Want to retire to a country known for lush landscapes and friendly locals? If so, you may want to consider Colombia. It’s become a favorite destination among American retirees in the last decade. Before you pack up your life to retire in Colombia, though, there are some details you’ll want to be aware of, including the cost of living, immigration laws, health care and more. Here’s what you need to know.
A financial advisor can help you put a financial plan together for your retirement goals and needs.
Average Cost to Retire in Colombia
It’s often challenging for retirees to maintain their lifestyle while in retirement due to living on a fixed income. Fortunately, Colombia offers retirees an affordable yet comfortable way of life. According to Numbeo, a website that collects pricing data from citizens, you’ll need to budget (excluding rent, but including food, utilities, transportation, and recreation) around $250 per month for living costs. In more expensive cities like Bogotá, Medellín and Barranquilla, you may expect to spend a bit more, and you can expect to spend a bit less in cities like Bucaramanga or Pasto.
Utility costs include garbage service, electricity and water, which average about $70 for the nation of Colombia according to Numbeo. The national average costs for broadband internet with unlimited data is $30, which can help you connect with your loved ones.
Rent is about three-fourths lower in Colombia than in the United States. The national average for an urban one-bedroom apartment is about $265 per month and about $210 per month for a suburban apartment. If you want more space, the national average for a three-bedroom apartment is about $470 per month in a city center and roughly $365 per month in the suburbs.
However, rent prices will vary depending on what city you choose. For example, a one-bedroom apartment in the city center of Bogota averages about $365 per month.
Healthcare in Colombia
Healthcare is a common concern for many retirees who wish to move aboard. Luckily, Colombia has good healthcare options available. Colombia has clinics and hospitals in major cities, and many have bilingual doctors. While Colombia has several types of medical coverage available, two are available for non-Colombians.
The first is Entidades Promotoras de Salud (EPS), a public healthcare system mandatory for all residents, and the other is Medicina Prepagada, which is public health insurance available through different private lenders. Foreigners must have a resident ID card to apply for EPS. With a private Prepagada policy, a passport is enough.
If you are over 60 years of age or have specific pre-existing conditions, it’s possible to be denied coverage from Medicina Prepagada. Those who don’t qualify for Prepagada insurance may want to explore a global health insurance policy.
The visa that most expatriates use is the pensionado visa (TP-7). The visa costs roughly $282 and has a few requirements that retirees must meet to receive it. To qualify, retirees must prove that they have an income of at least three times the minimum salary in Colombia. If you are not earning a full-time income in retirement, do not worry. Your Social Security, pension and retirement savings account income that comes in each month counts as income.
There are also a few documents that you must show to receive a visa. These include:
- A valid passport with at least two open pages and an expiration date of at least 180 days in the future
- Copy of passport ID page
- Copy of passport page with your most recent trip to Colombia
- Proof of pension from either the U.S. government or a private company
- Additional passport photo
Individuals can apply for a retirement visa online or at a Colombian embassy or consulate in the United States. Once you have received your visa, you must apply for a foreigner ID called a Cedula Extranjeria within 15 days. The TP-7 visa is good for a year and will need to be renewed each year. After five years, visa holders are eligible for a resident visa. The resident visa is good for five years.
Housing in Colombia
One of the biggest factors in moving to a new country is procuring housing. Fortunately, the home buying process is very similar to the United States, and is relatively simple: all you need is a valid passport and enough funds.
On the other hand, it can be very difficult to obtain a mortgage in Colombia. The safest option is to plan to pay for a house or apartment outright. To qualify for a mortgage, you must have at least a few years of credit in Colombia and have established permanent residence. On average, a home in Colombia costs almost $110 per square foot in a city center and just under $95 per square foot outside of a city center. For a comparison, a home in the U.S. costs three times as much in the city center (just over $330 per square foot) and twice as much outside of a city center (almost $200 per square foot).
Housing Process in Colombia
The process of buying a home in Colombia is the same for foreigners as it is for locals. Buying a home can also lead to receiving a residency permit, so many people are choosing to purchase homes in retirement rather than rent.
As you begin your search for the perfect city, neighborhood, or area to live in, be sure to also find a good realtor and lawyer. These individuals will help you navigate the home-buying process and will be able to help you avoid purchasing a property that has legal claims or other issues.
When you have found a property that you would like to purchase, your lawyer can help you to get a Certificate of Tradition and Liberty. This document contains all the information about the property, including any debts on it, ownership records, and other important information. The Certificado de Tradicion y Libertad costs about $5.
When you purchase a property, you must pay taxes and fees that amount to about 1.65% of the value of the property. The seller also must pay taxes and fees that equate to about 4% of the total value of the property.
Taxes for Retirees in Colombia
Expats who reside in Colombia for less than six months (183 days) will only be taxed on any income they earn directly from Colombia. They will pay a flat tax of 35%, no matter what their income level is. However, for those who reside in the country full time, they will be taxed according to their income level, ranging from 0% to 39%.
Keep in mind that even if you live outside the U.S., you’ll still need to file a U.S. tax return as an expat. You’ll also have to file even if you don’t end up having to pay any U.S. taxes. It’s unlikely you’ll have much income originating from outside the U.S. in retirement. If you do, however, you can use a few different provisions to reduce your U.S. taxable income. These include the foreign earned income exclusion, the foreign tax credit and the foreign housing exclusion, among others. If you’d like to forecast your tax burden more specifically, you may want to consult a tax expert familiar with both U.S. and Colombian tax laws.
Colombia is a popular place for Americans to retire. The country is safe, stable, and the locals are incredibly friendly. Additionally, Colombia costs less to live in and purchase a home in than the United States. Be sure to consider the cost of living, visa and immigration laws, and where you will live as you decide if retiring in Colombia is right for you.
Tips for Retirement
- Consider talking to a financial advisor about the pros and cons of retiring outside the United States. Finding the right financial advisor who fits your needs doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- An essential part of saving for retirement is making sure the money you save remains untouched. Dipping into your savings may seem tempting if you’re low on cash, but you’ll pay for it down the line. Consider creating an emergency fund instead.
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