Tips for Retiring in Costa Rica

Costa Rica has long been a popular retirement destination for foreigners. Many come to enjoy the warm weather, beautiful beaches, and lower cost-of-living; a paradise of palm trees at discount rates. 

The truth is, Costa Rica can be an excellent place to live for foreign retirees, however, there are important caveats and there are some common pitfalls to avoid. Before you make the final decision to retire in the land of pura vida, read on! 

How to Become a Legal Resident of Costa Rica.

If you’re considering retirement to Costa Rica, you’ll want to understand your options in regard to obtaining the legal right to live in the country. Fortunately, the country is open and welcoming to retirees of various levels of income and wealth. 

There are three primary ways to get legal residency in Costa Rica, as a retiree. They are:

• Pensionado, which is for retirees with an ongoing retirement income (such as that from social security), as low as $1,000 per month for a married couple. 
• Rentista, which is for people that can prove an ongoing unearned income or savings in the amount of $2,500 per month. 
• Inversionista, which is for people that make an investment of $200,000 or more in business or real estate in Costa Rica. 

Let’s take a closer look at the three ways:

Pensionado

The pensionado option for legal residency is popular with retirees that draw a monthly pension and/or social security income. A married couple only needs to show a monthly income of at least $1,000 per month (which is a normal household income in Costa Rica). 

Probably the most popular option for obtaining legal residency, pensionado status is within the reach of many retirees, even those Americans that are living entirely on monthly social security benefits. 

Rentista

The rentista program is for people that don’t necessarily have an ongoing monthly pension but can prove an ongoing monthly income of at least $2,500, which must be deposited into a Costa Rican bank and converted to the local currency, the colón. 

Many retirees and expats meet the rentista income requirements by depositing $60,000 into an account in a Costa Rican bank. The $60,000 figure represents $2,500 per month for two years, which is the length of the visa. 

Inversionista

This option, inversionista (which means investor), requires an investment of at least $200,000 in a Costa Rican business or real estate. If you’re investing in a business that is dedicated to forest replanting, then a $100,000 investment is all that is required. 

The real estate doesn’t have to be commercial real estate. It could be a home. So, legally, you could qualify for residency by buying a home worth $200,000 or more. However, we strongly discourage buying a home in Costa Rica unless you’ve spent a significant amount of time getting to know the country and exploring potential permanent places to settle. You should rent a home and spend some time exploring before you buy a home. 

The Process for Applying for Residency

Many expat retirees in Costa Rica engage a local attorney to help them with their residency applications. And, for good reason. The process involves a lot of paperwork and a lot of waiting. It can be frustrating, especially if your Spanish isn’t good. 

For example, for the rentista and pensionado residency visas, the following items accompany the application:

• Two photos
• Fifty US dollars paid ahead of time at the Bank of Costa Rica
• Passport copy fees equal to 125 colones, plus 2.5 colones per passport page paid ahead of time at the Bank of Costa Rica.
• A standard immigration entry form
• Two copies of your fingerprints
• Birth certificate with an accompanying notarized translation 
• Certificate of a clean criminal record with an accompanying notarized translation
• Your passport
• One copy of your passport
• Documents proving your income
• Marriage license (if you are applying as a married couple), and an accompanying notarized translation

I know retired expats that navigated the process on their own. They spoke and understood passable Spanish. They were also very patient. I know more retirees in Costa Rica that hired an attorney to help them navigate the process. 

Perpetual Tourist

There is another option for retirees that are considering moving to Costa Rica. It’s informally known as being a perpetual tourist. More plainly, it’s the practice of living in the country with a tourist visa, timing entry and exit dates in order to keep a valid visa. 

For residents of many countries (including the US and Canada), Costa Rica allows for a 90-day tourist visa upon entry. This means that someone from one of these countries can spend 89 days in Costa Rica, exit the country, return, and get a new 90-day visa. Rinse and repeat. 

This practice is arguably an abuse of the tourist visa system. Occasionally, the Costa Rican government takes measures to discourage perpetual tourism. For example, if the immigration official that processes you into the country believes that you might be a perpetual tourist, he or she can grant a shorter visa duration. 

In the mid-2010s, it was common for immigration officials to only grant 30 days on a tourist visa if they saw multiple entry stamps in a passport. During this time, officials also required that travelers remain out of Costa Rica for at least three days before renewing a tourist visa. 

There are other disadvantages to being a perpetual tourist. Without a cédula (government identification card), you can’t do some important things, such as sign up for the health insurance system. 

Health Care for Retirees

Access to medical care is obviously an important topic for people of retirement age. 

Costa Rica has a universal public healthcare system that is often referred to as the Caja. Foreigners that live in Costa Rica legally are eligible for Caja coverage. This means that foreigners with status as a pensionado, rentista, or inversionista status participate in the public health system. 

Rates for the Caja premium payments are calculated on a sliding scale ranging from 5.18% and 10.69% of your income. 

Some retirees with additional resources choose to take private insurance, in addition to the public system. The advantages of additional coverage include shorter wait times for appointments, more choices in doctors, and more choices in clinics and hospitals. 

Which Part of Costa Rica?

Only you can decide which part of Costa Rica is the best for your retirement. Despite being a small country, roughly the size of Denmark or the US state of West Virginia, it is a diverse country. 

There are at least 32 different microclimate zones in Costa Rica. There are rural, suburban and urban areas. There are luxurious up-scale areas and there are more modest neighborhoods. You are likely to find a place that is the right combination for you. 

If access to specialized health care or a variety of shopping options is important to you, then you might want to consider living somewhere in the central valley. Roughly 70% of the county’s population lives in the central valley. 

There is a thriving expat community of retirees in Atenas, which is located on the western edge of the central valley. Atenas has consistently mild weather with an afternoon rain shower during the rainy season. 

The San José suburbs of Escazu and Santa Ana are popular with expats and Costa Ricans of above-average means. 

I’m partial to the cities and towns of Heredia. Downtown is a bustling walkable city with nice parks and a brand new hospital. Nearby, you’ll find one of the nicest and most modern malls, Mall Oxígeno and Human Playground. North from downtown Heredia (and higher in altitude) you’ll find the quaint towns, Barva and San Rafael. Even further north and higher, are small mountain towns of San Isidro and Concepción. 

If you want to live near the beach but still be close to the conveniences and services of the city, then Jacó might be your place. It’s the closest beach town to San José and the central valley. 

If you like hot and dry weather, then Guanacaste, on the northwestern coast of the country is a good place to try. Look at the areas around the Pacific coast beach towns of Tamarindo and Playas del Coco. 

One of my best friends, José Pablo, believes that the area around La Fortuna and Lake Arenal is the most beautiful place in the whole country. People flock to this area to bathe in the geothermal hot spring waters that make the area famous. 

If you prefer adventure then you should consider the Caribbean coast towns of Puerto Viejo and Cahuita. The culture of this part of the country has a lovely Afro-Caribbean vibe. 

The southern zone is popular among some expat retirees. Check out Dominical, Uvita, and Ojochal. 

Is Costa Rica safe for retirement?

Generally speaking, Costa Rica is a safe country. The overwhelming majority of crime in the country is petty theft and pickpocketing. 

While some Costa Ricans may not agree, the data indicates that the country is significantly safer than other countries in Latin America, such as Mexico. 

There are three simple measures that you can take to substantially lower your risk while living in Costa Rica. They are:

• Don’t tempt thieves.
• Don’t ride a motorcycle.
• Get your immunizations. 

Don’t tempt thieves

While crime is relatively low in the country, so is average income (compared to North America and many European countries). The key to avoiding being a victim of petty crime is to not tempt potential petty thieves. 

Don’t wear flashy jewelry. Don’t leave items in plain sight inside of your automobile. Lock your car doors. This is good advice no matter where you are.  

Don’t ride a motorcycle

The overall rate of traffic deaths is only slightly higher than that of the United States; however, motorcycle accidents kill more people than hurricanes, crime, and earthquakes combined. 

Get your immunizations

The World Health Organization recommends a basic battery of immunizations for diseases like measles, mumps, hepatitis, rubella, and the flu. 

How much does it cost to retire in Costa Rica?

Low cost-of-living interests many potential retirees. And, the cost-of-living is often lower than that of North America, from where many ex-pat retirees come. But, for some retirees, with specific needs and desires, Costa Rica can be more expensive.   

How to Retire in Costa Rica for Less Money

While the relative overall cost-of-living is low, when compared to North America, some things are more expensive. 

Tax policy in the country is designed to make life easier for poorer residents at the expense of wealthier residents that purchase imported and/or luxury items. Import tariffs on items entering the country can drive up prices for these imported goods by 100% or more. 

You can see this most dramatically in the price of new automobiles. A new Subaru Forester, which would sell for around $31,000 in the United States, costs $55,000 in Costa Rica. 

Here are some rules-of-thumb regarding the cost of things in Costa Rica:

Imported items are expensive and locally-produced items are inexpensive.

In my very first week in Costa Rica, to study at Intercultura Spanish School, I forgot to pack shaving cream. So, I went to the Mas x Menos grocery store in downtown Heredia, near my Spanish school, in search of what I needed. 

I found many of the brands with which I was familiar in the United States. What I wasn’t expecting was the price. These shaving cream bottles had price tags of 3,500 to 6,000 colones. At the time, that was between $6.70 and $11 US dollars. 

Next to the expensive and familiar shaving creams, I noticed a container of shaving cream that I didn’t recognize. It was only 800 colones or about $1.50. 

It turns out, the inexpensive shaving cream was produced locally by a Costa Rican company.

Energy (like gas for your auto, and electricity) is expensive and labor is inexpensive.

While the average per capita income in Costa Rica is only approximately 17% to 25% of the United States and Canada [source], the price of electricity can run between 60% and 100% more. 

Since electricity is so expensive, energy conservation is a big part of the average Tico’s lifestyle. 

High-efficiency LED light bulbs are common. 

Due to the high cost of electricity, most Costa Rican homes don’t have a hot water tank that keeps water perpetually hot. They rely on on-demand water heaters such as an electric shower head. 

Luxury items are expensive and basic necessities are inexpensive

The price of fresh food from central markets and farmers’ markets is low. Basic food staples such as rice and beans are low. In fact, the price of rice is set by the government. Currently, it runs just a few cents more than a dollar per kilogram. 

Monthly rents that exceed a threshold of 639,300 colones (or about $1,170 USD) are taxed at 13%. 

Before You Make the Move

Here are some additional rules-of-thumb to keep in mind when considering retiring in Costa Rica:

Resist the urge to buy a home immediately. 

You might be tempted to buy a home immediately. Resist the urge to do it, especially if you’ve not spent a good amount of time in the country already. 

I recommend that you rent for at least six months to a year before buying. Try different parts of the country. Make sure that you are absolutely happy with the area in which you are buying before you make the commitment. 

Remember that things work differently in Costa Rica than they do in other places. 

When you move to Costa Rica, you’ll need to adjust your expectations. Don’t expect that things will work the same as they do in the place where you’re coming from. While there are plenty of English-speakers in tourist areas, Spanish is the common language throughout the country. 

The key to enjoying life as a retiree in Costa Rica is to appreciate it for what it is and not expecting it to be a version of what you already know. 

Enjoy Life

There is a reason why Costa Rica regularly tops the lists of happiest places in the world. Enjoy it.