Retire in Panama: Visas, Healthcare, Taxes, & More
Are you thinking of retiring in Panama? If so, you aren’t alone. Every year, more and more Americans moving overseas choose Panama as their new home.
And why wouldn’t they? Panama’s beautiful weather and affordable cost of living make it a great choice for anyone. Add in the easy tax policies, and it’s no wonder so many expats are ready to put down roots in this gorgeous Central American country.
If you’re planning to retire in Panama, here’s what you should know.
Benefits of Retiring in Panama
Cost of Living
Compared with much of the world, Panama has a remarkably low cost of living. By some estimates, living in Panama is about half as expensive as living in the US. That means that Americans who retire in Panama can expect their retirement income to stretch twice as far as it would in the US!
You’re planning to move soon? Read on in our easiest countries for americans to move to article.
Tax Benefits
Panama is known for its light taxes. Residents and non-residents are taxed only on income that comes from within Panama. Any income from outside the country — such as from the US — is exempt. If you retire in Panama with only US-source income, this could reduce your tax burden quite a bit.
Climate
Panama has a tropical climate and stays warm year-round. In most cases, temperatures range from 75 to 90 degrees regardless of the season. Panama residents spent plenty of time outside and at the beach, enjoying the sunny weather.
Safety
Panama is the second-safest country in Central America, second only to Costa Rica. While not all parts of the country are equally safe, Americans settling in Panama will have little to worry about in the major hotspots.
Scenery
Panama boasts a variety of gorgeous landscapes, including beaches, rainforests, mountains, and volcanoes. When you retire in Panama, you can spend your golden years basking in the natural beauty of your new home.
Best Places to Retire in Panama
Panama City
Settling in Panama City will give you all the perks of a modern metropolis. This city boasts good food, vibrant culture, and plenty of fun.
Upscale neighborhoods like Punta Pacifica and Costa del Este offer luxury condominiums with stunning waterfront views. More affordable areas like El Cangrejo and Bella Vista are known for their lively atmosphere and expat-friendly communities. Take your pick!
Coronado
Coronado is a thriving coastal town on Panama’s Pacific coast, known for its pristine beaches, world-class golf courses, and buzzing culture. Locals love to swim, surf, and sunbathe year-round. If you crave a relaxed coastal lifestyle, Coronado is a good spot to consider.
Boquete
Nestled in the lush mountains of Panama’s Chiriquí Province, Boquete is a haven for nature lovers and outdoor enthusiasts. Its cool climate, stunning scenery, and vibrant expat community make it a popular choice for retirees seeking a tranquil yet active lifestyle. Boquete offers a range of recreational activities, including hiking, birdwatching, and golfing, along with a variety of restaurants, cafes, and cultural events.
Bocas del Toro
Interested in the Caribbean life? Give Bocas del Toro a try. This coastal city is a tropical paradise renowned for its crystal-clear waters, palm-fringed beaches, and vibrant island culture. The main town of Bocas Town offers a laid-back atmosphere, with colorful Caribbean-style houses, beachfront cafes, and lively bars. Residents can also explore the surrounding islands, each with its own unique charm.
The Panama Pensionado Visa
Panama offers a special retirement visa called the Pensionado Visa. It is widely considered to be one of the best retirement visas in the world. To be eligible, all the following must be true:
- You have a monthly income of at least $1,000 USD ($750 USD if you’ve bought property in Panama worth at least $100,000)
- If you have any dependents, you must make an additional $250 per month for each (e.g., $1,250 total if you have one dependent)
- You have a clean criminal record
- You are at least 18 years old
If all these apply to you, congratulations! You are eligible for the Panama Pensionado Visa.
Check out more details about the expat retirement planning.
Benefits of the Pensionado Visa
With a Pensionado Visa, you can claim great discounts designed to make retirement in Panama more affordable and enjoyable. These discounts include:
- Healthcare services
- Prescription medications
- Hospital visits
- Dental care
- Public transportation
- Movies, concerts, and sporting events
But perhaps the biggest benefit of the Pensionado Visa is that it grants you permanent residency status. After five years of holding a Pensionado Visa, you can even apply for citizenship!
Applying for the Pensionado Visa
To apply for the Pensionado Visa, you will need to follow these steps:
- Authenticate several documents with the nearest Panamanian consulate or embassy.
- Travel to Panama.
- Schedule a medical examination with an approved Panamanian doctor.
- Speak to a Panamanian attorney who can apply for the Pensionado Visa on your behalf.
- Wait for approval.
- Obtain your Pensionado ID card and begin enjoying the benefits of retirement in Panama.
And that’s it! Welcome to Panama. To learn more about the individual steps involved, see the official rules from the Embassy of Panama.
Cost of Retiring in Panama
Panama has a low cost of living and favorable tax policies, making it easier to stretch your dollars further. When you retire in Panama, you can likely expect a higher standard of living than you might afford in the United States.
The average salary in Panama ranges from $1,200 to $1,800 per month. In 2024, the average Social Security check for a retired worker is $1,907 per month. This means that you may be able to live off of Social Security income alone. However, it may take a tight budget. Having more saved up (or an additional source of income) will give you a more comfortable retirement in Panama.
Panama Healthcare for US Expats
Panama has a public healthcare system that provides basic medical services to residents, including primary care, emergency services, and preventive care. While public hospitals and clinics may not offer the same level of amenities and comfort as private facilities, they can be a cost-effective option for expats on a budget.
Even when dealing with private healthcare, Panama’s costs are significantly lower than in the US, making it a great choice for American retirees seeking quality medical care. Doctor’s visits, diagnostic tests, and medical procedures are generally more affordable, so you can get the care you need without breaking the bank.
Pros and Cons of Retiring in Panama
Pros:
- Affordability: Panama offers a lower cost of living than the United States, giving you a comfortable lifestyle without draining your savings.
- Quality healthcare: Panama medical facilities provide quality healthcare at a fraction of the cost of US healthcare services.
- Retirement visa benefits: The Panama Pensionado Visa program will give you discounts on healthcare, entertainment, transportation, and more.
- Stable economy: Panama has a stable economy and a strong banking system, so you can manage your finances in peace.
- Expat community: Panama is home to a thriving expat community, providing opportunities to socialize and make new friends.
- Natural beauty: From beaches to rainforests to mountains, Panama’s stunning natural landscapes will appeal to any outdoor enthusiast or nature lover.
- Safety: Panama is one of the safest countries in Central America, making it an ideal place to relax.
Cons:
- Language barrier: While many locals speak English, you may still run into language barriers if you aren’t conversational in Spanish.
- Culture shock: Adjusting to a new culture and way of life can always be a challenge. (Although for many retirees, the laid-back culture of Panama is part of the attraction!)
- Climate: Panama’s tropical climate is appealing to many retirees, but some may find the heat and humidity uncomfortable, particularly during the rainy season. If hot weather is not for you, consider a cooler mountainous area like Boqute.
- Poor infrastructure (in certain places): While major cities like Panama City have modern infrastructure including Central America’s only subway system, rural areas may lack amenities like reliable internet access, paved roads, or even electricity.
Overall, when weighing the pros and cons, Panama is certainly a worthwhile choice for many Americans hoping to retire abroad.
Taxes for Americans Who Retire in Panama
If you’re planning to retire overseas, you may be wondering what taxes you can expect. That’s a fair question! We wish we could say that once you settle abroad, you’ll never have to bother with another tax return. Unfortunately, taxes tend to follow us everywhere.
As an American living in Panama, you’ll be subject to taxation in both countries. This is because US citizens are taxed on their worldwide income regardless of where they live. The good news is that the IRS provides several tax credits you can use to reduce or erase your US tax bill, including:
In addition to that, Panama’s local tax regime is pretty light. Panama only taxes residents on their Panama-source income. Anything that comes from the US should be exempt from Panamanian taxes. If you do have income in Panama, your taxes will look like this:
- If you earn between $0 to $11,000, you will not pay any income tax.
- If you earn between $11,001 and $50,000, you’ll pay 15% on any income above $11,000.
- If you earn more than $50,000, you’ll pay a flat rate of $5,850, plus 25% on any income over $50,000.
When compared with US taxes, that’s pretty simple! To learn more, check out this handy guide: Taxes for US Expats Living in Panama in 2024.
Of important note is the common practice in Panama of purchasing a home and placing it in a Panamanian corporation or foundation. This is normally done to help protect your property against lawsuits as well as to make it easy for heirs to inherit property. While it might be overall beneficial to place your home in a Panamanian corporation or foundation, this will require you to file additional forms each year with your US tax return or face penalties that start at $10,000 per year and can quickly increase.
Planning to Retire in Panama? We Can Help!
If you’re ready to spend your retirement in the buzzing cities and sunny beaches of Panama, you may want a little help with your taxes. That’s where we come in.
Greenback Expat Tax Services is an American company founded by expats—and for expats. Our team of CPAs and Enrolled Agents are spread across 14 time zones, and they’re all familiar with the unique needs and challenges of living abroad.
We help Americans living around the world manage their US and foreign taxes. Doing your expat taxes may never be easy, but Greenback makes it a whole lot easier.
No matter how late, messy, or complex your tax returns may be, we can help. You’ll have peace of mind, knowing that your taxes were done right by Greenback.
Contact us, and we’ll be happy to help you in any way we can!
Retiring in Panama FAQs
How hard is it to get a visa to retire in Panama?
Getting a Panama Pensionado Visa is a simple matter of gathering the right documents and speaking to a Panamanian attorney.
How long does it take to get a visa to live in Panama?
Getting approved for a Panama Pensionado Visa usually takes about three to six months.
What currency is used in Panama?
The official currency of Panama is the Balboa (PAB), which has a fixed exchange rate of 1:1 with the United States Dollar (USD). However, the US dollar is widely used throughout Panama and accepted for most daily transactions.
Does Panama tax US pensions?
Panama only taxes income that comes from within Panama. This means that foreign-sourced income, including US pensions, are not subject to taxation in Panama.
How many Americans live in Panama?
There are an estimated 20,000 to 30,000 American expats living in Panama.
Can I receive my Social Security benefits while living in Panama?
Yes, American retirees can receive their Social Security benefits while living overseas, including in Panama.
Is it safe to retire in Panama?
Panama is generally considered safe for retirees, with low crime rates compared to other countries in the region. However, as with any destination, it’s essential for retirees to exercise caution and common sense, particularly in urban areas and tourist hotspots.
