According to the US government, the average retired couple gets $2,100 per month, so that's what I based my numbers on. If you get more than that, congratulations. If you get less, there are some ways to cut corners without feeling the pinch.
I've estimated this budget on a two-person household who live in a 1- or 2-bedroom apartment in a secure area in the Coronado Beach Region. I'm a big proponent of apartments for expats because you don't have to worry about maintenance, security or falling off of a ladder. Plus, if you want to travel, you can just lock-it-and-leave-it. Plus, you can get an apartment that is beachfront or ocean view that fits into these budget numbers.
- Rent or mortgage, $900: If you buy an apartment outright, you'll obviously have more disposable income at the end of the month. That is always my recommendation if you can swing it. An average rent amount can be anywhere from $600 - $1000 per month, but if you buy a $200,000 condo, your payments and monthly administration fees will be somewhere in the neighborhood of $900 per month.
- Utilities, $50: Utilities will vary depending on how much you use your air conditioners. If you like it warmer, plan on a much lower utility bill.
- Transportation, $25+: The least expensive way to get around is by taking taxis. They're cheap, and plentiful. If you live in Panama City or Coronado, you can take regular excursions to the grocery store, the golf course and dinner for just a few dollars per ride. You can even take an air conditioned bus from the Coronado Beach area into Panama City for just $2.50. If you want to have your own car, insurance is less expensive than in N. America, and even if you drive somewhere every day, the short distances involved mean that your gas tank won't take a big bite out of your budget.
- Food, $300: Food is another area that can vary greatly depending on your eating habits. If you eat like a local with a diet rich in fish, chicken, eggs, beans, rice, and local produce, you'll eat well for $300 per month. To give you an example, I go to the produce market once each week and fill my SUV with fresh pineapples, basil, onions, peppers, potatoes, lettuce, cabbage, eggplant, mangoes, bananas and plantains for about $20 per week. When I go to the fish market, I can get fresh Corvina for $1 per fish. Of course, then I go to the wine store and blow my budget, but we all have our little splurges.
- Cable & Internet, $50: Basic cable and Internet service will get you plenty of channels to watch and Internet that's fast enough to surf the web and send emails. If you want to spend another $8 per month, you can get Netflix and watch streaming movies.
- Health Insurance, $250: I think that insurance is a form of legalized gambling, but it's one of those necessary evils that we all have to have.
Another thing to consider is the discounts you'll receive as a retired pensioner in Panama. All you need to do is apply for the visa. (I've got a great lawyer if you need a recommendation. Just email me.) You will get discounts on everything from movie tickets to restaurants to electricity.
Another way to keep your entertainment budget down is to use the Panama daily deal site, Oferta Simple. You can get deeply discounted massages, restaurant meals, and hotel stays. I even used an Oferta Simple to get my teeth cleaned for $12.
According to this budget, you've spending $1,575 per month to live in a nice apartment in a beautiful beach area. If you're living just on social security, you have a little more than $400 per month for extra things, such as manicures and golf. You won't need to budget for airline tickets because your entire extended family will want to see you once you live in Paradise.