Panama vs Costa Rica: Expats Are Ditching One in 2025

Expats are abandoning one of Central America’s top retirement hotspots. Which country is losing its charm – and why? I spent a year living in both Panama and Costa Rica to discover the answer to this question, and what I discovered will challenge everything you’ve heard and could save you thousands. Stay tuned to find out which country – Costa Rica and Panama – is winning over American retirees and which one they’re ditching. Let’s cover Panama first.

1) Panama – Why Move Here and How

I’ve lived in three of the most talked-about places in the country – Playa Venao, Panama City, and Boquete. I’ve also racked up more frequent flyer miles between Panama’s Tocumen Airport and other Latin American destinations than I care to admit.

So what makes this place special? Why has the Freedom Files helped so many Americans move to Panama? Well, you can’t throw a rock in an expat Facebook group without hitting someone talking about Panama’s “legendary” Pensionado Visa. And honestly, it’s true. If you have $1,000 a month in retirement income, Panama basically rolls out a red carpet for you and even throws in discounts on flights, food, films, and more. Seriously, Panamanian pensionados get promos everywhere!

Panama has a US dollar economy – handy if, like me, you’re not a fan dollars (or in maybe your case, your Social Security) to some currency you can’t pronounce. Direct flights to Miami in under three hours. And in theory, healthcare so affordable it makes US hospital bills look like Monopoly money.

Sounds like paradise, right? Well, hold onto your hats.

Cost of living:

Panama isn’t “cheap” anymore – at least, not in the places you’ll want to live. A decent, modern one-bedroom in Panama City won’t sell for less than $1,500 a month. (If you find one, let me know.)

Groceries? Imported foods can cost more, and even the local produce isn’t discounted. In Playa Venao, a burger will set you back $15. In Panama City, $20. But man, these prices can be worth it. The views from the City are absolutely remarkable (in the true sense of the word).

The culture gap:

If you’re looking to integrate into local society, you better have some Spanish, a thick skin, and some patience. Most expats we’ve helped move to Panama mostly gather amongst other expats from around the world. Panama City is incredibly international and energetic, but it can also feel like Miami’s less rowdy cousin. 

If you’re considering a move to mountainous Boquete, it’s a postcard town in the central range, famous for its coffee and retiree expats who have opinions – lots of opinions – about “how things used to be” in America. If you want to escape America to find some likeminded people, this is the place to do it. But I totally understand those who just want isolation and a totally different environment than what they’re accustomed to.

Climate:

This is one of my major gripes with Panama, and in particular Panama City. You walk out of the shower, dry off, and before you reach the kitchen you need another shower. That’s Panama. The humidity does. not. quit. On the other hand, Boquete is a cool, misty exception, but don’t expect city amenities.

Don’t believe the “eternal spring” PR. This does not exist in Panama as it does in Nicaragua, Medellín, and other destinations in Latin America.

Healthcare:

Consistently, healthcare is the biggest lifestyle change and savings for our clients who move to Panama. Thankfully, I didn’t need to access any services while I was living in Panama a few years ago. But we have clients and friends who have. Yes, you’ll pay $40 out-of-pocket for a doctor visit in Panama City. Yes, even private healthcare plans are extremely affordable and actually cover you when you need them. This is the beauty of health outside the United States. 

Residency:

As I alluded to earlier, the Pensionado Visa is Panama’s immigration crown jewel. You qualify with a retirement income of just $1,000 a month, and this is an immediate permanent residency. Apart from this retirement visa, Panama also offers a wide range of options for investment and immigration. If you, as an American or Westerner, invest $200,000 in the country or start a Panamanian company, you can qualify for a Friendly Nations Visa as well. The Qualified Investor Visa offers immediate permanent residency if you invest $300,000 in Panama.

All this to say, you have options when it comes to living in Panama legally. Once you’re there, it’s as tax friendly as advertised – no tax on foreign income in fact.

Look, Panama isn’t perfect. But with the cosmopolitan, well-connected hub of Panama City, the major tax incentives of remaining here for life, the flexibility in obtaining residency, and the lack of bureaucracy that plagues Costa Rica, some expats swear by it. 

But don’t make any decisions yet. Costa Rica rewards the most patient and among you. If you want tax efficiency, unlimited nature access, and a little bit less humidity, Costa Rica is honestly hard to beat.

Next, I’ll unpack Costa Rica through the same lens – warts, wonders, and all. Keep watching, because you’ll want to hear what nobody tells you about Costa Rica – and my personal opinion of both countries.

2) Costa Rica – Why Move Here and How

Costa Rica is Panama’s barefoot neighbor with a surfboard and suspiciously good coffee. Pura vida, they say here, as both a greeting and an attitude. Very charming. Very personable. Very peaceful.

I’ve spent enough time in Costa Rica to see past the postcards. My phone’s filled with photos from mountain trails in Atenas, rainy mornings in San José (which you can skip entirely), and lots of failed attempts at surfing. 

So, why do so many Americans choose Costa Rica for their overseas retirement? Is it the paradise expats make it out to be? And why does Costa Rica have a problem nobody’s talking about? And why are more people leaving? More on that in a minute.

• Natural beauty: Mountains, rainforests, beaches – sometimes all in the same afternoon. You start your morning in a cloud forest and finish it on the Pacific with a cold Imperial beer. This is entirely possible in Costa Rica (and to be fair a few other Latin American countries).
• Healthcare: The public system, known as “Caja,” is genuinely impressive. I’ve met retirees who pay $100/month for full coverage and brag about getting a checkup for less than an Uber ride in the US. This is also a primary reason Costa Rica is a hot medical tourism destination. Last time I was in San José, my airport driver asked if I was in the country for surgery.
• Safety: Statistically, Costa Rica is one of the safest countries in Central America. I’ve walked the streets at night and felt more at ease than in plenty of American suburbs. Granted, things have changed a bit and Costa Rica is not as safe as it was 10-15-20 years ago. But compared to its neighbors to the north, still far safer. And quick aside here – Would you rather save on taxes or live somewhere safe? Drop your answer below. In Costa Rica, you don’t have to choose between the two.

And for anyone worried about fitting in, Costa Rica is the “starter kit” of Latin America. It’s a bit more Americanized, Westernized, and friendly to the average American expat than, say, Argentina, which is very different from the US. If you can survive, if not thrive, for a year here, you can probably make it anywhere.

Residency:

Now, about that pensionado visa:

You need to show $1,000/month in retirement income just like in Panama, plus some extra documentation. But (and this is a big but) Costa Rica’s bureaucracy makes Panama look like the Apple Store. Residency application requires more than 6 months of processing. And citizenship is a lot farther off (7 years) than in Panama (5 years).

Where Costa Rica shines, Panama does too. Costa Rica does not tax your foreign income or retirement distributions.

Weather:

They say Costa Rica has “the best climate in the world.” I don’t know who “they” is, but I can’t disagree. Apart from the occasional rainy season that plagues much of Latin America a couple times a year, weather in Costa Rica is mostly mild thanks to the dense jungle that covers most of its territory.

But let’s not sugarcoat things – Costa Rica has its own headaches too:

• Bureaucracy: Costa Rica is slow, even by Latin American standards. Most immigration matters take half a year to resolve. But this may also be a good thing. Life isn’t as serious and “rat-racey” (for lack of a better term) here. Pura visa after all, right?
• Healthcare: For anything urgent, most expats pay out-of-pocket at private clinics or hop over to one of Latin America’s famously abundant pharmacies. Surgery is affordable and world-class, often performed by American-educated doctors who’ve returned home to Costa Rica.
• Infrastructure: The roads are awful. Probably thanks to the weather and heavy rains. There’s no sugarcoating this.
• Rising costs: Beach towns are no longer cheap. Property in Tamarindo, Nosara, Santa Teresa – they all come with high American price tags. Because why? Americans are buying it.
• Cultural quirks: Ticos are famously polite. “Maybe” means “no,” “soon” means “eventually,” and “tomorrow” means “remind me in three days.” If you like efficiency, you’ll need to meditate, which is ironically easy to do in the Costa Rican jungle.

Cost of living:

This is where the myth and the reality part ways.

Costa Rica in general is no bargain. When I was last there a few years ago, I noticed that prices here for food, groceries, accommodations, and nearly everything were higher than almost anywhere else in Latin America. 

Even outside the capital city of San José, beach destinations and Guanacaste peninsula are not cheap. We’re talking US prices. But if you’re not worried about price, Costa Rica could be a great landing spot, especially if you’re comfortable around lots of other expats.

This is the reason many expats have chosen Costa Rica as their retirement destination yet have left for greener pastures elsewhere. Lots of people come for the tax breaks, jungle life, and adventure. Many leave when the rose-colored glasses come off.

So, is Costa Rica right for you?

• If you want nature, safety, a warm local community, and can handle a bit of bureaucracy with a smile, Costa Rica is a strong contender.
• If you want everything to “just work,” crave a hyper-efficient bureaucracy, or need blazing-fast internet on the beach, Panama City may be a better option.

I’ve met retirees who moved from Panama to Costa Rica and vice versa, each convinced the grass is greener. And sometimes it is.

If you want to skip the years of trial and error, check out our free 162-page e-book on the Freedom Files website for a breakdown of all your options, or schedule a Freedom Consult with our American expat and relocation experts. The only way to really understand these countries is to hear what it’s actually like to live there – warts and all.

3) My Experience in Both Countries

Costa Rica’s branding is strong – pura vida everywhere you look – but for the price, I wanted more. More flavor. More character. More culture. Instead, I got sticker shock and a vibe that felt oddly… neutral. Which also makes sense because Costa Rica is one of few neutral countries with no standing military. Nice? Yes. Memorable? Not so much. It just wasn’t my cup of tea. But that doesn’t mean it isn’t yours.

Panama, on the other hand, is messy, humid, and alive – and that’s what makes it work. Panama City is like Miami’s slightly scrappier sibling, with a world-class airport and food scene, fun nightlife, and the option to escape to the mountains, jungle, or coast whenever you need a reset. It’s not “cheap” everywhere (in fact, neither of these Central American countries is), but the dynamism, international connections, and straightforward banking and taxes make it a smarter play – at least for my family.

I like a country that rewards curiosity, hustle, and a bit of stubbornness. Panama does. That’s why I keep coming back – and why, if you’re weighing these two options here in 2025, Panama gets my vote.

If you want a reality check from someone who’s lived it (and made a lot of the rookie mistakes for you), hit the link below or schedule a call with us. 

If you want an honest breakdown of life in Panama and how you can live there, click on this video here. We talk residency paths, taxes, expat destinations, and more.