Every year more and more North Americans and Europeans are looking to Latin America as a destination of choice for retirement, and the three biggest considerations choosing a location to outlive their savings nest egg are standard of life, safety and security, and cost of living.
According to International Living, Costa Rica has one of the highest standards of living in Central America, but it is also regarded the most expensive in Central America by many indices.
Standard of living, quality of life and cost of living are about the economic and social well-being of countries and their residents. The definitions of these terms often overlap.
Standard of Living
Standard of living generally discusses the level of wealth, comfort, material goods and necessities available to a socio-economic class, in a specific geographic area. Because there are so many factors (see below), it is difficult to recommend any one index. Cost of living indices are often used to judge standard of living. An evaluation of standard of living commonly includes the following factors:
- income standards
- quality and availability of employment
- class disparity
- poverty rate
- gross domestic product (GDP)
- quality and affordability of housing
- hours of work required to purchase necessities
- inflation rate
- number of paid vacation days per year
- affordable access to quality health care
- quality and availability of education
- incidence of disease
- life expectancy
- cost of goods and services
- national economic growth
- economic and political stability
- political and religious freedom
- environmental quality
- safety and security
Safety and Security
The Public Insecurity in Latin America index, from FTI Consulting examines how each country in the region is working towards reducing the levels of public insecurity, with particular focus on the business community in Latin America. Costa Rica tied top position for public security place with Uruguay.
Cost of Living in Costa Rica
The Global Property Guide takes the difference between the IMF’s nominal GDP figures, and their purchasing power parity GDP figures for the latest year available. In their report, Latin America: Price of Goods in US$, which in US would Cost $1 , Costa Rica ranks 6th out of 18 Latin American countries, with $0.73 on a comparative U.S. dollar score. Nicaragua at $0.38 ranked 18th. While Nicaragua scores very high on the dollar comparison, Nicaragua is rated “Critical” for crime and for residential security by the US State Department.
The World Economic Forum recently produced the Travel and Tourism Competitiveness Index 2015, and ranked Costa Rica the most expensive destination in Central America. Costa Rica also has the most developed tourism infrastructure in Central America.
NationMaster is a vast compilation of data from hundreds of sources. On their index of Cost of Living, Average Monthly Disposable Salary After Tax: in 2014 Costa Rica ranked 82 out of 176 with $770.21 as an average monthly disposable income after tax, just ahead of Panama. U.S.A. ranked 13th, with $3,258.85
Numbeo is the world’s largest database of user contributed data about cities and countries worldwide. Cost of Living Index for Country 2015 Indices on this website are relative to New York City (NYC). Which means that for New York City, each index should be 100(%). As an example, if another city has a rent index of 120, it means rents in average in that city are 20% more expensive than in New York City. On this Index, Costa Rica ranks in position 42 just behind Spain, Slovenia, and Jamaica, just ahead of Russia.
The Big Mac index compares the prices of an identical basket of goods and services (in this case, a burger) in any two countries, a plus or minus evaluation against the U.S. dollar. In 2012 Costa Rica was on par, in 2014 Costa Rica was approximately -20. Currently, January 2015, Costa Rica holds the 14th place just behind Briton, Australia, and Euro Area.
In summary, when looking for a Central American country to retire, standard of living, cost of living, and safety are the key areas to consider. In general, for Central America, on the question “Where can I afford to live?” You need to have a minimum of $2,000 a month to afford Costa Rica’s standard of living. If you have $1,500 per month, consider Panama. If you have $1,000 per month Nicaragua is the best choice.