Panama: A Cost of Living Breakdown

A low tax country you could retire in right now?

Sep 01, 2024

Hi Folks,

Have you ever thought of retiring in a sunny Latin American country? How about Panama? It’s likely cheaper than the US, Australia, or New Zealand, right?

I moved to Panama in 2021 to retire, learn Spanish, enjoy the local cuisine, and save on taxes. Since then, I’ve used Panama as a base to travel to Europe and the US, where I spend about six months each year hiking and exploring.

Many people ask me about the cost of living and the tax situation in Panama, so here’s a quick breakdown of my monthly expenses in Panama City. If you find this content helpful, I encourage you to leave a comment below, so I know to create more like it.

I’ve pulled the data directly from the Wise app I use, so you get an accurate perspective of my expenses. All percentages are rounded, so there might be a few slight differences—one or two percent—between the Wise screenshots and the Excel pie chart below. There may also be some small out-of-pocket expenses that have slipped through the cracks, but they’re not significant enough to affect the overall picture. All costs are in USD. Let’s dive in.

Accomodation

I share a flat with someone, so my rent is quite affordable at $450 per month. I live in a nice neighbourhood that’s remarkably walkable by Panamanian standards. Additionally, my flatmate and I each contribute an extra $80 per month to have a cleaner come in once a week. Since I pay in cash, this expense isn’t reflected in my Wise app.

Spend: $540

% of Total Spend: 27 %

Eating Out

This category is one of my primary expenses, but I love it. It covers not only dining out at cafes and restaurants but also ordering in when I’m feeling lazy. Perhaps I love this too much? What do you think?

Spend: $574.88

% of Total Spend: 30%

Groceries

This category includes my regular grocery shopping, as well as the frequent trips to the small market down the street to buy snacks and energy drinks.

Spend: $337.63

% of Total Spend: 17%

Personal Care

This category covers expenses such as my monthly gym membership, supplements, doctor visits, and pharmacy purchases.

Spend: $211.18

% of Total Spend: 10%

Bills

Yes, we all have these in one form or another. For me, this category includes expenses such as my mobile plan, iCloud storage, and insurance.

Spend: $99.82

% of Total Spend: 5%

General

These cover expenses such as hiring Fiverr freelancers and various other miscellaneous costs.

Spend: $71.05

% of Total Spend: 4%

Investment Related

This area includes expenses such as personal development, Udemy courses, Amazon ads, Patreon subscriptions, and other investment-related costs. Got to keep learning right?

Spend: $64.53

% of Total Spend: 3%

Shopping

This category includes all retail shopping shenanigans, but for me, it primarily involves purchasing exercise and training-related items.

Spend: $49.17

% of Total Spend: 2%

Entertainment

This category covers expenses such as movies, concerts, and tourist activities.

Spend: $29.6

% of Total Spend: 1%

Transport

This is all Ubers right here.

Spend: $28.87

% of Total Spend: 1%

So total expenses for the Month of August is $2041.40 USD or a Daily Personal Burn Rate (PBR) or $65.85.

Whilst I do love going out to dinner with my partner or shouting her to a post gym snack from time to time, my “Eating Out” cost is clearly out the gate! I will be trying to rein this in over time.

In conclusion, Panama offers a more affordable alternative for retirement compared to places like the US, Australia, and New Zealand, particularly if you’re open to making some lifestyle adjustments. Dining out can be budget-friendly if you choose local cuisine, but opting for imported goods will drive up your costs. Accommodation can also be economical if you steer clear of tourist hotspots. While living outside Panama City is significantly cheaper, it comes with fewer amenities and less frequent public transportation.

Overall, Panama presents a favourable trade-off between cost and tax benefits, alongside a sense of freedom. However, if you wish to maintain a lifestyle similar to what you enjoyed back home, be prepared to pay a little more.

For me, Panama has been a worthwhile choice in terms of balancing cost and lifestyle. Nevertheless, I’m planning to explore other options further afield. Stay tuned for more updates on my journey.

How do these expenses compare to what you're currently experiencing where you live? Based on this breakdown, do you think you could make a move to Panama? Share your thoughts and experiences in the comments below—I’d love to hear how your situation compares!

P.S.

I'm excited to create similar cost-of-living breakdowns for Mexico, Spain, and Turkey as I spend more time in each country. If you’d like to see these insights, please let me know by commenting below! And don’t forget to subscribe to stay updated on my latest posts. Your feedback and support helps to motivate me to keep educating like minded people in our awesome community. Thanks for being a part of this journey, and stay tuned for more updates! 😄

Cheers

Andy

Panama City