How to retire in Costa Rica on nothing but a government pension. Written by John Newton and Loreta Yukeco. They came to live and retire in Costa Rica from Canada.
There was a time when retiring in Costa Rica on a government pension was easy, but those days are over. After four years of continual study on how to survive in Costa Rica for less, we have learned the following; First-take another couple with you and share the cost of renting a home and car for two or three months. Try eating the local foods and cut back dramatically on the air conditioning during your stay because the cost of electrical power in Costa Rica is very high for people who continually use AC. This rental experience will help you to determine if Costa Rica is really for you.
Do not even consider buying a home in Costa Rica until you have lived there awhile and “learned some of the ropes.” The people who work in construction building homes in Costa Rica earn as little as three dollars per hour, so how can the extremely high home prices be justified? Most of the homes being offered to Gringos are usually much too large for what you really need for comfortable living. Two years ago, we bought a building lot in a gated community close to the ocean for just $15,000. The location is central Pacific Coast not far south of the town of Jaco. We are five minutes from the beach. The cost to construct a new 24ft. x 16ft. home was just $30,000. The home size might seem small, but a large outdoor covered area makes it seem much larger. We spend 90% of our time outdoors, including eating our meals. A large modern kitchen-living room combination and good size bedroom with big washroom is all you need for two persons inside the house.
The cost of groceries in Costa Rica is about the same as in North America, but the selection of commodities basic. Fruits and vegetables are fresh and relatively inexpensive and available year round. If you shop at the weekend local farmer’s markets you get more variety, fresher quality and much better prices.
The cost to purchase a car in Costa Rica is astronomical-often twice the cost of a car in North America due to the very high import taxes collected by the Costa Rica government. Renting even the smallest car can cost about $700 per month. And gasoline at this moment is around $5.50 per gallon. We use a local taxi. From our development to Parrita, the nearest small town is just $3.
The Costa Rican people are friendly, but there are a few who think all Gringos are wealthy, and they will inflate prices when you try to buy something. The government’s high import taxes on virtually everything results in many items being extremely expensive. The import taxes on a refrigerator is over 80%. If you build a home and need appliances, go to the Duty Free zone in Golfito located in the south western corner of Costa Rica near the Panama border. There you can buy brand name items at North American prices.
Now to talk about costs of surviving: Health care in Costa Rica is good and cheap, about $50 per month. You can be part of the health care system by simply applying for Pensionado status which is a legal process which takes time and some money. You will need a lawyer whom you trust to help you with this.
If you must take out a mortgage to buy a low priced lot and home, I guess it would carry for about $500 per month, or less. Grocery cost would be about $300 per month. Electricity if you use the AC only when sleeping, about $150 per month. Water is only about $8 per month. Yearly property taxes are about $250 The association fees in our gated community are $85 per month. My suggestion is to build a home with an adjoining self contained unit, and if you are in a high tourism area you can rent to the tourist and let them pay your entire mortgage and utility bills. You could add that rental unit for about $15,000. Make sure that unit is attached to your home, so as to keep the taxes down, and share the same septic system.
Warning: Costa Rica has become famous around the world for its past real estate scams. Many developers sell building lots that are not even registered with the government, and some buyers never ever see deeds to the property. Real estate agents in Costa Rica are not licensed, and since the recession many of them have become desperate to sell anything, and often do not provide full information about properties. Also, never use the lawyer recommended to you by the seller.
There is so much more information I could provide to people who would like to retire in Costa Rica with only a government pension, but there is so little space here. I mentioned a few negatives about living in Costa Rica as I’m a person who hides nothing, but I will tell you that there are many more positive reasons to retire in Costa Rica. Waking up each morning in Costa Rica is a great feeling. Take Care, John Newton and Loreta Yukeco