Don Winner at the Panama Guide just started a great survey asking people to tell him how much money it costs them to live in different areas and lifestyles in Panama and he will be following this with more as it comes in.  His report is very detailed and a great guide to those who are preparing a retirement budget.  Great job Don!!

One of the first questions people ask when they are considering a move to live in the Republic of Panama is about the cost of living. They want to know how much things cost, and will they be able to get by on the amount of income they have available. There are so many variables it’s hard to answer this question in a manner that would apply to everyone. Since the bottom line costs change according to the choices people make in the way they want to live, I decided to take a different approach. I asked my readers to give me a run-down of their monthly expenses, come up with a total, and then divide that by the number of people in their family. Some expenses are both fixed and highly variable. Electricity for instance. Everyone here pays the same per kilowatt hour, but your monthly bill will vary greatly depending on how much you use. Those of us roasting down at the lower elevations run our air conditioners more often than those who live in Boquete, Altos del Maria, or Cerro Azul. Anyway, I’ve received enough responses to post the first installment on this series of articles on the Real Cost of Living in Panama. I already know this series is going to be a “classic” – widely read and quoted all over the place by those who follow this sort of stuff. According to the data received and my analysis of the data – and this surprised me – the average cost of living in Panama for expatriates is about $1,130 per month, per person. Don’t believe me? Read on… (more)

Note: This was the first article of a series. The second article was;

• Second Set Of Data Pushes Average Cost Of Living in Panama Even Lower – 23 July 2012.

Methodology: On Friday, 20 July 2012, I asked www.panama-guide.com readers to send me a snapshot of their regular monthly living expenses as detailed in this article: The “Real” Cost Of Living in Panama – A Survey And Call For Input. Their inputs and responses include a headcount or how many people live under the roof. Then they provided details on their monthly costs for housing, food, utilities, transportation, education, and any other regular or routine expenses. Annual bills are divided by 12 to make it a monthly number. Necessities are covered, while most discretionary is not – this is a survey of cost of living, not spending habits. Then the monthly expenses are added up, and divided by the number of people living in that household. The bottom line result is a monthly cost, per person, to live under that roof. Here’s the data and inputs received from the first seven participants;

• Living The High Life In Cerro Azul: A 61 year old male lives alone in Cerro Azul, located about 40 minutes by car outside of Panama City. He bought his house for $135,000 dollars by putting down $35,000 in cash, and he financed the balance for 13 years at $900 per month. He also dropped another $50,000 into the house to fix it up. He only pays $150 per month on electricity because there’s no need for air conditioning in Cerro Azul. Monthly water bill is $30 bucks, cable television is $55, Internet access $15 per month (via Digicel USB modem), monthly cell phone usage is $25 dollars (calls only, no data.) Budgets $400 per month for food, eating out, and cleaning items. Fuel for the car is $200 per month. There’s a $20 per month Home Owners Association fee in Cerro Azul which pays for road upkeep and maintenance. Car insurance is $100 per month on a ten year old car, bought in cash for $10,000. Travel plans – two trips per year at $600 per ticket, $1,200 annual, or $100 per month. That puts him at a total of $1,995 per month living expenses. Plus, he has a total of $95,000 invested in the purchase of the house, remodeling the house, and purchase of the car. So the bottom line is – A single man lives alone in Cerro Azul for $1,995 per month.
• A Retired Couple in Altos del Maria: Lloyd and Linda Sherman live full time in Altos del Maria. They return to the US about once a year. They are renting a house for $900 per month. They purchase insurance on the contents of their home for $45 per year (or $3.75 per month). They budget $600 per month for groceries which includes regular trips to Price Mart for large package items and cleaning supplies, and they spend an additional $300 per month or so eating out. Their utilities are $65 per month for electricity, $8.50 per month for water, $76 per month for cable TV (including movie channels), $80 per month for Internet access, $6.99 per month for Skype with unlimited calls to the US, $15 per month for cell phone on prepaid cards. Domestic help $110 per month for part time maid and gardener. Also, $15 per month for propane for cooking and hot water. They own two cars, purchased in cash for $10,800 total. They spend a total of $240 per month on fuel, $26 per month for insurance on both vehicles, and have a budget of $200 per month for repairs and maintenance on the vehicles for parts and fixes. Other: $80 per month for mail services, $125 per month for health insurance. They have budgeted $3,000 per year or $250 per month for international travel. Added all together, their monthly expenditures are about $3,112 per month or $1,556 per person. So, the bottom line is – A retired couple lives in Altos del Maria for $1,556 per person, per month.
• A Family of Three in Gamboa: An American man, his Colombian wife, and their school aged daughter live in Gamboa, next to the Panama Canal where the Chagres river enters Gatun Lake. They rent their house for $750 per month, which includes all of their utilities – gas, electricity, water, Internet, air conditioning, satellite television, a gardener, garbage pick-up three times a week, and no maintenance fees. Their daughter attends a public school, and they were surprised and impressed with the school (free). They bought a car and paid about $6,100 total for the purchase and needed repairs. As for monthly costs, $80 for fuel for the car, $400 for food, $300 for restaurants and eating out, $75 for cell phone service, $138 per month for car insurance, and $200 per month for fuel for the boat (fishing) and $40 for bait. Add $25 per month for the wife’s hair and nails, $5 per month for dad’s haircut, a budget of $50 per month for clothes for their daughter, and $35 per month for prescription medicines. That brings the monthly total to $2,058 for a family of three. So, the bottom line is – A family of three lives in Gamboa for $686 per person, per month.
• Swinging Single in Las Tablas: A 65 year old retired American male lives in Las Tablas, in the Azuero region of Panama. He’s been coming to Panama since 2001 but has been living here full time for the past seven years and has not been back to the United States. He rents a single family house (stand alone) in a respectable neighborhood for $225 per month. His utilities are $32 per month for electricity and $7.50 per month for water. He spends $400 per month on groceries and cleaning supplies, and spends about $45 per month eating out at restaurants. He spends another $30 per month on beer and cigarettes. For telecommunications, he pays $11 per month for data on his Blackberry cell phone, and an additional $15 per month on cell phone cards. He owns a scooter for local transportation and spends about $5 per month on gas (with no insurance). Finally, he spends about $20 per month for buses or taxis. His greatest expense is on prescription medicines at $300 per month. So the bottom line is – his costs for necessities is about $1,070 per month. But here’s the kicker. He gets a check for about $2,500 per month and he blows the rest on “girlfriends and casinos.” He spends all of his income, but he could get by for less if he either had to or wanted to. So, the bottom line is – A single man lives in Las Tablas for $1,070 per month.
• A Family of Three in Pedasi: This family, a 51 year old retired law enforcement officer, his 45 year old wife, and their 12 year old son, moved to Pedasi in Los Santos after selling all of their belongings in the United States. They moved to Panama and rented for the first five months, but now they have purchased their home and they have been in there for seven months, and live in Panama full time. They bought the house cash for $125,000 and there are no HOA or other scheduled maintenance fees. They pay $15 per month for homeowner’s fire insurance on the house. They budget $750 per month for food and household supplies, and another $150 per month for restaurants and dining out. Monthly utilities are $150 for electricity, $8 for water, $40 for Internet (via Claro USB stick and router), $8 for cell phone. They don’t have cable TV or a landline telephone. They bought a used car for $12,000 cash. Fuel costs are $180 per month, pay $58 per month for maintenance, and $62 per month for insurance. They rarely use public transportation. School for their son is done with a home schooling plan through the Internet at $166 per month. Their costs are a little elevated right now because their son needs braces – which will cost them $105 per month over the next two years. So, the invested $125,000 for the house plus $12,000 for the car, or a total of $137,000 going in. Total monthly expenses are $1,669 for three people. So, the bottom line is – A family of three lives in Pedasi for $556 per person, per month.
• A Retireed Couple Living in Boquete: An American couple in their 70’s purchased a two bedroom ground floor condominium in a gated community in Boquete, in the Chiriqui province of Panama. They paid $240,000 cash about two years ago. Their Home Owner’s Association fees are $2,114 for the year or $176 per month, which covers security, external maintenance, and landscaping of the common areas. They pays an additional $18 per month for fire insurance. Utilities are $100 per month for electricity (no air conditioning necessary at altitude), about $5.80 per month on gas for cooking on a range top and oven. Water is $4.50 per month, local service. Legal fees for a Panamanian corporation $29 per month. Real estate tax is $2.50 per month. They have one bill for $100 per month with Cable Onda for cable television, local telephone, and Internet service. They spend about $105 per month on maid service and a gardener. Health insurance is $350 per month because they are over 70 years of age and have large deductibles – this is for catastrophic medical problems only. For transportation, they bought a new SUV from the dealer in David, paying cash. Car insurance is $83 per month, full coverage. Estimated monthly food costs: $600. The up front investment for large ticket purchases was about $270,000 for the house and car. Their total monthly expenses are $1,573 per month, for two people. So, the bottom line is – A retired couple lives in Boquete for $786 per person, per month.
• A Family of Five in Panama City: A family of five – an adult man and wife, two grown children, and one small child all live together in an apartment in Panama City. They purchased the home with $11,000 down, financed the rest, and have invested about $50,000 in upgrades and improvements to the property. The monthly mortgage is $640 and the condo maintenance fees are $150 per month. Utilities are $290 per month for electricity, $300 per month for Cable Onda which includes full cable TV for four digital boxes, two local telephone numbers, and high speed Internet access. The monthly water bill is $40 per month, which also includes garbage collection. Cell phone is $150 per month, broken down as one phone on a monthly plan, and several others using prepaid cards. School and education expenses are $200 per month for a private school. The two older kids are done with school. Food costs are $600 per month for groceries and household supplies, plus another $400 per month for restaurants and dining out. There is one car payment of $260 per month for a new car. Fuel expenses are $100 per month total. Another $100 per month budgeted for repairs and maintenance as needed. And another $120 per month for insurance. There was a total of $61,000 invested up front to make the move to Panama. These monthly expenses come to $3,350 per month. So, the bottom line is – A family of five lives in Panama City for $670 per person, per month.

Analysis of the Data: First of all, thanks to the people who have been generous with their time, who answered my call for input. As you can see widely differing demographics are represented in this first installment. There are two single men, two retired couples, and three families represented, or a total of seventeen individuals – fourteen adults and three children. They live in different parts of Panama, and their monthly spending habits vary according to their needs and lifestyles, as expected. Some rent their homes, while others have purchased a house. I added together all of the bottom line “cost of living per person, per month” totals in order to determine an average. So far – according to the responses provided by Panama-Guide.com readers – the average cost of living in Panama is about $1,130 per month, per person. The range is from a low of $556 per person with costs spread out over a family, and a high of $1,995 for a single guy living alone in Cerro Azul.

Please Keep It Coming: With this article you should be getting an idea of what I’m trying to accomplish with this series of articles on the “real” cost of living in Panama. You can tell me enough about your regular and routine spending habits to allow me to write this kind of a summary without violating your personal privacy. This sort of information about monthly cost of living is critically important to those who are thinking about moving to the Republic of Panama to join our community of English speaking expatriates. If you are already living here, and if you’ve been here long enough to establish these sorts of spending patterns and habits, then please share. If you see something you think to be way out of line with your own personal experience, then of course by all means – give me your feedback – and at the same time give me your “snapshot” details so I can include your situation to be included in the overall strategic view. So, please send me your input.

There Is No “Right Answer” – Everyone living here makes their daily decisions depending on their wants, needs, and desires. I loved the input from the guy in Las Tablas who recognized he’s actually getting by on about $1,000 a month and blowing the rest on “discretionary spending” – chicks, booze, and casinos. Another participant had budgeted for fuel for the fishing boat and bait – first things first, right? I think these kinds of details are what’s going to make this series of reports both different and more important than others that have been done in the past. There’s an undeniable “real world” factor which stems from the value, honesty, and integrity of the data going in. It might not be a perfect formula, but I bet you know more about the true costs of living in the Republic of Panama, now that you’ve read this article.

Second Set Of Data Pushes Average Cost Of Living in Panama Even Lower

Here’s The Second Batch:

• Retiree Has High “Burn Rate” in Panama City: A 70 year old single American male has been living in Panama full time since 2000. A full time girlfriend lives with him, so these monthly expenses are for two people. He bought a new SUV in 2004 for $30,000 in cash. He bought a nice 280 square meter oceanfront condo in 2005 for $270,000 cash. He spends $4,000 per year ($333 per month) for major medical insurance. He reports spending $1,500 per month on “groceries and booze” and another $650 per month on “restaurants and fun.” He lists another $500 per month for “stuff.” His monthly condo fee is $370 per month for operations and maintenance for the building, as well as security, common water, gas, and garbage collection. For utilities he spends $120 per month on electricity, $130 per month for cable television and Internet, and $330 per month for two cell phones. So the total comes to $3,933 per month for two people, or $1,966 per person. There was a total upfront investment in cash of $300,000 dollars to buy the condo and his vehicle. So, the bottom line is – A retired man and his girlfriend live in downtown Panama City for $1,966 per person, per month.
• Living On A Farm in Boquete: A single American man lives on his farm in Boquete. He has a live-in girlfriend who spends a lot of time with him, especially on weekends, so these expenses are for two people. He bought a working (income producing) four acre coffee and citrus farm upfront for $350,000 in cash, and he also bought a new car for $21,000 in cash. Property taxes are $150 per month. Utilities are $5.35 per month for propane gas, $40 per month for electricity, $2.50 per month for water, $8.95 per month for Netflix, $25 per month for a cellphone contract and unlimited data. He spends $200 per month for fuel, $50 per month for auto insurance, $20 per month for home insurance, $300 per month for groceries, and another $300 per month on restaurants, entertainment, and dining out. There is also a $60 per month cost for a wireless Internet connection – more expensive because of the relatively remote farm location. One half-time farm worker costs $260 per month, including Social Security payments as required by law for an employee. Other costs for $50 per month were listed as “miscellaneous”. There was an up-front investment of $371,000 to buy the farm and the car. Their total monthly expenses are only $1,471. So, the bottom line is – A retired man and his girlfriend live on a working coffee and citrus farm in Boquete for $735 per month, per person.”
• A Retired Couple Living On The Beach: A 55 year old man and his 45 year old wife live in Ojo de Agua, which is near the Playa Venao on the Azuero Peninsula, Panama. They bought their house for $27,000 cash about six years ago and invested another $10,000 in cash to remodel the house while they both continued to work in the US, before they could retire. They bought a truck for $12,000 cash in 2009, and they both have been living here full time for the past two years. They pay $56 per month for vehicle insurance, full coverage. Utilities are $40 per month for electricity, $11 for water, $55 for Skye TV, $25 for Internet through a Cable & Wireless USB connection, $30 in cell phone cards, and $60 for life insurance. They spend about $160 per month for fuel, used to drive to Las Tablas, visit friends, or to go to the different beaches in the area. They spend $200 per month on groceries and household supplies, and another $300 per month on restaurants, dining out, and “my husband’s cerveza.” They budget about $2,000 per year for international travel to visit the United States. “Give or take an ice cream here and there our living expenses for Panama is $550 a month per person. It would be more affordable if my husband would give up the Atlas and if we stopped eating at the beach everytime we go! But it is for those things that we love it here!!” I see an initial cash investment of $49,000 for the house, remodeling, and car. Their monthly expenses are just over $1,100 total. So, the bottom line is – A retired couple lives on the beach in Panama for $550 per month, per person.
• A Retired Man Lives On His Social Security Check in Downtown Panama City: A retired American male has been living in Panama City for the past five years. He bought a new two bedroom condo in El Cangrejo for $150,000 dollars cash, so there’s no monthly mortgage payment. He also bought a new car for $18,500 and a motorcycle for $1,500 dollars in cash, so no monthly payments there either. His only source of income his his monthly Social Security check, so he has to “watch every dollar.” His monthly expenses are $126 in condo fees, $75 for Internet and cable television, $65 for electricity, $300 for food, $60 for gas for both the car and motorcycle, and $24 for insurance. He lists another $100 per month as “miscellaneous” monthly expenses. He said “I live very comfortably on $750 per month, and I don’t skimp.” He spends the remainder on discretionary items such as travel and partying. His total up-front cash investment was $170,000 for the apartment, car, and motorcycle. So, the bottom line is – A retired man lives alone in his apartment in Panama City for $750 per month.
• Off The Grid in Bocas del Toro: A retired husband and wife live on an island in the Bocas del Toro archipelago in the Republic of Panama. They spend $100,000 to buy the property and another $150,000 to build their home. They have no monthly utility bills because they live “off grid” using solar electricity and a rainwater catchment system. They report regular monthly expenses of $100 month for transportation (truck and boat); fuel and maintenance; $450 month food costs (groceries, beer, wine & eating out); $150 month for yard, agricultural work; $100 month lawyer fees for “typical Bocas stuff”, and $20 month for propane. They had an initial up front investment of $250,000 for the property and to build the house. Their total monthly expenses are $820 per month. So, the bottom line is – A retired couple lives on an island in Bocas del Toro for $410 per person, per month.
• A Family of Five in Veracruz: A young working couple and their three kids live in a house they bought in Veracruz, located just outside of Panama City. They paid $23,000 or 10% down to buy the house, and then spent an additional $60,000 on repairs, remodeling, and upgrades. They spent $24,000 cash to buy two cars, one of which is paid off and there’s still a loan on the other one. Their monthly expenses are $1,600 for the mortgage, $257 for life insurance (related to the mortgage), $90 for fire/flood/content insurance as required for mortgage, real estate taxes $165. Monthly car payment $330 which includes insurance. Insurance on the second car is $100 per month. Diesel for both cars $280 per month. Health insurance is $120 for the entire family. Private schools cost $600 for three kids. Electricity is $350 per month. Garbage pick up $12 per month. Internet is $30 per month. They spend $130 per month for Satellite TV, and subscribe to two different services. Food and household supplies $1200 per month. A maid costs $200 per month, five days a week, mornings only. And a gardener is $80 per month, only one day per week, full day. They put down $107,000 to buy the house, fix it up, and buy two cars. Their total cost of living expenses are $5,544 per month. So, the bottom line is – A working couple and their three children live in Veracruz for $1,108 per person, per month.

Analysis And Crunching The Numbers: It’s becoming pretty clear two primary factors have the greatest impact on the bottom line cost of living in Panama. The first is how much money you are able to invest up front. If you can afford to buy your home and car in cash, then that eliminates a lot of monthly fees for mortgage payments and the associated insurance required when you have a bank loan. So, buy putting more down up front greatly reduces your monthly expenses. No real surprise there, but it’s interesting to see that fact reflected in the monthly spending habits being reported. The second greatest factor is how the monthly “burn rate” changes depending on how people choose to live. If you buy your groceries in the supermarket, do your cooking at home, and don’t spend too much on restaurants or dining out then you can greatly reduce the monthly cost of living in Panama. Conversely, there’s literally no limit to how much you can spend, if you want to.

How Many People And Average Cost Per Month: This second installment covers the living and spending habits of fourteen people in the Republic of Panama, in six different family groups. Of those, eleven are adults, and three are children. There’s one single man, two guys living with their girlfriends, two retired couples, and a family of five. Their average per person monthly living expenses range from a low of $410 in Bocas del Toro to a high of $1,966 for an ocean view condo in Panama City. The average per person monthly cost of living for this group was $919 dollars. That’s slightly lower than what was reported in the first group. And so far the average between the two groups – covering a total of thirteen families and 31 individuals – is a monthly cost of living in Panama of $1,024 per person, per month.

Don’t Agree? Are Your Numbers Different? If you’re reading these articles and if the situations being described and their associated costs of living vary greatly from your own experience, then by all means please send me an email and let me know.

Keep Those Reports Coming: I think this is some great stuff. More reporting will make the analysis more accurate. Please remember to include the total number of people living under your roof. Let me know your cash expenditure up front for big ticket items, spent to buy your home or cars. Then break down your actual monthly expenses, add them up, and divide by the headcount. It’s a pretty simple formula, actually, and I’m really liking the results so far. Thanks again to those who have participated. I’ll do another update when I get about six or seven more inputs. Keep ’em coming.