Panama has earned its reputation as one of the world's best retirement destinations — and for good reason. With the U.S. dollar as its official currency, healthcare costs 50-75% lower than back home, no taxes on foreign income, and a retiree visa program that's been welcoming Americans since 1987, Panama offers near-retirement planners a compelling path to making their savings last significantly longer without sacrificing quality of life.
Key Takeaway
Panama's Pensionado visa program requires just $1,000/month in pension income and provides generous discounts on healthcare, dining, transportation, and entertainment. Combined with costs that run 40-50% below U.S. levels and zero taxes on foreign income, many American retirees find they can live entirely off Social Security while enjoying a higher quality of life.
Why Panama Stands Out for American Retirees
Several factors make Panama uniquely attractive compared to other international retirement destinations:
- U.S. dollar currency - Panama uses the dollar as its official currency (the Balboa), eliminating exchange rate risk entirely
- World-class Pensionado program - The most generous retiree visa in the Western Hemisphere, with discounts on nearly everything
- No tax on foreign income - Panama's territorial tax system means your Social Security, pensions, and IRA/401k withdrawals are completely tax-free
- Proximity to the U.S. - Direct flights from Miami (2.5 hours), Houston (4 hours), and other major cities
- Modern infrastructure - First-world banking, high-speed internet, and a metro system in Panama City
- English widely spoken - Especially in Panama City, Coronado, and Boquete where expat communities thrive
- Stable democracy - Panama has been a stable democracy since 1989 with a growing, diversified economy
The Pensionado Visa: The World's Best Retiree Program
Panama's Pensionado (retiree) visa has been attracting foreign retirees since 1987. It's widely considered the gold standard for retirement visas worldwide.
Requirements
- Monthly pension income - Minimum $1,000/month from Social Security, government, military, or private corporate pension
- Reduced requirement with real estate - Only $750/month if you purchase property worth $100,000+ in Panama
- Additional dependents - $250/month per dependent (spouse, children under 25)
- Residency requirement - Visit Panama at least once per calendar year
- Processing time - 3-10 months, with a 97% approval rate
- Cost - Approximately $1,900 for the main applicant, $900 per dependent
Pensionado Discounts
The visa comes with remarkable discounts that reduce your cost of living even further:
- 50% off - Entertainment (movies, concerts, sporting events)
- 30% off - Public transportation (buses, trains)
- 25% off - Airline tickets and restaurant meals
- 20% off - Professional services (doctors, dentists, lawyers)
- 15% off - Hospital bills and dental procedures
- 10% off - Prescription medications
- Tax-free imports - One-time duty-free import of household goods (up to $10,000) and a new car every two years
Important Consideration
The Pensionado visa does not include the right to work in Panama. However, you can work remotely for foreign companies, earn investment income, and run online businesses. If you want local employment, you'll need a separate work permit.
Cost of Living: Panama vs. United States
Panama's cost of living runs roughly 40-50% below comparable U.S. cities. Here's what to expect across major spending categories.
Housing Costs
Rental Costs (Monthly):
- 1-bedroom apartment, Panama City - $800-$1,400 (vs. $2,000-$3,500 in U.S. cities)
- 2-bedroom apartment, Panama City - $1,200-$2,200 (vs. $3,000-$5,000 in U.S. cities)
- 2-bedroom house, Boquete - $600-$1,200 (vs. $2,500-$4,000 in U.S. suburbs)
- Beach condo, Coronado - $900-$1,800 (vs. $3,000-$6,000 in coastal U.S.)
Home Purchase Prices:
- 2-bedroom condo, Panama City - $150,000-$300,000
- 3-bedroom house, Boquete - $180,000-$400,000
- Beach property, Coronado - $200,000-$500,000
- Luxury oceanfront - $500,000-$2M+
Daily Living Expenses
Groceries & Food:
- Grocery bill (monthly for couple) - $400-$700 in Panama vs. $700-$1,100 in U.S.
- Dining out (mid-range restaurant) - $20-$40 for two vs. $60-$100 in U.S. cities
- Local beer at restaurant - $2-$3 vs. $6-$8 in U.S.
- Fresh produce at markets - 50-70% less than U.S. supermarkets
Utilities:
- Electricity - $80-$200/month (A/C usage varies by location; Boquete needs none)
- Water - $10-$30/month
- Internet (high-speed) - $30-$60/month
- Cell phone - $15-$40/month
Transportation:
- Panama City Metro - $0.35 per ride (one of the cheapest in the world)
- Taxi ride across Panama City - $3-$8
- Gasoline - $3.50-$4.50/gallon (cheaper than U.S. average)
- Car insurance - $500-$1,000/year
Overall Monthly Budgets
- Budget lifestyle (rural/small town) - $1,400-$2,000/month per couple
- Comfortable lifestyle (Boquete/Coronado) - $2,000-$3,500/month per couple
- Upscale lifestyle (Panama City) - $3,500-$6,000/month per couple
Savings Potential
The average Social Security benefit is about $1,827/month. A couple receiving $3,500/month combined can live comfortably in Panama's interior or beach communities without touching their retirement savings at all. That means your 401k and IRA can continue growing — or serve as a cushion for travel and emergencies.
Healthcare: World-Class at a Fraction of U.S. Costs
Healthcare is often the top concern for retirees considering an international move. Panama excels in this area.
Quality of Care
- Hospital Punta Pacifica - Affiliated with Johns Hopkins International, one of the most advanced medical centers in Latin America
- San Fernando Hospital - JCI gold-star accredited for international healthcare standards
- English-speaking doctors - Many physicians trained in the U.S. or Europe, especially in Panama City
- Medical tourism hub - Panama attracts patients from across the Americas for procedures at a fraction of U.S. costs
Cost Comparison
- Doctor visit - $30-$60 in Panama vs. $150-$300 in U.S.
- Specialist consultation - $50-$100 vs. $250-$500 in U.S.
- Dental cleaning - $35-$60 vs. $150-$300 in U.S.
- MRI scan - $200-$400 vs. $1,500-$3,500 in U.S.
- Knee replacement surgery - $8,000-$12,000 vs. $40,000-$70,000 in U.S.
Insurance Options
Medicare:
- Does NOT cover healthcare outside the U.S.
- Keep Part A (free if eligible) for coverage when visiting the U.S.
- Consider dropping Part B ($185/month in 2026) if you won't use it
- Can re-enroll upon return to U.S. (may face late enrollment penalties)
Panama Private Insurance:
- Local plans - $50-$300/month depending on age and coverage level
- Hospital plans (e.g., Santa Fe Hospital) - $144-$232/month for seniors with Pensionado discount
- Budget option - MiniMed Expat Health Membership at $22/month covers 14 clinics and a hospital
International Insurance:
- Comprehensive plans - $200-$600/month for ages 65-75
- Providers - Cigna Global, Allianz Care, GeoBlue
- Coverage - Worldwide including U.S. visits and medical evacuation
Warning
While Panama City has excellent hospitals, rural areas and smaller towns have limited medical facilities. If you retire in Boquete or the islands, factor in travel time to Panama City (6 hours by car from Boquete) for specialized care. Consider medical evacuation coverage regardless of where you settle.
Tax Advantages for American Retirees
Panama's tax system is one of its biggest draws for retirees.
Panama's Territorial Tax System
- No tax on foreign-sourced income - Social Security, pensions, IRA/401k withdrawals, and investment income earned outside Panama are completely exempt
- No capital gains tax on foreign investments - Your U.S. brokerage account gains are not taxed by Panama
- No inheritance tax - Panama does not tax estates or inheritances
- No property tax (first 20 years) - New construction may qualify for a property tax exemption of up to 20 years
U.S. Tax Obligations
- Still must file U.S. taxes - American citizens file regardless of where they live
- Foreign Earned Income Exclusion - Does not apply to retirement income
- FBAR filing - Required if Panamanian bank accounts exceed $10,000
- State taxes - Establish residency in a no-income-tax state (FL, TX, NV) before relocating to avoid ongoing state tax obligations
Tax Strategy
Because Panama doesn't tax your foreign income, your only tax obligation is to the U.S. federal government (and potentially your last state of residence). Combined with Panama's lower cost of living, this means more of every dollar you withdraw from retirement accounts stays in your pocket.
Where to Retire in Panama
Panama offers diverse environments to match different retirement lifestyles.
Panama City
- Best for - Retirees who want city amenities, world-class healthcare, and cultural activities
- Popular neighborhoods - San Francisco, Casco Viejo (historic quarter), Punta Pacifica, El Cangrejo
- Monthly cost - $3,000-$5,000 for a couple
- Pros - Best hospitals, international airport, restaurants, shopping malls, metro system
- Cons - Traffic congestion, higher costs, tropical heat year-round
Boquete (Highland Mountains)
- Best for - Nature lovers, hikers, and those who prefer cooler weather
- Climate - Spring-like year-round (65-80°F), no A/C needed
- Monthly cost - $1,800-$3,000 for a couple
- Pros - Large expat community, stunning scenery, coffee plantations, low costs, no A/C bills
- Cons - 6 hours from Panama City, limited healthcare, rainy season can be heavy
Coronado (Pacific Beach)
- Best for - Beach lovers who want gated community security and golf
- Distance - 1.5 hours from Panama City by car
- Monthly cost - $2,200-$4,000 for a couple
- Pros - Gated communities, golf course, close to Panama City hospitals, active social scene
- Cons - Hot and humid, less authentic Panamanian experience
Practical Examples: Retirement Budgets in Panama
Example 1: Living Off Social Security in Boquete
Jim and Carol, both 67, receive combined Social Security of $3,200/month. They have $400,000 in retirement savings they want to preserve.
Monthly Budget:
- Rent (2-bedroom house with mountain views): $900
- Groceries and household: $500
- Utilities (no A/C needed): $80
- Local health insurance (both): $350
- Transportation (one car): $250
- Dining out and entertainment: $400
- Phone and internet: $60
- Miscellaneous: $200
- Total: $2,740/month ($32,880/year)
Result: They live comfortably on Social Security alone with $460/month surplus. Their $400,000 retirement savings remains untouched and continues growing. In a comparable U.S. mountain town, the same lifestyle would cost $5,500-$7,000/month.
Example 2: Comfortable Beach Life in Coronado
David and Maria, 63 (early retirees), have $1M in retirement savings and combined Social Security starting at $2,600/month at age 67.
Monthly Budget (pre-Social Security):
- Mortgage (purchased $280,000 condo): $1,400
- Groceries and household: $650
- Utilities and internet: $200
- International health insurance (both): $800
- Car and transportation: $400
- Dining and entertainment: $700
- Golf club and activities: $300
- Travel (U.S. visits, 2x/year): $500
- Miscellaneous: $300
- Total: $5,250/month ($63,000/year)
Income Strategy:
- Portfolio withdrawals (4% of $1M): $40,000/year
- Investment dividends: $12,000/year
- Total pre-SS: $52,000/year (small deficit covered by savings buffer)
- At 67 with Social Security: $83,200/year — surplus of $20,200/year
Result: They enjoy beach life with a modest early-retirement draw, and once Social Security kicks in, they build surplus. The same coastal lifestyle in Florida or California would run $9,000-$12,000/month.
Common Mistakes to Avoid
- Not visiting first - Spend at least 2-3 months in Panama before committing. Rent in different areas. What seems like paradise on a one-week vacation may feel different as daily life.
- Buying property too quickly - Rent for at least a year before purchasing. Real estate scams targeting expats exist, and you need time to understand fair market values and neighborhoods.
- Underestimating the adjustment - Even in expat-friendly areas, things move slower. Bureaucracy, cultural differences, and occasional power outages require patience.
- Ignoring hurricane and rainy season - While Panama sits below the hurricane belt, the rainy season (May-November) brings daily downpours that affect daily routines.
- Dropping Medicare Part B prematurely - If there's any chance you'll return to the U.S., keep Part B to avoid late enrollment penalties of 10% per year of non-enrollment.
- Not planning for U.S. visits - Budget $3,000-$6,000/year for flights and expenses to visit family and handle U.S. affairs (banking, taxes, medical checkups).
Using Bullseye to Plan Your Panama Retirement
Bullseye can help you model the financial impact of retiring in Panama:
- Compare expense scenarios - Create one scenario with your current U.S. expenses and another with reduced Panama costs to see how much longer your portfolio lasts
- Model early retirement - Test retiring at 60 or 62 with Panama's lower costs versus waiting until 65 or 67 in the U.S.
- Plan Social Security timing - Since Panama costs are lower, you may be able to delay Social Security to age 70 for maximum benefits while living off savings
- Account for healthcare costs - Input Panama insurance premiums and out-of-pocket costs as recurring expenses
- Test what-if scenarios - Model unexpected situations like needing to return to the U.S. permanently, medical emergencies, or changes in Panama's tax laws
- Track the gap years - If retiring before Social Security kicks in, model the withdrawal strategy to bridge the income gap
Bottom Line
Panama offers American retirees an exceptional combination: the U.S. dollar (no currency risk), no taxes on foreign income, healthcare at a fraction of U.S. costs, and a retiree visa program with unmatched benefits. For near-retirement planners looking to stretch their savings, Panama deserves serious consideration. A couple with $3,000-$3,500/month in Social Security can live comfortably without touching their retirement savings — something increasingly difficult to do in the United States. Use Bullseye to model your specific numbers and see how many additional years of financial security a Panama retirement could provide.
