We’ve all heard the stories of how you can retire in Panama on social security or your pension, but if you really want to do it, you need to do some research first. The prospect of living and retiring on a fixed income can be scary. There are so many variables, and little room for error in your budget. There is also the question of the cost of living where you are. This is why Panama is so appealing to pensioners of all ages. In Panama, you can live off your pension and still maintain a good lifestyle, even if your monthly pension or social security check is on the lower range of the spectrum. It’s all about choosing the right place to live, and the right way to budget.
Here are a few solid tips on how make retiring in Panama on social security or a pension easier.
Live off social security in Panama by making smart decisions
When you decide you want to move to Panama to live off your social security or pension, you need to ask yourself three important questions:
- Can I maintain my current lifestyle on my pension budget?
- Will I be able to culturally adjust to living in Panama?
- Will Panama give me a better quality of life than my current location?”
To make sure you find the answers to these questions, you first have to look at the basics: how much money will your pension provide you, and for how long?
Cost of living in Panama
In Panama, the average minimum wage salary is around $500 a month. So, if you’re receiving more than that, you’re already ahead of the game. But don’t let this number fool you. Living off of minimum wage in Panama is not comfortable, and many who live off this salary share houses with family, eat very basic foods, and do not enjoy luxuries like dining out, non-essential shopping, use of taxis/cars, or non-essential travel. That being said, it is possible; it’s all about choices. If you want to live off your social security and still lead a comfortable lifestyle, it will cost less that say in the U.S. or Canada. Living off of $1,500 is more realistic. But again, it’s all about choices.
How to live off of a $1,500 per month in Panama
Being that $1,500 seems to be the most popular number written and talked about amongst pensioner expats, we’ll look at how to live off this amount. As far as rent goes, this amount will out price you in the nicer areas of Panama City, but be more than sufficient in some of it’s suburbs or family-style neighborhoods (considering you spend about 33% of your total budget on rent). In these areas, as well as popular expat retirement areas such as El Valle, Volcan, Boquete, and Gorgona, paying around $500 a month for rent of an unfurnished house or apartment is very feasible. That leaves you with around $1,000 a month left to cover expenses, which is still 2x the minimum wage in Panama, so you’re in good shape.
Be smart about expenses
Household expenses can vary, depending on how much A/C you use, and how many appliances you have, so choosing a city or town with a favorable climate can be a great way to save money and live off your pension. Also, many expats choose to use fans to cut down on electric expenses, which can make a drastic difference (often 70% less cost). Public transportation is cheap nationwide, and taxis are typically between $1.50-$5.00 across town, in nearly every part of the country. Having a car will get pricy, but with so many other transportation options, it’s not a necessity in most places.
Food costs are another big budgeting concern, and with a $1,500 a month budget, can be very reasonable. Buying local meats, produce, and grains should cost you about $300-$500 a month for two people. Eating out at a reasonably priced restaurant should cost about $15 per person for dinner, and $8 per person for lunch, including tip.
Save more money by living as the locals do
Because of the low cost of living, and subsequently low wages, following the lead of the locals is a great way to stay on budget, and live off your pension in Panama. Always buy local products, use local transportation, live in areas with Panamanian families and retirees, and participate in local cultural events and entertainment. Panamanians are happy for a reason, and the quality of life in Panama is 2nd to none. It’s all about making smart decisions, and more importantly, enjoying yourself in the process; after all, you’ve earned it.
If you are interested in retiring in Panama, be sure to learn more about the Panama retirement visa.
