60s to the mid 80s unless you are at the beach. Panama on the other hand is hot and muggy not having the advantage of the high altitude San Jose enjoys.

Taxes – Taxes was one of my main criteria as I was trying to get away from high taxes. Here is what each country offered:

In Costa Rica, you are not taxed on your retirement income unlike Panama and you are not taxed on money that is earned outside of Costa Rica.

In Panama, you are exempt from tax import taxes every two years but since I did not plan on driving, it did not really apply to me.

One of the advantages of living to Panama is that you do not get taxed on property if it is the only property you own in Panama or abroad.

Healthcare – Both countries have a healthcare plans for retired expats but the plan in Costa Rica was much better and cheaper.

Business - In Costa Rica and Panama, opening a business is quite easy. Opening a business in Costa Rica is fairly easy and just requires the help of a lawyer and the same holds true to Panama. An example is that it is very easy to open an online business like a website design company in Costa Rica as you just need to get a website and some skills.

Infrastructure – This one definitively belonged to Panama as Panama is certainly more modern than Costa Rica. The customer service is also slightly better in Panama and phone and cable services are more modern and more reliable in Panama.

Cost of Living – In this one, both countries are about the same but Panama does have some advantages as they do not have a huge tax on certain goods like electronic and such. In general though, cost of food is comparable.

Pensionado Visa – A pensionado is the term used by Central American countries to describe someone who is retiring from abroad and is also the name of the visa for these people. Each country that offers the “pensionado visa” has their own set of criteria in order to qualify.

In my case, having worked for over a quarter of a century in the railroad business, I did not have to worry about meeting the monetary requirement for each but for those who are interested here they are:

Costa Rica: Need to have a steady income of $600 or more

Panama: Need to have a steady income of $1,000 or more.

In the end, I chose to live in Costa Rica because of the weather, the healthcare plan in Costa Rica and the people. It was a tough decision because I love the more modern setting of Panama but it takes more then that to make me happy.

Frank Donavan is a freelance writer with over twenty years of experience in the sports betting online and bargain Costa Rica real estate industry. Frank has written numerous articles for a variety of Costa Rica related websites. You can contact him at This email address is being protected from spambots. You need JavaScript enabled to view it. This e-mail address is being protected from spambots. You need JavaScript enabled to view it .