Uh-Oh… Our Retirement Expenses Are Higher than Expected

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Uh-Oh… Our Retirement Expenses Are Higher than ExpectedRetirement expenses are a tough one to plan for in life.

You can budget for what you think your expenses will be, but you really don’t know if they’ll be more or less.  The biggest reason is that your life will likely be dramatically different at the time.

This is probably even more on par the younger you are when you leave the workforce because you’re likely not going to be resting on your laurels.  Not only would you be trying your hand at all sorts of projects (some that cost money or transportation), but there’s a lot more time for changes to occur.

And by changes, I mean that you have a longer amount of time for your likes and dislikes to transform.  Maybe you’re a frugal person today, but once retired your hobbies lead you to some costly obsessions.

Nothing wrong with any of that, but it’s important to realize that it’s unknowns like this that can throw off your retirement expenses.  And if they get out of whack too much, it can possibly break your entire retirement plan and send you back to the rat race.

So obviously, planning well is essential but can be tough to do successfully.  For us, it’s even a little tougher because we moved to Panama where we really had no idea what our costs would be – only the educated guess that it would be less expensive than it was in the United States.

Now that we’re becoming a little more settled, I thought I’d fill you in on what our retirement expenses are costing us.


Why are we only hearing your retirement expenses now?

Being an early retiree is exciting.  It’s also something that not too many folks are blogging about.  Most of the sites you’ll find out there are from those in the FIRE (financial independence / retire early) community who are on the path but haven’t made it there yet.

As such, I like the idea of sharing information that could be helpful for you to learn from (both the things I’m doing right and the things I’ve been doing wrong).  I’ve been wanting to share our retirement expenses since I left my job almost a year ago.

The struggle has been that we’ve been on a financial roller coaster ever since I left my career.  Between selling our house and moving into a smaller apartment, using up the last of all our pantry, heading out on our July adventure, and then moving to Panama, our costs have been all over the map.

Uh-Oh… Our Retirement Expenses Are Higher than Expected - Great Wolf Lodge
Just another great memory of Great Wolf Lodge from our July adventure!

Then to top it off, I finally parted ways with Quicken and moved on to Empower (formerly Personal Capital).  That was a good move and I love Empower (formerly Personal Capital), but it doesn’t do a good job of handling the abundance of cash transactions we do in Panama.  It threw my game off and I couldn’t get a handle on our expenses for a while.

I’m now using Mint for keeping track of our spending and Empower (formerly Personal Capital) to manage our investments.  It works well for me and I’m happy with this solution, but the transition made tracking my expenses difficult.

But here we are.  We’ve been in Boquete, Panama for about three months now.  Our numbers have (mostly) settled from buying things we needed once we moved into our new place.

I now feel like what we’re seeing should be a fairly accurate projection of what we could now expect every month.  Obviously, our retirement expenses will go up and down over the months as does everyone’s costs.  However, I think it’s fair to share my October costs to give you an idea of what I’m seeing.


Our retirement expenses for the month

Ok, let’s lead with our total expenses for the month…


Be aware that I keep my three businesses separated out and not in these numbers.  The $3,468, along with the screenshots you’ll see, are strictly the personal costs that our family of three has here in Panama.

Here are the category breakdowns…

Uh-Oh… Our Retirement Expenses Are Higher than Expected - Budget for October

I’m not a budgeter, and this was our pilot month of pulling numbers out of the sky, so you can ignore the “goal” numbers, too.  I may start tweaking this a little bit down the line, but honestly, I’m not too concerned with that.  We’re careful spenders and I don’t want to spend my life micro-managing our retirement expenses.

The two important pieces here are

  1. The amount spent within each category should be pretty accurate
  2. Our total expenses were about $3,500.

To break this down a little bit, let’s hit on the major expenses that we have:


Our monthly rent at our apartment in Boquete, Panama is $1,100.  Right off the rip, that accounts for almost a third of our entire retirement expenses for the month.

You might also notice that we have a second line item under Mortgage & Rent for $118.49.  That’s the monthly rent for our storage unit in Ohio.  We’re planning to keep that unit for this first year until we decide if we’re staying in Panama for the long haul or heading back.

If we decide to stay, we’ll sell everything off.  Otherwise, we’ll empty it and take the stuff to whatever place we might get in the States.  Just part of the cost of moving out of the country!



$678 might seem like a good chunk of change on groceries… well, at least it is for us.  We’re used to shopping at Aldi and our costs for groceries have been a lot less than this per month for years.

But, it’s important to remember that we’re still building up from nothing.  We moved here with no food – nothing in the fridge and nothing in the cupboards or pantry.  We also didn’t start any major grocery shopping until we moved into our new apartment here a couple of months ago.

Every time we go to PriceSmart (Panama’s version of Costco), we buy extra to have on-hand.  We’ve gotta build up some goods for the pantry!

Finally, I’m also not picky about splitting up costs in Mint.  For example, when we go to a store and the majority of the purchase is groceries, I just lump the whole thing as groceries.  I’m just looking to get a ballpark on things, not to spend my whole life working in Mint.

Anyway, as the shelves in our place are getting full, I imagine this number will start to go down.  And as time has gone on, we’re now figuring out the cheapest places to buy fantastic fresh fruits and vegetables, which should make a dent in this category, too.


Health & Fitness

I use this category for all our healthcare and insurance.  So when you think about that, less than $360 for everything ain’t too shabby in our retirement expenses!

We spent a lot of time figuring out how we wanted to handle insurance while living as expats in Panama.  We didn’t really need anything while in Panama unless we ran into something catastrophic like a cancer diagnosis.

However, we did want to have coverage when we come back to the U.S. to visit – think of a bad car accident while in town or something along those lines.

For now, we decided on expat insurance to satisfy both of these thoughts.  At around $300/month, we’re covered anywhere in the world.  That’s a worthy cost in my book and less than a lot of folks in the U.S. pay even for subsidized premiums through their employer.

So, those three entries will stick around every month for the time being.



Ok, I’ll admit it – we’re eating out more often than we have in a long time.

It’s a tough one – we’re in a fantastic country that’s still new to us in a city with so many new and different restaurants to try.  Add in that we love walking around town and we have more time on our hands and… well, that usually leads to a little more dining out.

I’d like to say that this category is going to decrease, but I’m not so sure.  We enjoy eating out here and the prices aren’t too shabby.

We played a little bit of dress-up one evening and went to a fancy restaurant here in Boquete called Boulder 54.  Even with the pricier food (compared to other places here) along with a couple of drinks each and the total still was less than $100 for the three of us, including the tip.

Uh-Oh… Our Retirement Expenses Are Higher than Expected - A Night at Boulder 54
Enjoying a night out at the Boulder 54 restaurant in Boquete…

You’ll see that most of the other places have been some cheap meals for us.  I’m sure we’ll use this as part of our flexibility on where to cut back when we run into some bad times in the market.  But for now, it’s a nice splurge and part of the joy of early retirement for us.


Auto & Transport

Barely over $100 for one month for transportation?  That’s a steal for sure!

We don’t have a car here and you’ll find taxis and busses galore.  Even with how cheap and readily available you can get transportation is here in Boquete, we still walk most of the time.  It’s so beautiful outside and it’s great exercise, so why wouldn’t you?

The exceptions are really if the distance is too far, it’s pouring down rain (even then only sometimes), or if we bought something too heavy to try to carry back with us.  Other than that, we even walk back with our groceries or whatever else we’re doing.



Nothing too exciting in the “Kids” category for the month.  Funny how the pundits and critics always talk about how it’s impossible to retire early with kids!

We decided when I retired from the good old 9-5 that we would continue to contribute a small amount to the 529 plan we have set up for Faith.  That accounts for most of the minuscule amount in this category.

The Boquete Equestrian Center is where she’s been doing horseback riding.  Since we’re homeschooling and also in living an area with very few kids, we’re good with her doing this activity.  She loves it and it’s a good chance for her to socialize with other kids and make some friends her own age.


Is retiring in Boquete, Panama cheap?

Haha, it depends on your perspective!

As you can see by our numbers, if this becomes our new norm, we’re on track to spend about $42,000 per year.  That’s pretty mild for our retirement expenses considering how much I feel like we’re living the “high-life.”

But, I had no idea what we’d be spending when we got here because Panama was obviously completely foreign to us.  I anticipated and was hoping that we’d be spending around $30,000 per year here.

So yeah, that means I was off by about $12,000… ouch!

However, $42k/year still puts us way below the $55,000 per year that we could theoretically spend without depleting our portfolio.  That’s based on the 4% rule on our market portfolio plus the expected income from our rental property.

Most importantly, we’re spending more freely right now than we’d usually do.  We’ve only been in Panama for a few months now.  My guess is that as we continue to settle, our retirement expenses will continue to decrease by at least a little bit.

Uh-Oh… Our Retirement Expenses Are Higher than Expected - Boquete, Panama Sign
Just hanging out at the Boquete welcome center!

Now, as far as the cost of Boquete, Panama being cheap or expensive, it depends on a lot of factors.  First off, I think it’s definitely less expensive than the cost-of-living in many U.S.-based cities.  But it could also be even cheaper (or more expensive) depending on how you live here.

For instance, our apartment is more expensive than a lot of places in Boquete.  If we had lived in a more “Panamanian” type of place (a casita), it’s likely our housing cost could be around $750 instead of $1,100.  On the flip-side, we decided not to rent a beautiful home that was $1,600 per month.  That would have cost us an extra $500 every month!

In the long-run though, we decided on this place to take advantage of the amenities and the proximity to town.  Seeing as we don’t have a car, we’re doing very well in the categories of housing and transportation combined.  These are generally the two biggest expenses people have so being careful here is very helpful to us.

So, overall, we’re spending a little more than I projected and that’s never good.  But we’re still in what I’d consider our safe zone and that’s all while spending on a lot of unnecessaries so that’s extremely encouraging.

We’re loving life here and enjoying the beauty of this country.  At a cost of about $3,500/month, I’m thinking we have a great deal going on!


Would you have expected the retirement expenses in a place like Panama to be cheaper or more expensive than $42,000 per year?


Thanks for reading!!

— Jim

You know you wanna share this!!

20 thoughts on “Uh-Oh… Our Retirement Expenses Are Higher than Expected”

  1. The screenshots are very helpful. What do you envision your travel budget to be? If you are back in the US and then on a cruise, that may put you over than 42k. I’m glad the family is enjoying the new life. I appreciate your posts and you are right that most sites focus on getting to FIRE rather than retired early and what those expenses look like versus your estimate while working. I look forward to your continuing updates! Enjoy!

    1. Hi, Kevin – for the time being, we put our travel budget at about $350/month. We don’t really anticipate a steady number like that though – some months will be nothing and some months may be more than $350. The good news though is that we’ve accumulated a huge amount of miles/points from travel rewards before we left, so it’s making the trips dramatically cheaper.

      I also have a big “secret” that I’ll be sharing when we get back to Panama that may actually slice our travel costs even more! 🙂

      1. I love the travel points. We are in Hong Kong working now but will fly to the US three times in the next 4 months and total airfare was like $140. I had budgeted $1k/month for travel in retirement and think we can be at $40k/year. All while converting 401k to Roth to be totally tax free at 70 and under 2% while converting. Excited to hear your next announcement.

  2. My anxiety went up after looking at your expenses. I always think about my situation …I guess I need to work more 🙂 so I could retire in a few years. Talking about not micromanaging the budget, I am sure you are aware you could set the budget monthly with Personal Capital. I like it for I will know at-a-glance if my expenses hit the budget or not. Also, if you categorize the expenses correctly you still could group them together like the Mint. Anyway, I heard that budgeting is the weakness of personal capital. I hope they could make it as attractive and usable as Mint. Enjoy your time in the US!

  3. I think you are right that your food expenses will go down when you are there longer. I’m a more traditional retiree with a pension but not yet old enough to get into the 401k. The first year we retired we bought a small condo in Florida away from the snow in upstate NY. Food is more expensive in Florida and with a small space we don’t have room to buy in much bulk. But we aren’t spending as much in utilities up North as we would if we were spending the winter. It’s a give and take situation. The sunny weather here is definitely better than the dreary North! Enjoy your trip back!

    1. I like to hear that the food expenses will likely go down over time, Nancy – every little bit counts! That surprises me to hear that good is more expensive in FL than NY, but I guess that depends on the areas in general as opposed to the specifics (like NYC might be!). That’s great that the give-and-take is working out – enjoy the nice Florida weather! 🙂

  4. Appreciate you sharing. Our expenses are nearly identical. Just read this aloud to my wife in Bali. Our FIRE rental budget is $1,000/mo. Since we were able to get a high-rise condo in Chiang Mai, Thailand, for $659 (October), we splurged on a place in Bali this month. Breakfast included + room service (~$2.15/meal) + daily maid: $1266. Averaged $962.50 for two months. Our big expenses are flights & weekend getaways from getaways. Cheers out!

  5. One month doesn’t make a trend so give it a few months. $42k seems a little high but it all depends…

    Since my layoff I’ve been tracking everything to see if I can be “done” and with a few adjustments will be well below that figure in Ohio. But as you know, the weather is not even close to being what Panama has. This month has been higher for us because I put snow tires on one of the cars☹️

    1. I’m with you that $42k seems pretty high, but we are living a really nice lifestyle right now. I’ll be curious to see how things look after a full year there – hopefully, the number settles and moves down a bit!

      Ah, the joy of snow tires! A number of years ago, I had bought a set of extra wheels (winter tires and rims) because my car was horrible in the snow. It was nice because I could then just swap ’em out myself instead of having to take the car in. Around the end of November and the end of March, I had the fun of jacking up the car, changing out the wheels, and then resetting the TPMS (which was a project in itself). I’ll be honest, I don’t miss it! 😉

      1. I’m glad I put them on. My son goes to the community college and we got a lot of snow a week or so ago, almost a foot. Everyone else was having issues and he was fine.

  6. If you look at International Living, which is the resource I credit with finally getting me to seriously invest in Costa Rica, they’ll say a couple can get by in Panama for $2500, but they also caveat that it depends on level of accomodations, frequency of eating out, etc. So $3500 for a family seems great. We recently spent a full month in Costa Rica and already spent $3500 but we still maintain our primary in the US (including much more costly medical). So $3500 seems reasonable and at $42k per year, that’s still within reach with a $1 MM portfolio, depending on how aggressive you’re willing to draw down. Good luck on your new location!

    1. Very true, Caroline – we could absolutely get by on less, but with our standard of living, $3,500/mo. ain’t too shabby! 🙂 I’m not as familiar with the cost-of-living in Costa Rica – I’m sure it varies by region, but do you know if it’s generally more or less expensive than Panama?

  7. Hey big spender! 🙂

    OK, I’m only kidding! This really isn’t all that bad. You spent less than me in October!

    I’m actually surprised you spent almost $1000 on food/groceries in a month. I was expecting Panama to be a bit cheaper actually.

    Thanks for sharing your numbers Jim!

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