How to retire in Costa Rica
Wondering why and how to retire in Costa Rica?
Would you like to find a place to retire where your pension goes a lot farther than in the United States or Canada, and where the scenery is spectacular and beautiful? Somewhere you can afford to live like you always dreamed of living during your retirement and somewhere with many natural wonders to explore? Then, consider joining the thousands of American and Canadian citizens who are choosing to retire in Costa Rica. Spending your "golden years" in that peaceful, Central American country can be stress-free, interesting, and surprisingly affordable.
Costa Rica allows American citizens to stay in their country up to three months before applying for residency status. The country has two main residency designations that apply to those opting to retire in Costa Rica: a “pensionado,” or retired status, and a "renista." For "pensionado status, you must receive a minimum $600 monthly income. The “renista” status requires that you earn a minimum of $1000 a month for at least five years. Status cards are issued to foreign residents and must be renewed every two years at a cost of around $100. Both categories allow you to own and draw income from a business inside the country, but prohibit working for anyone else without a special permit.
A Low Cost of Living
For people accustomed to paying the high prices for gas, heating oil, housing, and food in the United States, particularly the northeastern states, retiring in Costa Rica is a bargain. Single family residences in middle-class Costa Rica neighborhoods are priced much less than comparable housing in the U.S., with monthly rents starting at around $300. In addition, hiring help around the house – a maid or a cook – is within most American retirees' budgets, costing around $200 per month for a full-time employee. Savings are also realized on utilities; they are about 30 percent less than in North America. What's more: Costa Rica’s temperate climate eliminates the need for expensive winter heating oil bills and the cool mountain air and sea breezes mean help cool your home in the summer. Public transportation is plentiful and inexpensive. A cross-town bus in San Jose, Costa Rica's capital, costs just 25 – 50 cents. Bus fares from San Jose to the provinces are usually under $10.
Additional savings may be realized by learning to live as the Costa Ricans do. Buying local produce, drinking Costa Rican beer, and walking rather than driving can reduce your expenses ever more. The average middle-class family in Costa Rica earns between $500 and $2000 per month. Anyone earning more than that amount is considered upper class in Costa Rica. If you retire in Costa Rica with an income of $2000 per month or more, you can really live in style
Dealing with Taxes
Costa Rica's tax system is friendly to foreign nationals residing in the country. Foreign residents living in Costa Rica are not taxed on income that’s earned outside of the country. For homeowners, property taxes, levied on your property’s street frontage, vary from one municipality to another, but are never over $10 per month per residence. Money earned within Costa Rica, either from your own business or from working for someone else, is subject to the country's income tax. Significantly simpler than the U.S. tax system, the Costa Rican tax is based on a two tiered, 10 percent and 15 percent, system with minimum deductions.
If you choose to retire in Costa Rica, understand that it will not be the same experience you would find in Phoenix or Sanibel Florida. In addition to being less expensive, retiring in Costa Rica can be a chance to learn a new language, a new culture, and explore the beauty of this friendly Central American country.
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