After almost three years of expat living in Panama, we still hear two questions pretty frequently: 1) Is the cost of living really lower there than in the U.S. or Canada? and 2) What are your actual living expenses there? We’ll get to the second one in a minute, but as to the first — it’s highly subjective. Where are you coming from? Where in Panama do you want to live? How fancy do you want your lifestyle to be, and how important is “stuff” to you? Will you rent or own your home? How much do you travel? And those are just a few of the factors that come into play.
Everyone’s situation is different, but here are a few facts about us. We’re not wealthy by any means, but we’ve both worked hard all our lives and planned carefully to secure a comfortable retirement. We came from Southern California, one of the most expensive places to live in the U.S. We own a modest home in Boquete and do not live extravagantly, but we’ve avoided making ourselves “house poor” or putting ourselves into a “watching every penny” situation. At this point in our lives, travel is a large priority and represents a significant chunk of our budget. But we’d rather spend our money on experiences than on accumulating “stuff.”
About That “Stuff”
We moved to Boquete in May 2015 with six large pieces of luggage, a couple of backpacks, and two dog crates, and we couldn’t be happier. In fact, we don’t really miss (much less remember) the stuff we sold in Long Beach before we moved. That’s not a knock on people who ship all of their furniture and belongings down in a 40-foot container. There’s a lot to be said for bringing items that give you comfort when you’re adjusting to a new culture; it’s just not our MO. And we can point you to several stories of folks who spent tens of thousands of dollars moving down here with all their stuff (even vehicles), only to have to sell it at a big loss or ship it back again after deciding Panama wasn’t for them.
In short, the more stuff you bring, the more it’s going to cost to bring it here, and the more you’ll have to spend on housing for the stuff. Plus, more stuff makes it harder logistically to move from place to place. For some folks, that’s just fine – they’ll stay rooted here – but we’re rolling stones and it’s important to us to stay mobile.
Location, Location, Location
Like most places, Panama offers a wide variety of terrains and climates, and the cost of living is also variable. Boquete isn’t the least expensive spot in the country (and prices have been on an upswing lately), but it’s not as costly as some of the upscale neighborhoods in and around Panama City. If you like the bustle of a growing city that’s not only very affordable but rapidly developing its own personality, consider David – but be forewarned; it’s the hottest city in Panama (especially during the dry season). Some of the beach communities near David are less expensive than those near Panama City, but they’re also pretty remote.
We settled on Boquete for its temperate climate (we don’t do well in extremely hot weather and we hate having to live in air conditioning) and its stunning mountain vistas. Life is good in the cloud forest, where the best coffee in the world is grown and the air is fresh. The temperature rarely gets above 25 C (about 77 F), and the breezes keep everything nice and comfortable most of the time. And when we need a beach fix, it’s a 30-40 minute drive down to the coast.
Rent or Buy?
One of the first pieces of advice you’ll probably get as a new expat – and we couldn’t agree more – is to rent for a while. Before you make a commitment as big as buying a home, try the Panama expat lifestyle on for size (it’s not for everyone).
We never set out to buy a house, but our situation became a little more complicated because of the rental market and also because of our dogs. When we first moved here, a lot of other folks were doing the same thing, and we simply ran out of time to find a long-term rental that would a) meet our standards, b) allow dogs, and c) offer the high-speed internet Susan needs for her job. We wrote at length about the challenge in this post. The good news is that things have now swung back the other way and it’s very much a renter’s market at the moment.
As our six-month, temporary lease was drawing to a close and with no suitable long-term rental in sight, we decided to look for a home to buy. We put pen to paper and realized just how much money we’d be able to save if we could stop throwing it away on rent. Also, for the first time ever, we were in a position to be able to pay cash for a house. We loved living here (still do), and it just didn’t make sense not to buy. Plus, we got extremely lucky and found a perfect house that was already fully furnished.
Of course, this choice isn’t for everyone and plenty of people don’t have the rental constraints we did. Plus, as I said, the market’s different now. But we know we made the right decision for us. Buying a home here has lots of pluses – there’s a multi-year tax exemption on most home purchases (we have 14 years to go on ours). Also, we can easily close up the house or rent it out for extra income if we head out for long-term travel in the future. And not having a mortgage is a definite advantage in the monthly budget.
When we bought our house, there were plenty of good options in the $175K – $250K market. Prices have gone up somewhat in the meantime, but there are still quite a few nice homes on the market. There seems to be a bit of an exodus lately – several expats we know have either moved back north, or they’re headed for new destinations such as Medellin, Colombia.
A Few Other Factors
What about transportation? In Boquete, it’s possible to get around and down to David and back using buses and taxis, but at some point you’ll probably want a car (we did). Some people opt to ship a vehicle down, but there’s absolutely no need to incur that expense (not only shipping but customs fees) when there are plenty of excellent used cars available here.
Our second highest monthly expense is health insurance. We know plenty of people who opt to “go naked” and try to cover themselves if they have a medical expense, but we’re just not comfortable doing that, especially since neither of us qualifies for Medicare in the U.S. yet. It’s true that healthcare in Panama is significantly less expensive here than in the states (don’t get me started) but it’s not free. We’ve written plenty about our quest for health insurance; the latest post is here.
To simplify things, we’ve just listed our recurring, monthly living expenses here. Not included are travel expenses including airfare, lodging, meals, and other trip incidentals, as well as life insurance premiums and any money we’ve spent over the last couple of years on one-time, larger home improvements.
Routine maintenance, gardener, cleaning lady, home and property insurance
Cable TV/Internet, 50 mgs, $73
Cell phone data/minutes $25 (both phones)
Water and trash pickup, $8 (yes, you read that right!)
MEDICAL/HEALTH INSURANCE $585
Includes a global policy that covers us anywhere in the world, including the U.S., and also a local “discount plan” for services rendered by the private hospitals here. We will consider dropping some coverage once we are eligible for Medicare.
MISC. MEDICAL AND PRESCRIPTION DRUGS: $128
Includes doctor visits and insurance deductibles.
FOOD AND BEVERAGE: $600
We love food, wine, and sharing it with our friends, and we entertain a few times a month. This is significantly lower than it was in Long Beach, where we didn’t do nearly as much entertaining.
EATING OUT/ENTERTAINMENT/MEDIA $370
This includes exercise classes, hiking fees, local weekend local getaways, music venues (e.g., the Boquete Jazz Fest), media costs such as Netflix, Amazon Prime, and online news subscriptions.
Auto insurance, gas, registration, taxis, buses, and car maintenance.
MISC. HOUSEHOLD AND PET COSTS $148
Cleaning and office supplies, dog grooming, dog food, vet visits, dog meds.
Since mail is unreliable in Panama, we use a shipping service for occasional shipment of items down from the states. It’s expensive but reliable and convenient.
Includes donations to local community and animal organizations.