Many people move overseas to reduce their cost of living. And you can certainly do that in a lot of different countries. 90% of the expats I have talked to in Panama have said that they have significantly reduced their cost of living and improved the quality of their lifestyle. Not worrying about money all the time reduces stress too!
But a cheap cost of living is not the only thing to consider when moving abroad. During the Panama Relocation Tours I discuss how important it is to also check out the stability of a government and economy in any country you are considering. Stability is one of the reasons Panama rises to the top of the list of places to retire to. The economic growth in Panama is evident with the new construction throughout the country. Because of this growth, everyone is making more money. When wages are good, there are more happy people and much less crime. Maybe this is why Panama has won the Happiest People in the World award for the last two years in a row!
Panama also welcomes expats by offering the most attractive retiree program in the world, the Pensionado Visa which offers discounts on prescriptions, airfare, restaurants, entertainment, airfare and more. The pensionado discounts are available to Panamanians or anyone with ANY visa who meets the age requirements of 55 for women and 60 for men. (You can also get the Friendly Nations Visa)
Bob Adams at RetirementWave.com writes a quarterly report that discusses the economy and demographics in Panama. See the excerpt below about how Panama compares to other Latin American countries. The graph clearly shows how much more money Panamanians make compared to other Latin American countries. Learn why this is important….
So how do we compare with other Latin American nations? For this graph, I chose to include the two largest Latin American economies, Brazil and Mexico. In terms of purchasing power, Brazil is the 7th largest in the world and Mexico is the 11th largest. I included Peru which has done well in the last couple decades in pulling itself out of poverty, and Colombia, our neighbor of which Panama was part before it separated and set up its own republic. In addition, I included Costa Rica and Ecuador, two nations often of interest to RW members.
The economic growth of each nation is divided by its population so we get a “per capita” (per person) comparison and the statistics are corrected for inflation and for purchasing power which takes into account that a dollar can buy more (or maybe less) in some nations than others. It makes it possible to compare nations that are very different. So Let us take a look at the results.
(The average annual income in Belize is $8,416, in Nicaragua is only $4,918 and in Guatemala is $7,454 — see other country details here)
I think the graph speaks for itself. But Bob, how does Panama do so much better than the big economies that everyone talks about? The answer is simple. Panama has a smaller population than any of these nations. You see, it is not simply a question of “How much money do you make”. It is a double question, “How much money do you make and how many mouths do you have to feed?” That is a much more practical way to look at it and the results are obvious.
Expats often ask me, what difference does Panama’s growth make for me? It is very simple. Life in Panama whose economy is rising steadily as it has for the last 25 years, especially the last 10, is a lot more comfortable for expats than living in a nation whose economy is stagnant or failing. Panama is a democracy and Panamanians are not shy to express their opinions, but one thing has especially impressed me.
I have lived here for two complete administrations and now am living with a third. The Presidents come from different parties (no party has won two elections in a row since 1989), have different styles, and different viewpoints on various topics, but they all have had one thing in common that continues today – dedication to expanding the Panamanian economy and taking it to new heights. As I have said many times, Panama is a growing tourist attraction, but Panama is not a “tourist country”. It is a “business country” and has been since the Republic was proclaimed a little over a century ago. This focus on economic growth, especially over the last couple decades, has benefited everyone. It is hard to argue with success.
A stable government and economy should be at the top of your list of things to consider when picking a place to move to overseas.
A country who has a lot of debt (like the United States), is always looking for ways to extract money from people who live in the country, including expats.
Because of Panama’s strong economy, there is no entitlement mentality. People work to make a living instead of relying on the government to support them. You rarely see anyone begging for money in Panama.
Other important things to consider when evaluating a place to move to are:
♦ Quality and cost of health care
♦ Are there other expats in the city where you want to live?
♦ Are the things you NEED in your life readily available?
♦ Distance and costs to fly to your country of origin (will determine if family will ever come see you and if you can afford to fly home occassionally)
♦ Are the activities you enjoy readily available or will you need to start them
♦ How friendly are the locals towards expats
♦ Natural Disasters – Hurricanes, Tsunami, Earthquakes, Active Volcano
♦ Freedoms in the country
♦ Reliability of electric, water and internet services
♦ Is fresh food readily available and affordable without importing (does the country have a year round growning season too)
♦ Does the government rely on only 1 – 2 sources of income or multiple sources of income. No one source should be dominate.
So, what does it cost to live in Panama?
There is not one right answer to what it cost to live in Panama. Some people live in a 5,000 sf house in a gated community or in a luxury condo 2400sf overlooking the Pacific Ocean. Others (like me) live in 1200sf houses in the mountains. Obviously the cost to live in each of these places is different. But there are some costs which are consistent regardless of where you live in Panama. I discussed some of these savings in a previous articles which you can read below: