Costa Rica vs Panama pensionado: how a lifetime annuity meets the $1,000 a month rule
Written by Hans Goldstein, licensed insurance agent · CA 4273294Short answer: in 2026 both Costa Rica and Panama ask a single retiree for $1,000 a month of lifetime pension income (Costa Rica: Ley 8764 art. 81; Panama: Decreto Ejecutivo 320 art. 201, as amended in 2009). The difference is the couple: Costa Rica lets the same $1,000 cover a spouse, while Panama asks $1,250 but lets spouses add two pensions together. A life-only annuity bought while you still live in the US meets the lifetime wording in both: at 62, $1,000 a month costs about $152,000 to $172,000 of premium (illustrative, September 2026 rates). Both countries tax on a territorial basis, so a US annuity is generally taxed only by the US.
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Costa Rica and Panama are the two countries Americans compare most when they want to retire somewhere warm on a fixed income. On paper the pensionado bar is identical, $1,000 a month, written in US dollars in both laws. In practice the two programs treat couples, renewals and documents differently, and those differences decide how much annuity you need and which spouse should own it. I’ve laid them side by side below, using the same sources as my full guides to the Costa Rica pensionado and the Panama pensionado.
The two pensionado programs side by side
| Item (2026) | Costa Rica | Panama |
|---|---|---|
| Single applicant | $1,000 a month, permanent and stable, from abroad (Ley 8764 art. 81) | $1,000 a month lifetime pension (DE 320 art. 201(1), as amended) |
| Married couple | Same $1,000: the applicant can include a spouse and children under 25 (art. 82; confirm with your attorney) | $1,250 ($1,000 plus $250 for the spouse); spouses may add both pensions together |
| Lifetime wording | Certified as lifetime (vitalicia) by the payer, per the regulation and the agency’s list | “Pensión vitalicia”; private pensions administered by a foreign insurer are expressly covered (art. 201(4)) |
| Status | Temporary residence up to two years, renewable (art. 79); permanent residence possible after three years (law firms) | Permanent, indefinite, no renewal (art. 203, as amended) |
| Lower bar option | None for pensionado; the rentista route is $2,500 a month | $750 a month if you own Panama real estate over $100,000 (law firms; confirm with your lawyer) |
| Currency | Bar in US dollars | Balboa equals the US dollar |
| Wealth tax | No national net wealth tax | No net wealth tax (PwC) |
Neither bar is indexed, so the number you plan on today is the number that applies at the application. That makes both countries friendlier to a fixed annuity than euro or peso bars that move every year.
Why a lifetime annuity fits both rules
Both programs test a monthly amount that lasts for life, not your net worth. A 401(k), a brokerage account or a CD ladder is savings, and savings do not meet a pensionado test in either country. Social Security counts as a foreign pension, but many of the people who write to me are retiring at 58 or 60, or delaying Social Security toward 70, so the check is years away.
A life-only single premium immediate annuity (SPIA) turns part of those savings into exactly the income both laws describe: a fixed monthly payment, from an insurance company, for the lifetime of the annuitant, with no cash value to withdraw. Panama’s regulation goes further than most: article 201(4) lists what to add when the pension comes from a private “pension administration, trust, mutual fund, insurance or banking” company, which describes a US insurer directly. In Costa Rica, law firms report that private lifetime annuities qualify when the insurer’s letter names the beneficiary, states the monthly amount and says the payment is for life.
What fails in both countries is the same: a 10-year or 20-year period-certain annuity, an income rider on an account you can still cash out, IRA withdrawals, or a MYGA still accumulating. Those read as savings, not a pension.
Why I write about this. My mom is Norwegian, my dad is American, and they’re planning the move from the US to Norway. My mom is the sponsor (the host, or “reference person” in UDI’s words), so Norway’s income test falls on her income, not my dad’s. UDI told us in writing that money in an account does not count as income, and only lifelong income does. Their savings were not the problem; the paperwork wanted a monthly number in the host’s name. The rules in Costa Rica are different, but the problem is the same one many retirees hit: the income test, not the net worth. I’m writing this to help others in the same boat as my parents. Read how we worked through the Norway income requirement.
In the same boat? Let’s run your numbers
See roughly what a lifetime annuity would cost to close your income gap, then get my personal read by email. I can help while you still live in the US.
Estimates use the September 9, 2026 ImmediateAnnuities.com payout survey (life only) and a 15% cushion. Illustrative, not a quote.
Single or married: which country needs less annuity
For a single retiree the two countries cost the same. For a couple, it depends on how much lifetime income each of you already has.
- One spouse has (or will buy) all the income: Costa Rica is cheaper. One $1,000 lifetime pension carries both of you, while Panama asks $1,250.
- Each spouse has a smaller income: Panama can be easier. Its regulation lets spouses meet the amount with the sum of both pensions, and the extra $250 for a dependent spouse can also be shown with a local bank reference. Costa Rica publishes no rule for adding two spouses’ pensions together, so do not count on combining there without your attorney’s confirmation.
- You plan to buy Panama property over $100,000: law firms report the Panama bar drops to $750 a month.
What it costs: sizing the annuity at 62
Premium = monthly target divided by the payout per $100,000, times $100,000. At 62 the ImmediateAnnuities.com survey of September 9, 2026 (life-only, per $100,000 a month) averaged $603 for a man and $582 for a woman; the best quotes were $660 and $637. Rounded to the nearest $1,000. Illustrative, not a quote.
| Household, age 62 | Costa Rica target | Premium (best to average) | Panama target | Premium (best to average) |
|---|---|---|---|---|
| Single man | $1,000 | $152,000 to $166,000 | $1,000 | $152,000 to $166,000 |
| Single woman | $1,000 | $157,000 to $172,000 | $1,000 | $157,000 to $172,000 |
| Couple, annuity on his life | $1,000 | $152,000 to $166,000 | $1,250 | $189,000 to $207,000 |
| Couple, annuity on her life | $1,000 | $157,000 to $172,000 | $1,250 | $196,000 to $215,000 |
Because both bars are fixed in dollars, 10% headroom is usually enough, mainly to cover any withholding and bank fees and to keep the letter comfortably above the line. Social Security reduces the gap in both countries: a $700 benefit leaves a $300 shortfall, about $50,000 of premium for a 62-year-old man at the average rate.
Renewals, survivors and the joint and survivor question
Here the two programs really differ. Panama’s pensionado permit is permanent and is not renewed, so the income test is met once. Costa Rica’s pensionado status is temporary residence, renewed with a fresh pension letter (law firms say typically issued within the last six months) until you can apply for permanent residence after three years. If the annuity is on one spouse’s life and that spouse dies before then, the survivor needs lifetime income of their own at the next renewal.
That is why I usually price a joint and survivor annuity for Costa Rica couples: it keeps paying until the second death. It pays less per dollar than single life, so the premium runs above the table, but it keeps the survivor’s file simple. In Panama the survivor question is about income for the household, not the permit.
Documents: what the insurer has to put in writing
- Both countries: a letter from the insurer stating your name, the monthly amount, and that it is paid for the lifetime of the annuitant, with no cash-out or commutation feature. Apostille it in the US.
- Panama: add proof the insurer exists and is in good standing, and a payment receipt or bank statement (art. 201(4)). Have your Panamanian lawyer approve the wording before you apostille it.
- Costa Rica: the certification is apostilled and translated into Spanish, and you enroll in the national health system (the CCSS, or Caja), with a monthly contribution based on declared income.
Start the payments 3 to 12 months before you file so your bank statements already show deposits.
Tax: both territorial, so the US is the main tax
Panama taxes on a territorial basis, so income from a US annuity is generally not taxed there, and PwC reports no net wealth tax and no inheritance, estate or gift tax. Costa Rica taxes Costa Rican-source income, and a pension paid from abroad is generally treated as foreign-source; real estate pays a 0.25% municipal property tax. One thing to watch in Costa Rica: bill 25.796, filed in September 2026, would tax foreign passive income at 15%. It is not law and does not list pensions, so confirm its status with a local tax adviser.
As a US citizen you still file a US return. On a non-qualified annuity the exclusion ratio makes part of each payment a tax-free return of your premium. There is no US tax treaty with either country, which matters little because neither taxes the payment. One 2026 change: with a residence address outside the US, a US citizen can no longer opt out of federal withholding on the annuity, even into a US bank account; it is a prepayment credited on your return, explained in annuity withholding for US citizens abroad.
The trade-off, once
A life-only annuity cannot be undone, pays a level dollar amount unless you add a cost-of-living rider, and pays less per dollar at younger ages. In exchange you get the one kind of income both programs are written around, from the day you apply, for life. Buy it while you still have a US address: US insurers generally will not issue a new contract to someone already living abroad.
Married? Make the income outlive either of you. In Costa Rica the main applicant shows the income and the spouse joins as a family member, so the annuity sits with the main applicant. If a single-life annuity is on one spouse and that spouse dies first, the payments stop, and the surviving spouse may have to show income of their own at the next renewal. A joint and survivor annuity, which keeps paying until the second death, or a separate annuity on each spouse closes that gap. Joint and survivor pays less per dollar than single life, so ask for both quotes and compare.
Experts we point readers to
- Outlier Legal Services (Rafael Valverde): Costa Rica immigration law; pensionado category
We link to these because their guides are among the most useful we found. We receive nothing for listing them and are not affiliated. All experts by country.
Frequently asked questions
Free annuity gap analysis for Costa Rica. Tell me your ages, your Social Security or pension, and whether you are single or a couple. I will show how far your income is from the Costa Rica requirement and what a lifetime annuity would cost to fill the gap, in the sponsor’s or main applicant’s name where that matters.
Related reading
- Moving abroad on a fixed income: hub
- Moving to Norway: my parents' story
- Costa Rica pensionado income requirement
- Panama pensionado visa income requirement
- Which retiree visas accept annuity income
- Annuity withholding for US citizens abroad
- Retirement visa income requirements compared
Sources
- Ley General de Migracion y Extranjeria No. 8764, arts. 79, 81 and 82
- Decreto Ejecutivo 26 of 2 March 2009 (Gaceta Oficial 26238), amending Decreto Ejecutivo 320 of 2008, arts. 201 and 203
- Servicio Nacional de Migracion de Panama (official site)
- PwC Worldwide Tax Summaries: Panama, taxes on personal income
- PwC Worldwide Tax Summaries: Costa Rica, taxes on personal income
- Delfino.cr: bills to tax foreign passive income (expediente 25.796, September 2026)
- IRS Publication 939: general rule for pensions and annuities (exclusion ratio)
- 26 U.S.C. 3405 (withholding on pensions and annuities)
- ImmediateAnnuities.com: immediate annuity rates by age (survey of September 9, 2026)
Goldstein & Co. LLC dba Goldstein Insurance Services · Hans Goldstein, licensed insurance agent, CA lic. #4273294 · NPN 20602398 · 213-414-2808 · hans@hansgoldstein.com
Education, not tax, legal or immigration advice. Rules, thresholds and exchange rates change; confirm with the consulate or immigration authority and a local tax adviser before you act, and get answers in writing. Hans Goldstein is a licensed insurance agent (CA 4273294) and can only offer annuities to residents of states where he is licensed. Annuity payments are guaranteed by the issuing insurer’s claims-paying ability, not by any government. Payout figures are illustrations from a published survey, not quotes. Immediate annuities are generally irrevocable.