Thinking of living in Panama? Then you will certainly ask, “What does it cost to live in Panama?” We have developed a unique Panama budget calculator to assist with the answer.
For a long time, pundits sold Panama as a cheap retirement destination. The perfect alternative where your hard-earned retirement income will go further, allowing a better standard of living.
For those of you that are years from retirement, but considering relocation to Panama, the cost of living is equally important. You want to know upfront whether you can maintain or improve your standard of living, and if not, it will at least help you to be prepared.
In an attempt to find the answer, the article will first have a look at cost of living as a concept, before exploring indexes and the situation in Panama.
What is cost of living?
The website Investopedia describes it as follows: “The cost of living is the amount of money needed to sustain a certain level of living including basic expenses such as housing, food, taxes and health care.”
It seems like a straightforward explanation. However, there is one aspect that you should keep in mind when it comes to estimating your cost of living in Panama, and that is your consumption behaviour.
Although your emotions and attitudes affect your buying behaviour, the single biggest influence is arguably your personal likes and dislikes. Let us agree to call this brand loyalty.
The thing about brand loyalty is that, in Panama, it comes at a price. A much higher price than you are accustomed to at home. The reason is simply that those brands are all imported. The good news is that they are available but at a price!
Cost of living indexes
One way to estimate the cost of living in Panama is to use indexes. These are aggregate figures representing various expense items, used to compare countries or cities with one another.
The Numbeo website is not only comprehensive; it is user-friendly and a pleasure to explore. It contains the Cost of Living Index for Country 2018 (Mid-Year) in which Panama is ranked at 47 out of 117 countries, compared to 47/115 a year ago, and 51/123 the year before that (the number one position representing the most expensive country).
Two other indexes you can use are Expatistan’s no-frills Cost of Living Ranking by Country and the slightly older 2017 Survey by The Expat Insider. These two indexes show the least expensive country in the number one position.
The places in Panama we compare
We chose four places to represent our budget calculator – Panama City, Coronado, Boquete and Bocas.
Panama City, the capital and financial hub, home to the largest international airport in Hispanic America and the famous canal, is the first of the four places that we use in our budget calculator.
Next is Coronado, home to the second largest expat community in Panama, and one of the first expat communities established along the Pacific coast. It is a gated community with international schools, offering sufficient shopping and dining facilities, complemented by recreational opportunities including golfing, hiking, horse-riding and surfing.
Then we have the ever-popular Boquete, where you will find the largest expat community in Panama. Its popularity stems partly from the picturesque surroundings, also the higher altitude and year-round comfortable climate. David is a close 30-minute drive to reach major shopping or medical facilities.
Last, but by no means least, is the popular retirement destination of Bocas. The name does need clarification: Bocas del Toro is a province in the northwest of Panama, including the 250km² archipelago with its 10 major islands. The main island is Isla Colón, housing the largest settlement in the archipelago namely Bocas del Toro, or colloquially known as Bocas Town. The name Bocas could refer to Bocas Town or the area including the nearby islands.
Other popular and up-and-coming areas, not featured in our budget calculator, include El Valle, Chitré, Pedasi, David, Volcan, Santa Fe and Puerto Armuelles.
Prices increase according to the influx
As a general rule of thumb, prices will increase as the influx of expats into an area increases. This is particularly true for real estate.
Panama City is historically more expensive than any other city or town in Panama. That is understandable, given its status as political and financial capital, and main transport hub.
Coronado has become relatively expensive as it became a popular retirement destination and home to an ever-increasing expat community.
Boquete is in a similar position. Just a decade ago, it was a sleepy tourist town. Now it is home to the largest expat community, bursting at the seams (literally), with prices to match.
To help you construct a budget for living in Panama, we have researched the typical cost of 10 different categories:
- Health insurance, Healthcare
- Connectivity, mobile service
- Insurance (house content, car)
- Transport (public and/or own)
- Groceries, household cleaning
- Clothing and footwear
- Sport, recreation and entertainment
Where applicable, we have also included the price ranges of the four different locations discussed earlier.
Now it’s time to go to the budget calculator!
How it works
Each of the ten budget items has a slider, which can move to the left or the right until your chosen amount is indicated ($700 in the example below).
The table below the slider is a quick reference, indicating the lower end as well as the higher end of the price spectrum. Below each table is a short summary or description of that particular expense item.
By adjusting each of the 10 sliders, the total budget (found at the top of the budget calculator, above all the sliders) will respond accordingly and display the total, as in this example:
Rent is the single biggest expense item that will influence your budget. Although it is a topic for another post, we strongly advise that you rent for at least six months, preferably a year, before buying real estate. Even then, determine the opportunity cost of that purchase (interest forfeited) and include that into your budget to determine the true cost of living in Panama.
The second biggest expense item for a retired couple will probably be groceries and household cleaning. This is the one item mostly affected by consumer behaviour, specifically brand loyalty. By buying local products and finding the local fresh produce markets, you can meaningfully stretch your dollars.
The original question was “What does it cost to live in Panama?” I can offer an indicative answer and trust the budget calculator will give you a better indication: A couple can live comfortably on an income of $2 000 per month. A single person can do that with as little as $1 250 per month.
Some people manage to do it with less, while others spend a lot more! Your chosen lifestyle and standard of living will determine your budget.
My overall verdict? Panama is affordable, but not the cheap haven described by some.
“A budget tells us what we can’t afford, but it doesn’t keep us from buying it” – William Feather
I would love to have your thoughts about the cost to live in Panama? Did you find the budget calculator useful?
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