Panama: A Nation of Extremes
The prospective expat or retiree first needs to understand that Panama is very much a two tiered society – there are rich people, and there are “working class” people, and not much in between. For example in Panama City, it is not uncommon to see an exclusive condo tower right next to a barrio of run down shacks.
Among the benefits of living in a two tiered society, is the ability to live in a rich neighborhood, but live and spend like the working class locals do. In this article, which is an excerpt from the Panama 101 – E-Book Guide, 2011 Edition, we’ll cover the basic costs of living in Panama, including tips and tricks on how to find the right lifestyle for the right price.
Urban Vs Rural
Panama is also a two tiered society in terms of population density – you are either inside Panama City (urban) or outside Panama City (rural). In Panama, Panama City is known simply as the “the city” and everywhere else is called “the interior”. Rural areas outside Panama City tend to be much more affordable than inside Panama City.
Be aware that popular expat towns in rural Panama like Boquete, David, San Carlos, Penonome, and Las Tablas, are really small towns, not cities. The two tiered dichotomy applies in these communities as well – you’ll find neighborhoods with very nice, modern homes on large lots, and tiny houses cramped together where the rent is very affordable. So while high end rents in Panama City will run $5000/month or more, the high end rents in rural Panama are more like $1000/month.
Tips on Finding Housing
If you limit your efforts to Google searches online, you’ll quickly discover that most of the advertised options are near the luxury end of the scale. This is because there is not a sufficient financial incentive to advertise the bottom end of the housing spectrum on the Internet. There may also be one or more agents involved in the transaction, some of whom will advertise a higher price than the owner is asking in an effort to pocket the difference.
Finding lower priced rentals in Panama can be tricky, but one strategy is to run your Internet searches in Spanish instead of English. Online postings in Spanish are more likely to target the local market, and therefore more closely resemble local pricing. If you don’t speak enough Spanish to search for housing online in Spanish, you are encountering your first “challenge” and it will be the easiest one you will face.
The best option is to go to Panama in person and start networking on the ground. Once you zero in on the area you want to live, you’ll need to start asking around for available rentals. The word spreads fast in Panama, particularly in the smaller towns. You’ll often see signs that say “Se Alquila” which means “for rent”. If you don’t speak Spanish, ask someone you know to place the call for you, and try to get the quoted price before they see your gringo appearance.
Renting Vs. Buying
Real estate prices have risen substantially over the past several years in Panama, so for many people, it makes more sense to rent rather than buy. If you run the numbers on renting vs. purchasing, you can generally save money by renting. Only after you find that perfect spot at the right price, and you plan to stay there for awhile, would it make sense to go ahead and purchase. For more information about the ins and outs of renting and buying real estate in Panama, see Chapter 5 of the Panama 101 E-Book entitled, How To Buy Real Estate In Panama The Smart Way.
Panama produces most of its own food, including grains, veggies, fruit, beef, chicken, and seafood. As long as you are buying “Panamanian”, you’ll be pleasantly surprised at the low prices for food.
By extension, most restaurants in Panama are quite reasonable. A standard lunch of rice, beans, and your choice of meat can be found throughout Panama for under $3.00. On the higher end, a fine steak dinner for two with wine in Panama City might reach $30.00. A few precious items that are really cheap are mostly bad for you like beer ($3.00 per six pack), cigarettes ($1.00 per pack), hard liquor ($4.50 per liter of rum), and soda (25 cents per can).
Imported food items are generally more expensive and considered a luxury. Expect to pay the same price or more than you are used to for Frosted Flakes breakfast cereal, Tide dishwashing detergent, or Pringles potato chips, for example.
Utilities and Communications
Electricity is not overly cheap in Panama, but this is largely a function of how often you use your air conditioner. Central air is less common in Panama for this very reason – it makes no sense to air condition the kitchen and living room while you are sleeping in the bedroom – so most homes in Panama have separate air conditioners in different rooms of their home. Electricity rates can also vary depending on where your home is located – ask to see previous electric bills to get an idea what your cost will be. If you live in the highland areas of Panama, you will probably not need air conditioning, which can cut your electric bill down by 50% or more. High-speed Internet and Cable TV are usually the same or slightly more expensive than the U.S., weighing in at around $50 per month each.
Most entertainment targeted at the general public will be extremely affordable. For example, entry to a live jazz concert will probably run $10. Big screen movies cost from $2 to $5 depending on the cinema (most run English versions with Spanish subtitles). A day fishing, including captain and boat, is generally less than $100 and sometimes under $50. The high side of life exists in Panama as well, but most high end boutique shopping is limited to the central districts of Panama City.
The big savings come in the services sector, where labor is the primary function of the expense. Services like massage therapy, physical therapy, medical services, housekeeping, construction and trade, auto repairs and landscapers, are usually 30% to 75% cheaper than in Canada or the U.S. A professional haircut might cost $5 for men, and only slightly more for women. A dental check up and cleaning can be found for around $20.
It is true that Panama can add a unique dimension to your lifestyle at minimal cost. With a daily labor rate in Panama of about $10 per day, it is easy to see how you might save money or at least afford luxuries that would be astronomically expensive back home.
Special Discounts For Retirees
The Pensioner Visa is by far the most popular for foreign retirees, and you don’t have to be age 65 to qualify. Applicants can qualify for this visa if they receive a pension from a government entity or private company of US$1000 or more per month.
1. Certification letter confirming receipt of more than $1000 per month for life from the appropriate government authority, agency, or private enterprise.
2. Payment of $250 per dependent applying in conjunction with the primary applicant.
3. If the pension or retirement fund is from a private enterprise, the following documents are also necessary:
- letter from the administration of the foreign pension, trust, fund, bank, or insurance agency certifying that the funds do exist with the amount of the specified payment being guaranteed for life
- certification of existence and scope of the business offering the pension or fund
- copy of proof of payment or statement from the bank receiving the payments
- · national paz y salvo of income from the Republic of Panama
Pensioner Visa Benefits:
15% off hospital bills (if no insurance applies)
10% off prescription medicines
20% off medical consultations
15% off dental and eye exams
One time Duty tax exemption for household goods up to a total of $10,000
Duty exemption for importing a new car every two years.
50% off entertainment anywhere in the country (movies, concerts, sports)
50% off hotel stays from Monday through Thursday
30% off hotel stays from Friday through Sunday
30% off bus, boat, and train fares
25% off airline tickets
20% off professional and technical services
50% reduction in closing costs for home loans
25% discounts on utility bills
25% off at restaurants
Even if you don’t qualify for the Pensioner Visa, you can still save a bundle living in Panama.
Words Of Wisdom
Here’s an idea – don’t move to Panama strictly to save money. Moving abroad is a big decision and will likely entail a variety of adjustments to your lifestyle that will have nothing to do with money. Do your research first, make several visits before you move, and don’t take the decision lightly. Do it for the adventure, do it for the experience, but don’t do it to save a few dollars.
About The Author: Michael Manville is the author of the Panama 101 – E-Book Guide To Living and Investing In Panama, a 100+ page guide now in its 7th year of publication. This comprehensive guide is an indispensable research tool for anyone considering Panama for business, retirement, second home, or lifestyle change.
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