Yes, It is Cheaper to Live in Panama than the US

cost-of-living-(original)

You will hear two very different things, depending on who you talk to, about the cost of living in Panama. Some people will tell you it’s the cheapest place on earth, while others will insist it’s crazy expensive. Neither of those people will be entirely right, but a new study released by Movehub, backs up the point of view (of which I am a supporter of), that living in Panama is cheaper than living in the United States.

According to their new 2015 cost of living index (provided by Numbeo), the United States has a consumer price index of 76.53, while Panama has a consumer price index of 55.16. Out of 119 countries ranked in the index, the United States ranks as 23rd most expensive, while Panama is right in the middle of the pack at 60th. So if cost of living in Panama is measurably cheaper than the United States, why do some expats feel it’s the opposite? I’ll go into some of these reasons below, as well as some ways to save money if you feel like your life in Panama is too expensive.

Rent: Comparing Panama City highrises to US city outskirts and rural living

Panama City Fireworks

Highrise living comes at a premium

 

Rent Index: Panama 31.22 United States 36.17

I’ve talked to several American expats who tell me that the rents in Panama City are more expensive than the rents where they were from. I’ve also talked to several friends and family from New York, Chicago, and LA, who gush about who cheap my rent is. Can they both be right? Well to a certain extent, they can. Because they are comparing the rents in Panama City to very different circumstances in the US. The truth is, Panama City is a dense international city with limited space and as such, you pay a premium for rent. This is true anywhere across the world. This is why rents in LA, New York, and Chicago are such much more expensive than Jacksonville or Louisville. So if you came from a place where you were living in a city or rural area where you were paying $800 for a two bedroom and two bathroom and are now paying $1300 in El Cangrejo, then you’ll think rents are more expensive. But if you compare it to other dense big urban cities, you’ll find that the rent is actually a pretty good deal.

For example, my wife and I pay $1100 a month to live in a 3 bedroom, 2 bath condo in Edison Park. Edison Park isn’t quite as trendy or in high demand as El Cangrejo, Punta Pacifica, or San Francisco. But it’s still a good area with 2 supermarkets and a warehouse club in walking distance, along with a drug store, several restaurants. a private school, and multiple bus stops. Now before I moved to Panama, I lived in Tampa, Florida. In Tampa, could I have found 3 bedroom, 2 bathroom apartments for $1100 or less. But they would’ve been two story walkups on the outskirts of the city, not within walking distance of anything and requiring a car to get around. Instead now, I live in a highrise with an amazing view, and can live without the expense of a car because I can get everywhere by walking, taxis, or public transit.

Transportation savings is also another area directly tied to rent that most people don’t consider. Most expats can live just fine within Panama City without having to own a car. There are some cities you can do that in the US, but you pay a huge premium on rent to live there. Try getting 3 bedrooms for anything close to $1100 a month in NYC or Washington DC. My sister lives in a 1 bedroom apartment in a good area of Manhattan (Edison Park level) for $2800. And that’s considered a good deal. Anywhere else you want to live with reasonable rents in the US, you’re going to need to own a car.

Now if your family already had an old car paid off, low insurance payments, and didn’t drive around much, then maybe this isn’t as big a savings for you. But for my wife and I, we had two car payments, two insurance payments, two cars we needed to fill with gas and perform maintenance on. Now in Panama City, we’ve gotten rid of all of that, and take a combinations of taxis, Uber, and the bus system to get around. All together that saves us about $1000 a month in transportation costs from when we lived in Tampa. So even if rent costs are comparable, our apartment is giving us significant savings by being in a city that allows us to live car free.

If you want to save on rents, choose almost anywhere else besides Panama City (and certain retirement havens like Coronado and Boquete). You’ll find that it’s significantly cheaper, and probably less than what you were paying at home. If you need to live in Panama City for work, then consider areas like Edison Park which are safe, convenient, and expat friendly, but don’t carry as high a price tag as the more trendy expat areas. 

One last note about rents: Rents in Panama are usually negotiable. Their first offer is not their final offer. Our apartment was listed for $1250 before we got it down to $1100. It helped us that my wife’s aunt is a real estate agent who could negotiate for us, but even if you don’t have one in your corner, realize that you can probably knock $100-200 off the listed price of the unit you are trying to rent.

Dining Out: Eating at Expat Restaurants vs. Local Restaurants

Niko's cafe offers 24 affordable dining

Niko’s cafe offers 24 affordable dining

Restaurant Index: Panama 40.39 United States 68.06

Another area that I’ve heard expats say is more expensive than back in the US is the cost of going out to eat at restaurants. This is true if you go to restaurants that are located in heavily expat areas, and marketed towards expats. You will find yourself paying $14 for a burger and fries, and $18 for chicken and pasta. But this is because restaurants know their target audience, and are pricing accordingly. You average Panamanian does not earn nearly as much as your average expat, yet they still find places to eat a good meal. So if you look outside of the trendy restaurants, you will find a much better deal.

I covered this topic in an article I wrote called Dining Out On a Budget. There are plenty of good deals to be found. For example, my wife and I enjoy eating a lunch spot by our house that provides a rice, beans, plantains, a salad cup, your choice of meat, and a small drink for $4. My wife and I once did a whole work week of lunches there for less than $50 combined. You’ll also find that in most restaurants, they have widely varying costs of entrees, and that you can get a good deal by deal shopping in the menu. For example, there’s a restaurant we like in Casco Viejo called Casablanca. The menu they have there is really varied, both in items and price. You can pay in the high $20s to get a steak there, or $8 to get a big seafood paella. The paella is a much better tasting dish than than the steak.

I’ve found on a whole, if you avoid the trendy spots, even nicer restaurants in Panama are more affordable than their similar counterparts in the US. For example, there’s a great seafood restaurant in Panama City called La Casa Del Mariscos. Is it expensive compared to normal restaurants? Sure. But it’s also significantly cheaper than a high end seafood restaurant in the US. In Casco, there is a restaurant called Donde Jose, which provided a 16 course pre-fixed menu in an intimate setting. Is it definitely more expensive than most restaurants. But if you were to go into that kind of restaurant in the US it would easily cost you 2-3 times what it costs you here. So when you compare apples to apples, you still get a pretty good deal.

Also, standard tip in Panama is 10% (usually added to the bill automatically), compared to 18-20% in the US, so you’re saving 10% on your meal right there.

Grocery shopping: Buying imported groceries vs. local choices

Same stuff as Jif, half the price

Same stuff as Jif, half the price

Groceries Index: Panama 61.03 United States 81.81

Another area of contention on the cost of living in Panama is the cost of groceries. And I’ve found that like much else, how affordable groceries are depends on how attached you are to having the things from home. If you want your imported goods, you are going to pay a premium for that. Almost everything that is a US name brand prepackaged good costs more here than it does in the US. Same thing goes with produce that is not local to Panama. If you are trying to by fruits and vegetables that don’t grow in a tropical environment, you will pay more. Certain other items, like bread and milk, are slightly more expensive in Panama. However, if you are willing to shop mostly local goods, you will find significant cost savings.

Areas where you’ll save a significant amount on groceries include meats, deli cold cuts, cheeses, and local produce. I’ve found the deli counter to be a steal in Panama. We get sliced cheeses and deli meats for about half what we were paying in the US. So even if I pay $0.30 more for a loaf of bread, I’m paying $5 a pound cheaper for what I’m putting on that bread. Meats are also significantly cheaper. When my dad came and visited, he was looking around in the super market, and remarked to me “oh, the meats don’t seem that cheap,” until he realized that the meats here were priced in kilos, not pounds. Then he realized what a good deal it was. Produce that is local to Panama or the nearby region, like bananas, pineapple, mangos, mamons, and manderins, are also a good deal cheaper than they will be in the US. So the basics of most peoples diets can be found for much less.

I’ve even found that on other items, buying local items can be a significant cost savings. For example, I used to think that peanut butter was an item that was more expensive in Panama. But that was because I was trying to buy Skippy and Jif, instead of a Spanish language brand called La Sabrosita. La Sabrosita tastes exactly like Skippy or Jiff, but is much cheaper than either of them are to buy here, and even cheaper than they cost to buy in the US.  Same thing with pasta. I could get US imported pasta for a couple of dollars a box, or a Spanish brand that I pay $0.42 a pack for. In fact, if you were to look at what you normally like to eat that’s prepackaged, and bought the brand that was in Spanish instead of in English, you would save money.

Also, it goes without saying that where you shop will have a big influence on how much you pay. You’ll pay more shopping at Riba Smith and El Rey than you will at Super 99 or El Machetazo.

If you really want to save money on groceries, you can always buy price controlled goods. The government sets certain price limits on basic goods that each store must sell at least one brand of that item for. They are often not the best quality brands, but the price savings can be significant. Here is a list of the price controlled items and their prices.

Dealing with the adjustment period

Panama City Skyline

It takes some time to adjust to this crazy country

If you have lived in your previous area for many years before you moved to Panama, you will underestimate the level that your familiarity with your home area played in helping to keep your cost of living down.  After years of living there, you figured out what were the good areas to live with reasonable rents, the affordable restaurants, the place to get your hair cut for cheap, that dive bar that sells dollar beers every happy hour, etc. When you move to a completely new place (especially when it’s a new country), it will take time to adjust and figure out where the good deals are. I’ve been here almost a year now, and I notice that my wife and I are spending much less money than when we first moved here. We know how much the cabs should cost so we don’t get ripped off. We’ve figured out which supermarkets have the good deals and on what items. We’ve figured out the cheap restaurants to get a good meal out. So now we spend less than we did before. This will happen to you too. So if you’ve just recently moved to Panama and found it more expensive than you thought, realize that it will get cheaper as time goes on.

Now not everything in Panama is cheaper than the US. Electricity, furniture, and electronics are a few things in Panama that you’ll find are more expensive than the United States. But most other things are cheaper in Panama, including healthcare, taxis, public transportation, movie tickets, cell phone bills, and any sort of labor service (haircuts, gardeners, maids, plumbers, AC repair, etc). All in all, the cheaper things outweigh the more expensive things, which help make Panama a considerably more affordable place to live than the United States. If you are not having that experience, see if some of the issues I talked about apply to you, and you may be able to make small adjustments to increase your savings. 

 

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14 Comments

  1. I agree…Panama IS cheaper IF you want to live like a local. If you want to live like a normal North American, with an average standard of living—then Panama will never cut it.
    It is not, nor will it ever be North America. I don’t want to have to live like a local.
    Panama city cannot compare to Tampa in terms of modernness, cleanliness, availability of everything ect…It is NOT a modern city. It’s a pig in lipstick. And not a very pretty one at that…
    I enjoy Panama for what it is—but make no mistake–it is NOT in any size, shape or form comparable in any fashion to anywhere in North America.
    We’ve done the math….and lived in both places—Panama is more expensive in EVERY aspect then our home in Sarasota, Florida.
    Houses are actually FAR cheaper in Florida (in nice man-gated golfing communities) and built WAY better.
    Fruit is the same or cheaper.
    Furniture is better made and cheaper.
    Vehicles are better kept and cheaper.
    Restaurants are abundant and yes, cheaper! (except for the aforementioned local dives).

    Yes, taxes are higher in Sarasota, BUT—look at what you’re getting for paying those taxes. Roads that are kept up all the time, street lights that actually work, 911 and fire service that actually come if you call, garbage collection, recycling, and the list goes on….to me, that $3500 a year I pay in property taxes, is WELL worth the peace of mind it offers me.

    So for some people, if you’re happy to live in a country that screams poverty at every turn, where we as Gringo’s will NEVER fit in as hard as we try, and where the cost of living realistically as you would back home IS more expensive, then so be it—let them eat cake.

    Please don’t misunderstand me—I do like Panama—for what it is. But make no mistake, those touting it as a cheaper version of Miami, are out to sell you you something!

    ***Don’t do anything in Panama for the first year, that you can’t undo in 30 minutes”. Best advice I ever received.

    • Betty – I disagree with very much of what you said. I find the quality of life that Panama City provides to be much better than that of Tampa. I live in a much better apartment than I ever lived in in Tampa. Tampa has very few apartment options if you want to live above a third floor. Almost none of the city is walkable, and the public transportation is much worse. Panama has a metro, Tampa does not. The buses in Panama run frequently and go everywhere, while in Tampa it takes you hours to get anywhere through the bus system. Panama City also has far more nature and parkland within the city limits than Tampa has. Not to mention great historical sites that Tampa lacks, like Panama Viejo, Casco Viejo, and the Canal.

      It is true that Panama City has lots of poverty, and it’s a special kind of third world poverty than you don’t see many places in the US. But Tampa had plenty of poverty and run down and abandoned areas too. That’s a natural part of being a city.

      One thing that I do agree with you about is that if you want to live exactly like an American, you can probably do that cheapest in America. But I have to rack my brain to figure out why someone would want to move to another country if they wanted to live exactly like they did at home, or why they would expect another country to be exactly like their home country. Most of us move because we want something different. Those of us that do and are willing to adapt usually strive here. Those that want exactly the same things they had at home are better off staying there.

    • we also lived in Sarasota FL before moving to David, Chiriqui and our expenses are 1/3 of what they were in FL and I really don’t feel like we have given up anything important in quality of life. We have gained so much though in sense of community, friendships, and general enjoyment of life. This is such a beautiful country and the people are wonderful. It’s interesting how two people from the same place can have such a different experience of living here. We loved Sarasota but I am thankful every day for our Panamanian lives.

  2. Very informative Michael. I live in the Azuero and it costs us a good 1/4 of what it cost us in Canada. There are very, very few NA products I cannot live without. We shop local and eat healthier than we ever did. Yes, there are trade offs and, as Kris points out, the gains have been immeasurable in our opinion. I am also thankful every day for being here and no intention of leaving.

  3. Betty is spot on. I compared brand names in USA vs Panama.. Panama is way more expensive, and yes, taxes may be lower but you must also be advised- the exponeration on taxes when buying a home is for the structure not the land. depends where you live- if near the beaches, your land tax yearly will be higher than a property not close to the beach., and yes, condo owners must pay for the land their condo sits upon..

    Make a pro and con list and clearly the cons outweigh the pros.. USA vs Panama. cheaper auto insurance but put in a claim and see how slow the insurance company is to pay.. many require the deductible up front unlike USA where they take the deductible off the repair cost,,

    High taxes in thr USA and Canada.. yup, but you get what you pay for..

  4. I think the orIginal report compared everywhere to New York City. And as for Canada being more expensive, this is increasingly debatable with our dollar doing so shittily (that’s a word right)?

    • The original report used NYC as a baseline. So NYC = 100, and then if a place was more expensive than NYC, it was above 100, and less expensive then NYC, it was below 100. Which is why most places have a rating less than 100. According to the survey. The cost of living is 81% of NYC costs in Canada, 76% in the US, and 55% in Panama.

  5. You are looking at it the wrong way. Calling Jiffy a brand name is like saying water only is correctly produced in the US. JIFFY costs more in Panama because IT IS AN IMPORT PRODUCT. The same way bananas cost more un the US. If you are moving to another country, how can you expect the brands of your country cost the same?

  6. As a Panameño I only live 1 year away from Panama and I am 37 this month, the ultra cheap Panama die in 2004, from there our 15 to 20 years of 1.2% inflation per year change from 2004 and the all time high was 2008 with a inflation of 8.5 to 10% just that year. Before 2004 a dream house was for sale for 100,000.00 now you get a cave for 80,000.00 a Big mac wih combo was only 3 dollars. You were avaible to do your supermarket with only 100 to 200 dollars for the whole month for three to four persons. Back to the present The inflation, money laundry, and offer and demand rules over quality and good service. Many times giving tech support in costa del este I always see many but many empty apartments , How come! , the prices for rent and buying apartments are not real to the ground they are just take advantage of the momentum, here is a example of living in the capital, apartment with two bedrooms goes from 850 to 2000 dollars, one person supermarket per month is like 300, transportation if you keep your activities in the center is like 30 dollars with bus and metro without taxi services, monthly payment for your car can be easly 300, having fun like night clubs , dinner in restaurants , Cinema , Bar just there is the big problem, social activities are extremely expensive here. As a panamenian capital city is now too expensive, I believe that you can make your balance here easily in any providence of Panama besides Capital City. Medical service is terrible, Taxes indeed are not use for infraestructure they are reserve for corruption purposes. And every year from now on poors are getting behind with inflation and this will trigger robbery and other negatives things so take that in consideration.

  7. I am very disheartened to hear these negative comments. I have been planning & dreaming of moving to Panama for six years now. I don’t want to live in the City, I want to live near the locals and shop at their markets. However, I am a single, retired, female and I need to be safe. So, does this mean that all the research I have done is incorrect? I read blogs where expats are so happy and loving life. Is that true or just a scam to get me to purchase something. I read that the medical care was better than in the US. Is that not true? I have Lupus and need to ensure good medical care. I was told that you can live in Panama on just your average social security check of $1250. True? What about exit taxes in the US? Do you still have to pay US income tax?

    As far as Sarasota, FL goes. It is beautiful there, however you can even get near the beach for under $500k for a decent 2 bed/2bath. I have seen numerous listings in Panama where I can buy a decent place for around $100k. Yes or no? Is everything I found in my research just hype to get expats to move there or is there any truth at all? I am very disappointed.

    • Hi Donna, your best bet is to reach out to Kris at http://blog.thepanamaadventure.com/. Her and her husband live in David, Panama on about $1000 a month, so they can provide perspective of what living a lower cost lifestyle here is like (she has some good cost of living guides on her blog too). As far as taxes, you do not have to pay exit tax, but you do still have to pay income tax (if applicable, you should be able to avoid most or all of it if you use the standard deduction), the same as if you lived in the US. You will not have to pay Panamanian income tax on your social security earnings. There are plenty of expats who are happy here, and some do live on low incomes. But always be somewhat skeptical of what you read online, especially if it’s from a website that sells properties.

    • I was borned, raised, studied and worked in Panama half of my life. I have traveled back once or more times a year for most of my other half. It upset me to see how many persons are misslead to believe that leaving their families, home, friends and a system that at least you or somebody understand to a false half way paradise. It’s true taxes are cheaper, you get what you pay for. Trash collection, conditions of streets and sidewalks, water service interruption, same as electrical as expensive as it is. Don’t forget your 75 to 90% humidity year-round. You won’t miss the rain from Seattle. Low car insurance, yes watch your coverage. I still have a vehicle there. Customer service? Good luck unless you are on the elite section of the city. But if you could live there $$ won’t be a concern. Because that will be one of your multiple houses. Public transportation? Is that really good anywhere in the planet? Here is no exception. Train good deal for people that don’t drive. If riding the bus was good and cheap allow the plus comments show the videos of people at the bus stop at 430 in the morning to go maybe 5 miles to work. And for the ones with car, traffic from ft Lauderdale to Miami will be fun in comparison. I will take housto at 08:30 in the morning or I5 on the way to LAX. If you are diabetic like my mom forget it, don’t go to the store looking for that section. And those famous $.15 c of coffee cups remember are only 4 ounces. And those hojaldres, carimanolas and other transactions unhealthy oily things you will never eat them at home. It’s callhigh cholesterol. Eat in a real local restaurant and u will find that they are not cheap $8 to $12 on the low side for local food. Sure you can pay $4.25 to$5.50 to the lady that is cooking around the corner. Tasty? You won’t do it back home. Here you will cheaper and I guess nobody is dying. Not my favorite choice but handy. OK, lets get out of Panama City. A house not including the lot in famous Coronado for approximately an equivalent of 1800sqft, brick construction, wire correctly, zinc roof, 3 bedrooms, 2 bath and the maid room and bathroom of course. Building from the ground up, remember not the lot (you own it) and not furnished of course. Close to $150,000. Yes American dollars. How many major supermarkets close by? I hope they are done building a second one. People are wonderful, beach in general nice if you can get access or pay your $3.00 to park. It used to be free, I remembered. Enough…Good luck…I still owned a house there…why?

  8. I have lived here in the U.S nearly 31 years, I came here when I was 18 to go to school and stayed, I’m getting ready to go back to David where I’m from. Yes I will miss some things from here but I’m sure I will do just fine, If you have have never travel or lived anywhere else then do not move to a 3rd world country. I have lived here and in Europe due to my Job and just adjust to the place. Not everyone is respectfull some people no mather where they live they will always be very unhappy. get it?

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