International Living’s 2019 Annual Global Retirement Index sees Costa Rica once again pitted against Panama for the top expat destination. North American expats love these neighboring Central American nations for the affordable ocean view real estate, less stressful lifestyle, and proximity to “home.” Retired expats love that both countries have pensionado programs, making it easy to gain residence as a pensioner plus special benefits. And universal health care in modern facilities is offered to all expats in both countries. So how do expats choose between Panama and Costa Rica?
Costa Rica and its neighbor to the south, Panama, have two long coastlines—one on the Atlantic and one on the Pacific—with a diversity of landscapes and micro-climates in between. Both countries possess good quality, affordable health care for residents, with top-notch, English-speaking private clinics and hospitals that are popular with medical tourism. Both nations are close to the U.S. and Canada, with growing direct flights to Europe. And both are situated just outside of the hurricane belt.
So what is it that has expats saying that they like Panama but love Costa Rica? We did some digging on expat message boards and came up with a few consistently repeated ideas from expats who have lived in, or visited, the two Central American countries. Below are some short descriptions of what expats have to say about life in Panama vs. Costa Rica.
World-renown for having a delightful tropical climate all year long, as well as awe-inspiring natural beauty, Costa Rica is a popular expat destination for good reasons. These qualities are not unique, though, when compared to neighboring Panama. Costa Rica’s neighbor to the South also possesses many natural wonders and protected biodiversity. What makes the two nations different, though, is that Costa Rica’s rich biodiversity is also present in popular expat destinations, like in the Costa Ballena. Compare Costa Rica’s international community of Ojochal and its thick, green, forested hillsides with Pedasi, one of the more popular expat destinations in Panama. Both communities face the gorgeous azure waters of the Pacific Coast. However, Ojochal’s homes and businesses feel integrated with nature, surrounded by lush jungle and wildlife. Much of Pedasi is clear cut, other than strips of forest separating properties.
Twelve microclimates allow for a large diversity of organic foods to be grown and sold at farmer’s markets all over Costa Rica. You will find many of the same microclimates in Panama, but as a whole, Panama tends to be more hot and humid. Their Pacific Coast’s rainy season lasts from May until January, whereas it stops in November in Costa Rica.
Costa Rica is clean and green, living up to its international reputation as a sustainable eco-tourism destination. Environmental policies are strengthening every year, and more money is being allocated to national parks and reserves every year. The successive, democratically elected governments of Costa Rica recognize that this country’s strength is in being recognized as a green-economy leader. 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.
Expats admit that Panama is noticeably dirtier than Costa Rica. Garbage lines the streets in Panama, where there are more disposable goods being sold due to Panama’s open trade policies. Panama’s economy features far more fast-food chains and big-name brands, which has its pluses and minus. For those who really love to spend their money on knick-knacks and snacks, Panama may place higher on your expat checklist.
Costa Rica is a nation with a peace-loving culture and a tradition of stable democracy. The Costa Rican army was abolished in 1948 and the army’s budget was indefinitely pledged towards free education and universal health care. This is a progressive nation, with LGBT rights increasing steadily. It is these and many other reasons that give Costa Ricans their pura vida attitude that has them smiling and friendly with everyone.
Expats find that Panamanians are polite to visitors one another, although not as polite as Costa Ricans. Panamanians tolerate all sorts of differences in race, religion, and socio-economic background because of their more diverse cultural history. There is a long history of foreign business owners bringing workers and their cultures from all over the world and these different cultures have influenced Panama with international flavors over time. Public displays of homosexuality are not widely accepted in Panama, though, and Costa Rica is generally favored by the LGBT community.
Costa Rica is a country known for its safety, neutrality and a secure 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!
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 and visitors feel uncomfortable. High levels of poverty (up to 14% live below the international poverty line, compared to around 2% in Costa Rica—the lowest in Latin America) make for more feelings of insecurity.
Ticos (a self-dubbed term for Costa Ricans) are a proud people with a good work ethic… if you can ditch your North American/European expectations of clockwork predictability. They start their workdays early and labor diligently, no matter the type of work. The Panamanian work ethic tends to have a lesser reputation on expat message boards. Both cultures, however, value time off. Attachment to schedules is dependent on circumstances like family, weather, special occasions, and other moving pieces. Both cultures possess strong ties to family that are founded on Catholic values, which make for overall pleasant cultures in both countries.
Considered by many expats to be the “51st state,” the primary reason that Americans choose to expatriate to Panama is for ease of transition. Panama City is a first-class, cosmopolitan capital, and the only first-world city in Latin America. Huge skyscrapers and an advanced metro system make it easily digestible to move near Panama City, where expats can 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.
Costa Rica does not have nearly the same first-world infrastructure, even in the capital, San Jose. However, essential services and luxury amenities are becoming more prevalent in our Southern Zone of Costa Rica, which until recently was not very developed. Today, our Costa Ballena communities are thriving, with schools, doctors, pharmacies, and essential services available in close proximity. Delis, boutiques, restaurants, spas, and an excellent live music scene are some of the many highlights of our growing international expat destination.
Expats acknowledge that there are better roads and signage in Panama. Costa Rica’s potholes and problematic roads are legendary, although the national highways have improved significantly in the last 10 years. Travel in Costa Rica is much slower than people assume because the distance as it appears on the map can be misleading due to the different quality of roads. Gravel roads are still the norm in Costa Rica’s many small villages, including in traditional expat destinations.
The World Bank considers Costa Rica to be a success story in terms of development. It is considered an upper-middle-income country, which has shown steady economic growth over the past 25 years. This growth comes as a result of an “outward-oriented strategy” that is based on openness to foreign investment and gradual trade liberalization. The growth of these policies over the years has led to a growing number of expats who feel safe and welcome to open corporations and own assets in Costa Rica. This country’s economy is well-diversified and has proven to have fairly stable growth in the last 10 years. Rental income is a fantastic asset to Costa Rica real estate, especially in our Costa Ballena region. We have seen spectacular rental income records with many of our sellers and it is a big draw for investors in our region.
Panama is currently a hot investment destination for expats. Over the past decade, Panama has been one of the fastest growing economies in the world, with an average annual growth rate of 5.6 percent over the last five years. However, because much of Panama’s growth is dependent on trade through the Panama Canal, their economy is heavily affected by international trade disputes or by global economic turndowns.
Panama’s pensionado program is a popular attraction 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 must show a combined $1250. Costa Rica has similar figures, but Panama’s pensionado program also offers 25% off airline tickets, 25% off monthly energy bills, and 50% off hotel stays. These benefits are given 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 to receive discounts in a variety of businesses, including free bus rides, and to never stand in line again.
For those who want to apply for residency before retirement, both countries offer investor paths to residency. In Costa Rica, this involves making a $200,000USD investment into assets (land, house car rather than mortgage and loans) in this country. Panama has an additional friendly nations policy for fifty countries (including most expat origin countries) and has very low requirements for gaining residency.
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 in Panama than in Costa Rica, largely due to global tarriff-free importation via the Panama canal. Panama does not have a duty tax on expats importing household goods up to $10,000, while Costa Rica does not have this exemption (unless you can prove that they are for personal use). Costa Rica does have tax-free zones in which expats travel to do bigger shopping excursions for things like appliances, electronics, wine, and bulk groceries. Vehicles are the main item that expats notice to be less expensive in Panama than in Costa Rica.
Property taxes in Costa Rica are especially low. Owners of Costa Rica real estate pay just 0.25% of the value of any property in taxes every year. In Panama, they pay 2.1% annually for any property valued above $75,000 USD.
So which expat destination is right for you?
For those who require a large selection of goods at great prices in their life as an expat, Panama will likely be a better fit. But if you value a high-quality lifestyle in a safe, peaceful, and ecologically beautiful communities, we highly recommend you choose Costa Rica. Cheaper and more abundant shopping in Panama is just a short drive or flight away from the Southern Zone of Costa Rica—our favorite expat destination in the world! We chose South Pacific Costa Rica to be our home and we invite you to try it out, too. Our fresh climate, friendly people, diverse wildlife, all exist on this spectacular landscape, where green mountains stretch down to our pristine Pacific beaches. This magical environment draws in anyone who truly cares about achieving a relaxing, enjoyable, pura vida quality of life.