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retiring in costa rica

No matter your age, you’ve probably dreamed of retiring on a sandy beach somewhere at some point. Perhaps you’ve started planning your retirement in Florida or San Diego. But have you ever thought about retiring abroad to Costa Rica? We bet you are now! Retiring to Costa Rica has proven to be incredibly affordable for Americans. Let’s take a closer look at the costs of retiring in Costa Rica.

Average Cost to Retire in Costa Rica

The average cost to retire in Costa Rica totals around $1,500 per month or $18,000 a year for an individual retiree. The cost is typically given in a range from $1,300 to $1,700. If you and your spouse want to retire together, you can easily do so for about $2,500 a month. This includes housing, transportation, medical care and food

To be sure, the lifestyle you plan to live will determine how much a Costa Rican retirement will actually cost you. For example, if you choose to run your air conditioning 24/7 or eat out at restaurants every night, your retirement will cost more. Luckily, the country’s lower cost of living (compared to the U.S.), means your savings can go a lot further especially if you choose to live modestly. So if you’re buying your groceries at local markets to cook at home, you’ll find you can easily spend under $200 a month on food.

Retiring in Costa Rica – Emigration Programs

retiring in costa rica

For Americans, Costa Rica is just a short plane ride away, making the journey there easy enough. But once you’re there, you’ll need to have the proper paperwork in order to stay and enjoy your retirement.

Your first resident option is enrolling in the Pensionado Program, which is made for retirees. To qualify, you’ll need a monthly income of at least $1,000 from a pension or retirement fund. You’ll then have to transfer those funds into a Costa Rican bank account and exchange it into local currency. Then you can withdraw and spend it during your stay.

Your second emigration option is the Rentista Program. This may work better for those who don’t have enough fixed retirement income. You can qualify if you provide proof of a current cash balance of at least $60,000 or a monthly income of at least $2,500 for two years. Again, you must transfer the qualifying funds into a Costa Rican bank account to be able to withdraw and spend.

The third and last option is the Inversionista Program. This requires you to immediately invest at least $200,000 in an approved Costa Rican business or property.

Each of these programs charges a $250 application fee in addition to their income requirements. Plus, the consulate will charge $40 per document for authentication along with fees for document translation, notarization and obtaining official documents. You will also have to renew your program status every two years, which costs $100 for each renewal. You must provide the same income information and documents for each renewal. After three consecutive renewals, you can apply for permanent resident status.

Retiring in Costa Rica – Housing

Most American retirees in Costa Rica choose to rent instead of buying a home or apartment. For a small home or condo in a city, you can expect to pay between $300 and $850 per month in rent. If you’re looking for something bigger or if you have more funds in your housing budget, you can find larger homes from $1,200 to $2,000 per month. On the other hand, you can find dwellings up to 20% cheaper outside of a city center.

While more uncommon than renting, buying a home in Costa Rica is also an option. A reasonably sized home can cost around $75,000, while a larger home with more rooms and amenities can reach up to $300,000. Utilities, like water, electricity and garbage collection, typically total an extra $75 per month. Costa Rica also boasts solid Internet service, with unlimited coverage costs reaching about $50.

How to Save for Your Retirement

retiring in costa rica

No matter where you want to retire, saving for retirement throughout your life is a crucial part of your financial health. The average retirement account balance in the U.S. was around $201,300 in 2013, according to the Federal Reserve. In addition, retired Americans receive about $1,300 a month in Social Security benefits (as of October 2016). Due to the lower cost of living in Costa Rica, meeting these amounts can cover the average annual cost of $18,000 to retire there. Again, living more modestly in retirement will help your money last longer. You can also choose to save more towards your retirement so you can afford a bigger house or more fun excursions.

Unlike the U.S., Costa Rica offers universal healthcare. The government-run system, known as Caja, charges residents a low monthly fee based on your income. This fee covers doctor’s visits, medicines, surgeries and more. This means you won’t need to worry about saving extra tens of thousands of dollars to cover the medical expenses that arise later in life. You may choose to visit private clinics or hospitals, which you can pay for in cash, and sign up for a private health insurance plan.

To get your retirement savings started, you should take advantage of your employer-sponsored 401(k) if you can. You should also contribute as much of your paycheck as you reasonably can to maximize your savings. If you don’t have a 401(k), or to even supplement those savings, consider opening an IRA, or individual retirement account. Again, it helps to contribute as much as you can to these accounts. Not only will it boost your savings, but it can decrease your tax burden for the year, as well. If you find yourself needing help to maximize your savings, it can help to find a certified financial planner, or CFP, an advisor who can help you plan for retirement.

The Takeaway

Retiring in a foreign country like Costa Rica (or Mexico) offers Americans an opportunity for the good life at a cheaper price. Rents, food and healthcare are much cheaper than in the U.S. This helps you stretch your savings much further once you’re relying on your fixed monthly income in retirement.

Tips on Saving for Retirement

  • If you ever find yourself needing financial help, a financial advisor could really come in handy. An advisor can help you maximize your retirement savings and investments. A matching tool like SmartAsset’s SmartAdvisor can help you find a person to work with to meet your needs. First you’ll answer a series of questions about your situation and goals. Then the program will narrow down your options from thousands of advisors to three fiduciaries who suit your needs. You can then read their profiles to learn more about them, interview them on the phone or in person and choose who to work with in the future. This allows you to find a good fit while the program does much of the hard work for you.
  • No worries if you want to take a more DIY approach to your savings, though. A retirement calculator like ours can give you a specific goal to start saving toward.

Photo credit: ©iStock.com/JoséAndrés 22 CR, ©iStock.com/DavorLovincic, ©iStock.com/monkeybusinessimages

Lauren Perez, CEPF® Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.
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