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Costa Rica or Panama: Which Is A Better Choice For You?


With the release of International Living’s most recent Annual Global Retirement Index at the start of 2019, we again see Costa Rica pitted against Panama for the top spot. North American expats clearly love this part of the world for its proximity to “home.” Retired expats love that both countries have pensionado programs, making it easy to gain residence. And the trend of affordable, modern healthcare is a bonus for everyone. So how do expats choose between Panama and Costa Rica?

Panama topped the most recent index, taking first place overall, and in the categories of Benefits and Discounts, Visa and Residence. It tied for first place with Costa Rica in Governance and Development, while scoring well in the Healthy Lifestyle, Entertainment and Amenities, and Opportunity categories.

Both countries have two long coastlines–one on the Atlantic and one on the Pacific–with a diversity of landscapes in between. Both countries have good quality, affordable healthcare for residents, with top-notch, English-speaking private clinics and hospitals that are popular with medical tourists. And both nations are close to the U.S. and Canada, sitting just outside of the hurricane belt.

But what’s so special that has people saying that they like Panama but love Costa Rica? Below are some short, composite descriptions of what expats have to say about life in Panama vs. Costa Rica.

Costa Rica

A tropical climate and stunning natural beauty make Costa Rica popular with expats who want to live in one of the most beautiful places in the world. These qualities are not entirely unique, though, when comparing it to neighboring Panama, which also has some ecologically spectacular locations. What people really love about buying real estate in Costa Rica are the better prices for similar experiences. If you want to be in an expat-hub like our home-village of Ojochal, you would be paying more for a comparable location in Panama.

Costa Rica has a stable democratic tradition running for many decades and a peace-loving culture. The army was abolished in 1948 and the army’s budget was indefinitely pledged towards education and healthcare. This is a progressive nation, with LGBT rights increasing steadily.

Twelve microclimates allow for a large diversity of organic foods to be grown and sold at farmer’s markets all over the country. Although the climates in Panama and Costa Rica are similar, Panama tends to be more hot and humid, and their Pacific rainy season lasts from May until January, whereas it only goes to November in Costa Rica.

Costa Rica is a country known for its safety, neutrality and a good banking system. The people are friendly and welcoming, with many able to speak at least partial English. Ticos are genuinely happy to help you learn Spanish, so don’t be ashamed to try–you will be highly praised for your efforts!

Many remark that Costa Rica has a better education system, better customer service and more cultural awareness. Costa Rican workers also tend to be more reliable for services like cooking, cleaning, gardening, and handy work, while Panamanians have a lesser reputation for work ethic.

Costa Rica is clean and green, living up to its international reputation, while Panama is noticeably dirtier. Garbage lines the streets in Panama, where much more disposable good are peddled due to Panama’s more open trade laws. Even fast food is more prevalent in Panama–for good or for bad.

On the other hand, Costa Rica’s environmental laws are strengthening every year, with more money being allocated to protect more land in national parks and reserves. The nation’s electric grid continues to report long stretches of operating on 100% renewable energy, even supplying neighboring nations like Panama when their grids are overloaded.


Considered by many to be the “51st state,” the primary reason that Americans choose Panama to expatriate is for ease of transitioning. Panama City is a first class, cosmopolitan capital, and the only first world city in Latin America. With huge skyscrapers and an advanced metro system, expats love visiting Panama City to experience exciting food, beer, jazz, film, golf, tennis and shopping. Panama also uses the U.S. Dollar, making it easier to track spending as an American.

The Panamanian pensionado program is another popular draw for retired expats from around the world. To receive residency, single retirees need to show that they receive $1000 per month from an official retirement scheme, and couples only need a combined $1250. Costa Rica has similar figures, but Panama’s pensionado program also offers 25% off airline tickets, 25% off monthly energy bills, 50% off hotel stays. These benefits are given by law to all who qualify by age, including expats (55 for women, 60 for men). Costa Rica’s senior citizen discount program, Ciudadano de Oro, is an opt-in scheme that any resident aged 65+ can apply for to receive discounts in a variety of businesses, free bus rides, and to never stand in line again.

Low taxes are the case in both Costa Rica and Panama, but Panama has zero income tax. Costa Rica’s income tax is between 10-15%, depending on the worker’s residence scheme. Daily life expenses are also said to be cheaper than in Costa Rica, largely due to global importation via the Panama canal. Vehicles are the main item that expats notice to be less expensive in Panama than in Costa Rica. And Panama does not have a duty tax on household goods up to $10,000, while Costa Rica does not have this exemption.

Due to some bad history over the canal, Panamanians can be less welcoming to “gringos.” People do not smile and wave as readily as they do in Costa Rica. Panama also has a militarized police force, authorized by their president. Soldiers in fatigues carry rifles to patrol the streets and guard many of the large stores and businesses in Panama. This strong military presence makes many expats feel uncomfortable. High levels of poverty (up to 10% live below the poverty line) make for more feelings of insecurity.

You will experience better roads and signage in Panama, whereas Costa Rica’s potholes and problematic roads are legendary. Travel in Costa Rica is much slower than people assume and the distance, as it appears on the map, can be misleading.

So which is best for you?

If expenses are your primary concern, Panama may be your better choice. But if lifestyle, social conscience and conservation are higher priorities, we highly recommend you choose Costa Rica. Cheaper and more abundant shopping in Panama are just a short drive or flight away from the Southern Zone of Costa Rica–one of the best expat destinations in the country. Our fresh climate, friendly people, diverse wildlife, and green mountains that stretch down to the Pacific Coast will draw in anyone who truly cares about their quality of life.

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