How to Retire to Costa Rica

Costa Rica’s island lifestyle, beautiful beaches and breathtaking views can tempt you to pack your bags and head south for good. Before you stash your sunscreen in your checked luggage, there are some important things you need to know. First on your checklist — know the requirements for how to retire in Costa Rica, how to save and more. 

Here’s your go-to guide to make sure you’ve thought of everything before you move to retiree paradise.

Cost to Retire in Costa Rica

The average retiree can expect to spend around $1,500 per month or $18,000 a year. Couples can live well on $2,000 a month. We’ve developed a cost breakdown for a couple to be able to retire in Costa Rica. 

The average life expectancy after 65 years is 18 years, so the $2,000-per-month living expenses multiplied by 18 years is $432,000. This is the amount a couple would need to retire and experience pura vida. The average Social Security benefit, based on a monthly amount of $1,444, is $312,000 over this amount of time. If there’s two of you, double it. The typical retirement savings balance is around $202,000. The typical retirement savings balance is around $202,000. It’s safe to assume that you can realize your Costa Rica retirement dream by saving $300,000 or more.

Requirements to Retire in Costa Rica

The Costa Rican government offers 3 categories for official temporary Costa Rican residency. Each option has unique financial standards and requirements.

The Pensionado/Pension Based Retirement Residency

The Pensionado is a pension-based Costa Rican residency category. Costa Rica grants temporary residency to foreign nationals who can show proof of a lifetime pension from Social Security, military benefits and other guaranteed retirement income. It requires you to have a guaranteed monthly income of at least $1,000 from a retirement or pension fund. You must immediately deposit your funds into the Costa Rican financial system. After the banks convert your money to local currency, you will have free access to it.

The Rentista/ Income Based Residency

If you don’t have a fixed income, you can apply for residency under the Rentista category.  This is a Costa Rican residency category that grants temporary residence visas to foreigners who have a guaranteed, constant monthly income. It requires bank statements that indicate you had an income of at least $2,500 a month over 2 years. Or you can show proof of having at least $60,000 in the bank. This program requires you to transfer the entire $60,000 or $2,500 a month to a Costa Rican bank. Afterward, you can convert your money to local currency.

Inversionista Program/ Large Investor Residency

The Inversionista program is a pro-business residence category for temporary residency in Costa Rica. The Costa Rican government created this category to encourage foreigners to start businesses there. The Costa Rican government requires you to make an instant investment of at least $200,000. The funds must go into an approved Costa Rican property or business. For an existing business, you must provide a profit and loss statement. The provisions forbid you from becoming an employee. You must also reside in Costa Rica for at least 6 months out of the year.

All 3 programs require a $250 application fee. The miscellaneous fees bring the application total cost to $509. The renewal requirements are the same as the initial ones. After 3 years as a resident, you can apply for permanent residency. You must demonstrate that you are a positive contributor to the country. Except for the right to vote, permanent residency gives you the same rights as any Costa Rican.

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How to Get a Visa to Live in Costa Rica.

Thanks to a treaty between the U.S. and Costa Rica, you don’t need a separate Costa Rica retirement visa. You must possess a valid passport, at least $300 and a return ticket to leave Costa Rica within 90 days. The 3-month stay will give you ample time to apply for and receive your temporary residency.

Does Costa Rica Have Retirement Benefits?

Costa Rica provides retirement benefits through the Costa Rican Social Insurance Fund. It’s based on mandatory employee contributions and investments. Costa Rican workers must contribute to the fund according to their occupations. They must contribute for a minimum of 25 years. U.S. citizens are not eligible for the program.

Places to Retire in Costa Rica

Costa Rica could fit inside the state of West Virginia, but its diversity is incredible. You can live near the beach, the rainforest, the mountains or the plains. Here are some great retirement locations in Costa Rica.

Southern Pacific Region

The Costa Ballena area lies in the southern Pacific coast region and several of the most popular beaches in the country are located there. The list includes Playa Dominical, Playa Ballena, Hermosa Playa Ballena and Playa Pinuela. From December through April, humpback whales gather offshore to mate. This area also offers numerous activities, dining spots and entertainment venues.

The Caribbean Coast

The Caribbean coast of Costa Rica embodies the relaxed spirit of island life. Most of the locals speak with an English-Creole accent. Reggae and calypso are favorites in bars and other public places. The language and music reflect the cultural influence of the early Jamaican settlers. The island culture is evident in the coast’s restaurants, beaches and neighborhoods. You can explore the beautiful port city of Limón, the thick jungle or the golden sand beaches. Coastal areas can be hot and humid. Most of the time, temperatures range in the high 80s and low 90s.

Arenal

If you love nature and outdoor life, Arenal is a good choice for retiring in Costa Rica. It’s the home of Costa Rica’s largest inactive volcano and the largest freshwater lake in the region. It offers over 18 miles of spectacular lake views. Arenal is perfect for retirees who prefer a rural environment. The surrounding mountains provide a peaceful setting and a comfortable climate. Temperatures typically stay in the mid-70s to low 80s.
The cost of living tends to be lower than in the beach areas. A couple can live well in the low $2,000-per-month range. You can buy a home for about $85,000 and benefit from lower utility bills.  

How to Save for Retirement in Costa Rica 

The best time to start saving to retire in Costa Rica is now. If you’re in your 40s or 50s, you’ll have 20 to 25 years to save. Fifteen percent of your pretax monthly income is a solid savings amount, but you may want to save more of your pretax income if you’re over 45 and haven’t saved much.

If you want some versatility, you can try a broker like Pepperstone that allows you to build your portfolio using forex trading along with CFDs, stocks and crypto with leverage up to 500:1.

Taking on a part-time job is a good way to raise money for your Costa Rican retirement fund. Let’s say you work 25 extra hours a week at $17 per hour. You could earn a pretax amount of $20,400 per year. That yearly amount could grow to a pretax sum of $306,000 in 15 years. 

How to Invest for Retirement

You may want to boost your contributions to your 401(k) plan — talk to your HR office. If you’re 50 or over, in 2021 you can contribute $6,500 more each year to this tax-advantaged retirement plan for a yearly total of up to $26,000. You can also contribute $1,000 more to your traditional, Roth and SEP  individual retirement accounts (IRAs), for a total of $7,000.

Compare online brokers for a great place to save your retirement income. Most broker sites allow automatic transfers of your funds from your bank account. On a weekly or monthly basis, the system will draft a deposit to your investment account. This can simplify the savings process for you. Here are some of our favorite brokerages.

Get as much financial knowledge as you can. Read about the best investments for retirees and the best retirement books. Check the status of your Social Security benefits. The Social Security Administration website can give you the latest updates.

Frequently Asked Questions