Costa Rica vs. Panama Retirement: Which One is Better for Expats

The typical American dream for most of us, if we got our way, would end on a beautiful beach somewhere sunny and balmy. Who could argue the perfect ending quality of an image like that? For many nearing their retirement, this picture-perfect scenario could soon become a reality.

But like many other things in life, even retirement requires a little planning.

Financial planning, of course, is important, but it’s much more fun to focus on choosing your retirement location. All of you beach lovers out there have got many options when it comes down to selecting the tropical paradise of your dreams. Many concerns will factor into your overall end choice: safety, local government and culture, healthcare options, property markets, affordability, and of course, weather.

Today, we’re going to review the merits of two tropical paradises, Costa Rica and Panama, as dream retirement locations to help you with this all-important choice.

Overview

A map of central America which features Cost Rica and Panama

First, let’s dive into what makes these two locations such popular choices for American retirees. Both are located right next to each other in Central America on the isthmus that connects North and South America. Due to their location, both countries provide miles of beautiful beachfront views and an overall lovely climate.

Latin America is a popular choice for retirees due to the reported wonderful culture and friendliness that many retirees experience there. On average, Central America also offers a tropical climate that features dry and rainy seasons.

However, Americans will most likely find that the climate’s temperature is more consistent than the often back-and-forth temperatures they’re familiar with at home. Though the weather usually stays consistently warm in Central America, temperatures will seldom rise above 90 degrees Fahrenheit.

The centralized location of Costa Rica and Panama makes them ideal for retirees who would like to spend their golden years traveling. Many fantastic places are easily and quickly accessible from these Central American countries.

Because Central America is such a popular place for American retirees, the governments in the area have developed many unique programs and benefits for these residents. While the programs will vary from country to country, the area is overall very welcoming and amenable to its retiree residents.

In all, narrowing your choices down to these two Central American countries is already a great decision. You can hardly go wrong with either Costa Rica or Panama, but as each country offers different benefits, you’ll want to choose the one that most closely matches your retirement desires and needs.

Let’s learn more about what makes each of these countries a great but unique choice for American retirees.

Safety

An image showing blue and red police sirens which symbolizes crime rates in Costa Rica and Panama

When planning for retirement, many people are concerned first and foremost with finding a safe place to spend their golden years, and understandably so. Choosing a retirement location is no different from selecting a new neighborhood to move to; it will affect your life in a long-term and far-reaching way.

Costa Rica Safety

So, are there any concerns to be aware of with Costa Rica’s safety? Overall, many experts agree that ex-pats will feel very comfortable and safe when moving to Costa Rica. However, like with any other area and especially abroad, it’s essential to be aware of your surroundings and understand that not every place will be as safe as others.

Since Costa Rica is also a popular tourist destination, many of its pristine beaches and more regularly visited tourist attractions will be extremely safe from violent and major crimes. Any more serious crimes would occur in poorer neighborhoods that would not be on your radar if you are considering retiring to Costa Rica.

It’s also very easy to avoid petty crimes and robberies in the tourist destinations of Costa Rica. Because such crimes are usually aimed at tourists in very tourist-dense areas, you can take measures to blend in more with the locals and remove yourself from the tourist population. Some ex-pats suggest that you place a Spanish newspaper on the dashboard or a Costa Rican flag sticker on the bumper if you will be driving a car.

Which Areas Are Higher Risk?

However, it’s important to be aware that, just like at home in America, certain areas of Costa Rica will be more likely to witness illegal activity. Certain activities that are illegal in America are legal in Costa Rica, including prostitution and the use of certain drugs. While these activities’ legality often makes them safer than in areas where they are illegal, it’s always a good idea to use common sense in deciding how late to be out and about in certain cities.

Experts cite cities such as San Jose, Tamarindo, and Playas del Coco as places where you may see some of this activity. However, these cities are still family-friendly and full of vibrant culture, which you can safely experience if you exercise awareness and common sense.

All in all, you will most likely find that Costa Rica is a highly safe place for retirees. You might be a witness or victim of a petty crime like a purse-snatching in tourist-dense areas, but if you remain alert of your surroundings and naturalize yourself to the area, it should be smooth sailing.

Panama Safety

If you’re looking for a very safe and comfortable place to retire, then Panama might be the perfect fit for you. Many ex-pats report feeling even safer spending their retirement in Panama than they felt living in America.

As with any other country, some areas are less safe than others, especially in large cities. But many native Panamanians are used to instituting safety measures, such as barred windows and guard dogs, that deter crime before it occurs. So if you see many structures with barred windows, don’t be concerned about what it may suggest about crime rates.

Panama has one of the lowest crime rates in all of Latin America, with a very low occurrence of violent crimes throughout the country. In tourist areas, when there is petty crime, the authorities are very easy to work with and amenable; they take crimes against tourists and ex-pats very seriously and work hard to rectify any wrongs.

Why is Panama Safer?

Interestingly, the country doesn’t have as significant a wealth disparity as other Latin American countries, meaning that poverty-influenced crimes or those ignited by racial or similar types of tension are simply not common. The government employs beneficial social programs and wonderful city planning that improve the area for both the internationally-settled communities as well as native Panamanian communities.

One ex-pat couple who settled in the Pedasi region of Panama fell in love with it because it reminded them of “Mayberry in the Andy Griffith Show” and felt even safer than their hometown in the U.S. did.

Overall, if you’re looking for a safe and secure place to retire and spend your golden years in relaxation, both countries are great options that you won’t regret. But when it comes down to brass tacks, is Panama or Costa Rica safer?

Compared to Costa Rica, Panama has an added feeling of overall safety due to its wealth equality and excellent social and urban planning. As a matter of fact, many experts say that you’ll only encounter crime in Panama if you become too comfortable and abandon the normal safety measures you were accustomed to employing every day at home in America.

Cost of Living

An image of a street stall in Boquete, Panama. It features a large display of colorful costume jewelery and handicrafts

When moving to a Central American country, money-related matters are likely to be one of the more significant adjustments you might have to make. Understanding the economy, the property markets, and the overall cost of living is crucial when deciding on your retirement location.

Economy

While ex-pats will find that they offer similar amenities and attractions, these two countries’ economies do differ. Does Panama or Costa Rica have a better economy? Both areas have a large and growing number of ex-pat retiree residents and other international community members that stimulate local economies.

Costa Rica’s growing middle class and growing community of over 20,000 ex-pats stimulate the economy well, making attractions and conveniences like fine dining locations, theatres, and galleries available to visit all across the country. Other amenities like high-speed internet, quality drinking water, and great cell service make the standard of living in Costa Rica enviably high.

Due to government involvement in social programs, Panama is more developed than other Latin American countries and enjoys a stable and growing economy. Even though national prices have increased over the last few years, you will still find that the cost of living in Panama is surprisingly low. Because of reasonable pricing, you can splurge on luxuries that you might not have been able to in the States.

Because Costa Rica has recently suffered from conflicts in neighboring countries, its economy is not as stable as that of Panama. Compared to each other, Panama’s economy will most likely provide retirees the most stable and beneficial environment.

Real Estate Market

All in all, is it easier to buy property in Panama or Costa Rica? Both places are accustomed to hosting ex-pat retirees, so both countries make the process of property purchasing relatively simple and easy for everyone. Retirees are likely to find, though, that they get more bang for their buck in Panama when it comes to real estate.

Costa Rica

Along with that great standard of living comes a cost of living that is not for bargain hunters. Costa Rica is the most expensive country to live in throughout Central America. Like with any other country, certain areas are more expensive than others.

American retirees report living comfortably on a budget of up to $2,000 a month, a sum that will vary if you want a beachfront home or prefer a less popular location.

When it comes to purchasing property in Costa Rica, many of the same principles of buying real estate in the States still apply. There are no restrictions on property purchasing for foreigners, who make up most of the country’s luxury homeowners. Each potential settling location caters to a different pace of life and varied needs, so you’re sure to find one that fits your ideal retirement scenario.

Related: Is Buying Property in Costa Rica Risky?

Panama

Panama also offers a variety of property styles to fit many different ideal retirement scenarios. You’ll find condo living, luxury beachfront locations, and simple and comfortable homes all offered at very reasonable prices. In fact, many U.S. ex-pats report that they can afford real estate in Panama that they would never have been able to in America because of the extremely reasonable cost of living. 

All things considered, is it cheaper to live in Panama or Costa Rica? The answer, again, would most likely have to be Panama. Retirees will find that their money goes further for many luxuries that they could not afford at home. However, Costa Rica can still be a cost-effective option for those who have budgeted to match the country’s cost of living.

Climate

An aerial photograph of a rainforest in Panama. It shows hundreds of trees including a large palm tree. In the background are mountain ranges and low hanging clouds

Central America is popular with American retirees in large part due to these two attractive factors. Because Costa Rica and Panama are directly adjacent to each other, these two neighbors will boast very similar weather and beaches. However, some differences may influence your decision.

Both countries have dry and rainy seasons, are located close to the equator, and have coastlines on both the Pacific and Caribbean oceans. Temperatures are similar and consistent: anywhere from 100 degrees Fahrenheit on the hottest days at the beach to 65 degrees on the coolest days inland. And because of location, both countries are outside the common path of hurricanes.

However, you’ll find that Costa Rica is the more consistently sunny country due to its long dry season, which runs from mid-November to mid-April. Panama, which is cloudy more often than Costa Rica is, endures its rainy season from May to January and its dry season lasts only around three months on average.

So when it comes down to it, does Panama or Costa Rica have better weather? We’d have to argue that the sunny climate and longer dry season of Costa Rica put it ahead. But here’s the hardest question of all: does Panama or Costa Rica have better beaches?

Beaches

In terms of beaches, both places boast miles and miles of beautiful coastline overlooking two picturesque oceans. It’s difficult to compare since one of both countries’ major attractions has to do with their ideal ocean-front views.

However, despite Costa Rica’s famous and exceptional eco-friendliness, many would claim that Panama has better, less crowded beaches with more pristine water, even if only by a hair. Ex-pats advise visiting the San Blas islands for the clearest water and most beautiful stretching miles of sand you’ve ever seen.

While Panama might pull ahead slightly for the quality of its beaches, it’s worth noting that Costa Rica is famous for its beautiful rainforests and myriad of fun outdoor attractions that can be enjoyed in the beautiful, consistently sunny, and tropical weather.

Healthcare and Government

A bronze statue of lady justice symbolizing the governments of Costa Rica and Panama

When moving to a new country, the government, infrastructure, and healthcare are perhaps some of the more practical considerations to keep in mind but are nonetheless extremely important.

Ex-pats will probably find both Costa Rica’s and Panama’s governments easy to adjust to since both countries have a stable and thriving democracy. Both offer great healthcare and discount/ incentive programs for ex-pat retirees.

Retirement Programs

Both countries also offer both public and private options for healthcare. The government-run option benefits those enrolled in social security programs. For retiree ex-pats, both Costa Rica and Panama offer similar pensionado programs that encompass temporary residency visas, discounts, and other amenities for retirees who can prove they live off pensions.

While both countries’ healthcare options are comparable to each other, Panama’s pensionado program comes out far ahead. It offers far more perks to retirees, including 10-15% off everything. Yes, you read that right: everything. Discounts apply to healthcare and hospital visits, entertainment, travel, and dining.

Does Panama or Costa Rica have better healthcare? Both are comparable, but when you consider the added benefits of Panama’s pensionado program, it puts Panama on top.

Infrastructure

In terms of roads, cell networks, internet services, and other national networks does Panama or Costa Rica have the better infrastructure? In previous years, the more developed Panama would have come out ahead, but the two countries’ infrastructure is mostly comparable, except for Panama’s superior road system.

For those looking forward to retirement, the thought of sitting on a Costa Rican or Panamanian beach, watching the calm rush of waves, and enjoying the tropical climate is the perfect way to spend their golden years. Central America is a great choice for a retirement location, and the choice between Costa Rica and Panama will ultimately come down to individual desires and needs.

While Panama offers an attractive pensionado incentive and impressively modern standard of living, Costa Rica is an eco-friendly and beautiful country that offers gorgeous weather for all kinds of outdoor activities. 

Final Thoughts

From the low crime rates to the affordability, the long stretched beaches to the beautiful tropical forests, these two countries have a lot to offer. Though Panama may come out a bit ahead in some areas, you can’t go wrong with either choice. 

Both countries offer amenities that cater to multiple living styles and preferences, so U.S. retirees of all kinds will find that either will prove to be a wonderful choice to spending their golden years in picturesque, tropical relaxation and enjoyment.