Panama vs. Costa Rica: Which is the Best Choice

Panama vs. Costa Rica: Which is the Best Choice

In recent years, Panama has become a popular retirement destination for North Americans. Costa Rica was once the primary choice for retirees looking to escape the cold winters and high costs of living in the United States, but Panama has been unseating its Central American neighbor as the go-to spot for retirees from north of the border. There are a number of reasons why Panama is becoming increasingly attractive as a retirement destination, including the warmer climate, beautiful beaches, and relaxed lifestyle. Let’s take a closer look at some of the factors for making the decision of where to live as an expat or retiree.

Panama vs. Costa Rica: Which is the Best Choice
Panama vs. Costa Rica: Which is the Best Choice?

Central American Countries

Central America is a region located in the southern tip of the North American continent, between Mexico and South America. It is generally considered to include the following seven countries: Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. Of these, Costa Rica, Panama, and Belize are the most popular destinations for retirees from the United States and Europe. All three countries offer a wide range of activities and attractions, as well as a relatively low cost of living. In addition, all three countries have a long history of peaceful relations with their neighbors and are considered to be relatively safe places to live. If you’re looking for a retirement destination that offers plenty of sunshine, beautiful scenery, and friendly people, you can’t go wrong with any of the Central American countries. Here is a quick introduction to Costa Rica and Panama.

Costa Rica

In recent years, Costa Rica has become one of the top retirement destinations for Americans and other foreigners. And it’s no wonder why. With its lush tropical landscapes, amazing wildlife, and friendly people, Costa Rica is a paradise that’s hard to beat. But with so many towns and villages to choose from, it can be tough to know where to start your search for the perfect retirement spot. That’s why we’ve put together this list of the three best towns to visit in Costa Rica. So whether you’re looking for a laid-back beach town or a bustling city center, we’ve got you covered.

1. Puerto Viejo de Talamanca

Puerto Viejo de Talamanca is a small town located on Costa Rica’s southeastern Caribbean coast. If you’re looking for a laid-back beach town with an Afro-Caribbean vibe, Puerto Viejo is the place for you. The town is home to some of the best beaches in Costa Rica, as well as a variety of bars and restaurants serving up fresh seafood and cold drinks. Puerto Viejo is also a great place to learn how to surf or go scuba diving. And if you’re interested in eco-tourism, the nearby Cahuita National Park is definitely worth a visit. 

Beautiful day for surfing in Puerto Viejo de Talamanca, Costa Rica
Beautiful day for surfing in Puerto Viejo de Talamanca, Costa Rica. Photo by Milada Vigerova on Unsplash

2. Tamarindo

Tamarindo is one of Costa Rica’s most popular tourist destinations thanks to its beautiful beaches, lively nightlife, and abundance of activities for visitors of all ages. Located on the northwestern Pacific coast of Costa Rica, Tamarindo is about an hour’s drive from Liberia International Airport. The town is also close to a number of national parks and reserves, making it the perfect basecamp for exploring all that Costa Rica has to offer. Whether you want to spend your days enjoying local culture, lounging on the beach or adventuring through the jungle, Tamarindo has something for everyone. 

Sunset surfing in Tamarindo, Costa Rica
Sunset surfing in Tamarindo, Costa Rica. Photo by Zachary Shea on Unsplash

3. Heredia

Located just north of San José in the Central Valley region of Costa Rica, Heredia is often referred to as “The City of Flowers.” And it’s easy to see why—the town is filled with beautiful flowers and gardens everywhere you look. Heredia also has a thriving arts scene and is home to a number of museums and art galleries. If you’re looking for city life without all the hustle and bustle of San Jose, Heredia is definitely worth considering as your retirement destination. 

El antiguo fortín. Heredia, Costa Rica. Photo by Christian Hess Araya on Unsplash

Costa Rica has something for everyone—whether you’re looking for a laid-back beach town or a bustling city center. So if you’re considering retiring to Costa Rica, be sure to check out our list of the three best towns to visit before making your decision. From Puerto Viejo de Talamanca on the Caribbean coast to Heredia in the Central Valley region, we’ve got you covered.


Not only is Panama one of the most beautiful countries in Central America, but it’s also home to some of the friendliest people you’ll ever meet. And when it comes to finding the perfect place to call home, you couldn’t ask for a better selection than the towns on this list. So without further ado, here are the five best towns to visit in Panama.

1. Boquete

If you’re looking for breathtaking scenery and an active lifestyle, Boquete is the town for you. Nestled in the lush green hills of Panama’s Chiriqui province, Boquete is home to numerous hiking trails, waterfalls, and hot springs. And if that’s not enough to keep you busy, the town also has its own coffee plantation and an annual flower festival.

Boquete mountains, Chiriqui, Panama
Boquete mountains, Chiriqui, Panama. Photo by Cristhian Carreño on Unsplash

2. Pedasi

Pedasi is a small town located on the Azuero Peninsula in central Panama. Although it’s often overshadowed by its more popular neighbor, Las Tablas, Pedasi is well worth a visit for its laid-back atmosphere and beautiful beaches. In addition to being a great place to relax and enjoy the outdoors, Pedasi is also known for its abundance of seafood restaurants serving up fresh catch from the nearby Gulf of Panama. You can live the good life in Pedasi.

Isla Iguana, Pedasí, Panamá
Isla Iguana, Pedasí, Panamá. Photo by Franklin Canelon on Unsplash

3. Portobelo

Portobelo is a picturesque town located on the Caribbean coast of Panama. It’s best known for its Spanish colonial fortifications, which were built by order of King Philip II in the early 1600s. These days, Portobelo is a popular stop for cruise ships and a great place to soak up some sun and enjoy fresh seafood overlooking the turquoise waters of the Caribbean Sea.

Portobelo, Panama
Portobelo, Panama. Photo by Lizi Gonzalez | Flickr

4. Isla Grande

Although technically not a town, Isla Grande deserves a spot on this list thanks to its Robinson Crusoe-esque vibe and idyllic beaches. This small island off the coast of Colon province is only accessible by boat, which adds to its remote feel. If you’re looking for a place to truly get away from it all, Isla Grande is hard to beat. 

Isla Grande, Panama. Photo by Austin Neill on Unsplash

5. Bocas del Toro

Last but not least is Bocas del Toro, a group of islands located on Panama’s Caribbean coast. Although often thought of as a party destination due to its reputation as a surfing Mecca, Bocas del Toro has much more to offer than just waves and booze. In addition to being home to some of the best surfing in Central America, Bocas del Toro is also known for its pristine rainforests, crystal-clear waters, and laid-back vibe. 

Bocas del Toro, Panama
Bocas del Toro, Panama. Photo by Camilo Pinaud on Unsplash

So there you have it—five towns that are definitely worth adding to your travel itinerary if you’re considering retiring to Panama. From the lush green hills of Boquete to the white sand beaches of Bocas del Toro, there’s something for everyone in this Central American paradise.

Cost of Living

One of the primary reasons that Costa Rica is becoming such a popular choice for American retirees is its lower cost of living. In Costa Rica, it’s possible for one person to live comfortably on a budget of $890 per month, while in Panama, you would need to budget closer to $1040 per month to enjoy a similar lifestyle. Costa Rica vs Panama comparison: Cost of Living & Prices (

Cost of Living in Costa Rica vs. Panama
Cost of Living in Costa Rica vs. Panama

This difference in cost of living is primarily due to differences in housing costs; in Costa Rica, you can find well-appointed apartments or houses for rent starting at around $400 per month, while in Panama, comparable rentals start at around $530 per month.

When it comes to other living expenses like food and transportation, both countries are relatively affordable; however, Panama does have an edge thanks to its pensionado visa program, which offers discounts on a wide range of goods and services to qualified retirees. 

Panama food
The cost of food in Costa Rica and Panama is similar, but slightly more expensive in Panama.


Another reason that Panama and Costa Rica are becoming increasingly popular with American retirees is its tropical climate. The average temperature in Costa Rica hovers around 87 degrees Fahrenheit year-round, with relatively little variation between seasons. This makes it an ideal destination for those who want to avoid the cold winters experienced in much of the United States. Panama also has a tropical climate; however, because it is located closer to the equator, temperatures there tend to be higher and there is more variation between seasons. For example, the average temperature is around 88 degrees.

Both Panama and Costa Rica have much warmer temperatures than the United States.

Costa Rica is the more consistently sunny country due to its long dry season, which runs from mid-November to mid-April. Panama, which is cloudy more often than Costa Rica is, endures its rainy season from May to January and its dry season lasts only around three months on average. So, if you’re looking for a retirement destination with reliably great weather, Costa Rica should be at the top of your list. 

There’s no denying that both Costa Rica and Panama boast stunningly beautiful weather, but when it comes down to it, Costa Rica is the clear winner. Here’s a breakdown of why: 

  • Costa Rica has a longer dry season than Panama does 
  • Panama is cloudier more often than Costa Rica 
  • The rainy season in Panama lasts from May to January 
  • Panama’s dry season only lasts for around three months on average 
Costa Rica rain forests are so beautiful and lush.


Both Panama and Costa Rica boast some of the most beautiful beaches in Latin America; however, when it comes to coastline accessibility, Panama has the clear advantage. In Panama, you’re never more than one hour away from the beach by car; by contrast, even if you’re staying in one of Costa Rica’s coastal towns like Tamarindo or Jaco Beach, you can still expect a minimum drive time of 1.5 hours from San Jose (and sometimes even longer). If you’re hoping to spend your retirement relaxing on pristine beaches and enjoying sunny days by the water, Panama is definitely worth considering.

Panama Beaches
Panama Beaches are so beautiful


Finally, another big factor that’s driving Americans towards retiring in Panama instead of Costa Rica is simply the lifestyle. Both countries offer a laid-back lifestyle with plenty of opportunity for outdoor activities; however, Panama seems to offer retirees a bit more peace and quiet. This may be due in part to its smaller size; at just over 4.3 million residents in 2020, Panama is a little smaller than Costa Rica, which has a population of close to 5.1 million people in 2020. For retirees looking to escape the hustle and bustle of city life without sacrificing creature comforts like good restaurants and modern amenities, Panama may be the perfect fit.

Annual Global Retirement Index

For the second year in a row, Panama and Costa Rica have been named the best places to retire by the International Living magazine. Panama and Costa Rica Named the Best Places to Retire in 2022 – Outlier Legal Services

These neighboring Central American countries are competing against each other to be the best place to retire. In 2021, Costa Rica was number one on the list, but Panama was close behind. In 2022, Panama has taken the top spot on the Annual Global Retirement Index, while Costa Rica ranks as the second-best country for retirees.

So what makes these two countries such attractive destinations for retirees? For starters, both Panama and Costa Rica offer a relatively low cost of living. In addition, both countries boast beautiful natural scenery, with plenty of opportunities for outdoor activities like hiking and surfing. And last but not least, both Panama and Costa Rica have friendly populations that make retirees feel welcome.

Keel-billed Toucan, Costa Rica. Photo by Zdeněk Macháček on Unsplash

With all of these factors working in its favor, it’s no wonder that Panama has been named the best place to retire in 2022. And with Costa Rica coming in at a close second, it’s clear that these two countries are leading the way when it comes to retirement destinations.

Pensionado Programs

The Pensionado Program – Benefits for Retirees in Panama

Panama has put together the most appealing program of special benefits for retirees you’ll find anywhere in the world today. The program, called the Pensionado program, outlines a series of senior discounts for retiree-age members. It also includes a permanent residence component for foreigners with pensions. This makes it easier for foreign residents.

In Panama, resident pensionados or retirees are entitled to 50% off entertainment anywhere in the country (movies, theaters, concerts, sporting events), 30% off bus, boat, and train fares, 25% off airline tickets, 25% off monthly energy bills, 30% to 50% hotel stays, 20% off prescription medication, and 15% off hospital bills – among other things. If you obtain residence in Panama via the Pensionado program, you’ll also be entitled to a one-time exemption of duties on the importation of up to $10,000 worth of personal belongings into the country. 

The Pensionado program is an incredible opportunity for seniors who want to enjoy their retirement years in a beautiful and welcoming country. Keep reading to learn more about the program and how to apply. 

Relaxing and drinking iced tea in Costa Rica
Relaxing and drinking iced tea in Costa Rica

What is the Pensionado Program? 

The Pensionado program is a set of benefits and discounts offered by the Panamanian government to encourage foreign retirees to move to Panama. To qualify for the program, applicants must prove that they receive a pension from their home country government or from a private company. 

The minimum amount required varies depending on whether applicants are single or married. For single applicants, the minimum monthly pension amount is $1,000. For married couples, each spouse must have a minimum monthly pension of $750 – meaning that the total combined pension income must be at least $1,500 per month. 

Other requirements for single applicants include being at least 18 years old and having no dependent children under 18 years old. For married couples, both spouses must be at least 18 years old and neither spouse can have any dependent children under 18 years old. 

Pensionado program benefits include discounts on various goods and services such as entertainment (movies, theaters), public transportation (bus fares), airfare tickets, hotel stays, electricity bills, medication prescriptions filled at local pharmacies as well as medical procedures performed at hospitals and clinics around the country. Retirees who obtain residency status through the Pensionado program are also exempt from paying duties on up to $10,000 worth of personal belongings imported into Panama upon their arrival in the country. 

Pensioner Visa in Costa Rica

If you’re considering retiring to Costa Rica, you may be eligible for a Pensioner Visa. This visa is available to foreign-nationals who have a guaranteed lifetime income, such as social security, annuities, retirement funds, or military pensions. If you’re interested in learning more about this visa category and how to apply, read on! 

Man walking over a bridge in a cloud forest near La Fortuna, Costa Rica
Man walking over a bridge in a cloud forest near La Fortuna, Costa Rica. Photo by Selina Bubendorfer on Unsplash

What are the requirements for a Pensioner Visa? 

In order to qualify for a Pensioner Visa, you must be able to prove that you have a permanent monthly income of at least US$1,000. There is no minimum age requirement to apply, and your application may include a spouse as well as children under the age of 25 (or older children with disabilities). Depending on the number of dependents included in your application, you may be required to provide proof of additional income. 

What are the benefits of a Pensioner Visa? 

Once your Pensioner Visa is approved, it will be valid for a period of 2 years. After that, it can be renewed on the condition that you continue to meet the eligibility requirements. In order to renew your visa, you must prove that you have received your income in Costa Rica and that you have lived in the country for at least 4 months out of every year. 

Additionally, holders of a Pensioner Visa are entitled to import personal belongings and one vehicle duty-free. You may also apply for permanent residency after 3 years or citizenship after 5 years. 

Are there any drawbacks to a Pensioner Visa? 

One potential drawback of the Pensioner Visa is that it does not allow retirees to work in Costa Rica. However, many pensioners are able to supplement their income by renting out part of their home or offering services such as tutoring or tour guiding. 

Additionally, although the initial application fee is relatively low (US$265), retirees should be aware that they will be required to pay an annual fee of US$600 after their first year in Costa Rica. This fee covers the cost of your mandatory health insurance policy. But the health care is one of the main reasons that it’s good to move to Costa Rica, when comparing it to the cost of health care in the States.

A Pensioner Visa can be a great option for foreign-nationals looking to retire in Costa Rica. If you think this visa category might be right for you, start gathering the necessary documentation and get started on your application today!

Expat Life in Panama

If you are thinking of moving to Panama, you will join a community of expats from all over the world. There are already communities of expats in areas like Panama City, Coronado, and Boquete. This will make it easy for you to find people with similar interests. These communities will also help you when you first move there. Panama is an incredibly beautiful country with plenty to see and do. You can find help from the expat community there. Panama is a great place for adventurers. There are many different things to do there, like explore the stunning beaches and rainforests. Plus, the food is amazing, so you definitely won’t be disappointed.

Photo by Sven Mieke on Unsplash

Expat Life in Costa Rica

One of the first things you’ll notice upon arrival in Costa Rica is the large number of American expats living here. In fact, according to the most recent census data, approximately 70,000 Americans call Costa Rica home. This should come as no surprise when you consider that Costa Rica offers a lower cost of living, year-round tropical weather, natural beauty, and ample opportunities for outdoor recreation. Costa Ricans are also known for their friendliness, so it makes it a very welcoming environment.

The majority of Americans living in Costa Rica can be found in the capital city of San Jose and the coastal town of Tamarindo. Both of these locations offer a variety of bars, restaurants, and shops catering to English-speaking expats. In addition, San Jose provides all the amenities of a major metropolis (think hospitals, banks, etc.) while Tamarindo is perfect for those who want to spend their days lounging on the beach or surfing some of the best waves in Central America.

What’s It Really Like to Live Here?

In general, expats report feeling very safe and welcome in Costa Rica. The locals, known as Ticos, are notorious for their friendly nature and helpful demeanor. Additionally, because tourism plays such a big role in the country’s economy, many Ticos speak English quite well. That being said, it’s always beneficial to learn at least some basic Spanish before moving to Costa Rica as this will go a long way in helping you assimilate into your new community.

One thing to keep in mind is that life here does move at a slower pace than what you may be used to back home. This can be frustrating at times but is also one of the things that many expats end up loving about Costa Rica. There’s no need to hurry here; just sit back, relax, and enjoy your new life in paradise! If you’re considering retiring abroad, Costa Rica should definitely be at the top of your list! With its beautiful beaches and friendly locals, it’s easy to see why so many Americans have chosen to make this Central American country their home away from home.

Woman in Limón Province, Costa Rica. Photo by Miguel Bruna on Unsplash

Universal Health Care in Panama

The healthcare system in Panama is a mix of private and public providers. The public sector is more common and is funded by the Ministry of Health (MINSA) and the Social Security Fund (CSS). These two groups operate separate facilities. The CSS is both a healthcare provider and a pension fund administrator, and it is funded by contributions from employers and employees. About 3.5 million people of Panama’s population of roughly 3.9 million were covered by its provisions.

Rural areas can face problems with the public health care system, where a lack of funding creates a shortage of beds. The majority of rural Panamanians have to travel long distances to get to a health facility, which can be costly and time-consuming. This problem is made worse by the fact that many rural Panamanians live in poverty and cannot afford private healthcare. This means that there is a big difference between the quality of healthcare in rural and urban areas of Panama.

Photo by Alexandr Podvalny on Unsplash

Universal Health Care in Costa Rica

There is universal health care in Costa Rica. The Costa Rican government provides free health care to all of its citizens and legal residents. There are public hospitals and clinics throughout the country that provide high-quality medical care. In addition, all Costa Ricans are required to have health insurance, which helps to pay for private hospitals and clinics. The government also provides subsidies for low-income families. As a result, everyone in Costa Rica has access to quality health care.


So, which is the best choice? It really depends on what you’re looking for. If you want to live in a place with great weather and friendly locals, Costa Rica is a great choice. However, if you’re looking for a place with better infrastructure and more job opportunities, Panama may be a better option. Ultimately, it’s up to you to decide which country is the best fit for your lifestyle and needs.

For more travel ideas, here are 40 best vacation destinations for nature lovers.

Have you been to Panama or Costa Rica before? Let me know in the comments!

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  1. I’ve been to both! Although I spent most of my time in Costa Rica! It’s so beautiful and I hope to explore more of Panama in the future.

  2. Both Panama and Costa Rica are on our list to visit for a longer stay. So it was interesting to read this post and look at both spots side by side. Great to see some of the towns we need to put on our itinerary in both countries. The weather might tip me to visiting Costa Rica. But access to beaches will make me happy in Panama. Guess I need to visit both and enjoy the differences.

  3. This is a great comparison between the two. I’m not quite ready to retire but I definitely want to visit both! The beach access in Panama does sound very appealing.This has me wanting to plan a trip to Panama and Costa Rica ASAP!

  4. Thanks for sharing these very useful tips! Though both countries are on my list, I actually prefer the laid-back and peaceful lifestyle in Panama. You’re so right that this is an important factor most people should take into consideration before making a decision.

  5. That is definitely a tough choice. We honeymooned in Costa Rica almost 20 years ago and I would love to go back, but those afternoon rainstorms are no joke in the summer! Maybe we will have to check out Panama, the beaches are what call to me. Thanks for the comparison!

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