Featured Columnist – Retirement & Living
Kat Sunlove

TCRN Volunteer:

So let’s talk money. Just how much can you save by living as a pensionado here in Costa Rica? For Baby Boomers facing the end of regular earnings, the question of how to stretch retirement income is a very real issue. With limited savings, reduced home equity (if they can sell at all) and an average Social Security benefit of around $1200 per month for an individual and $1750 for a couple [1], most retirees will have to cut expenses one way or another. Even at the maximum benefit amount of $2,346 [2], a mere $28,152 per year before taxes, those of us who have enjoyed the advantages of a moderate income will undoubtedly have to find ways either to increase that income or minimize expenditures.

At first glance, these are not pleasant prospects for most of us. Accustomed to the good things in life, it may be difficult to face up to a lower standard of living. But the 2008 U.S. Census Bureau statistics on Income and Earnings by Age of Householder [3] reveals the stark realities: According to their report entitled “Income, Poverty, and Health Insurance Coverage in the United States: 2008,” measuring all sources of money income, we find that the median income for 45 to 54 year old householders was $64,349; for the next age group, 55 to 64 year olds, the median figure drops slightly to $57,265; but for the over 65 year old group, the slide is precipitous, to $29,744. The message is clear. After retirement, you can expect a negative change in your financial situation.

But here’s the good news! With retirement comes a unique opportunity to make some important changes in your life — to simplify, downsize, reduce the clutter, re-prioritize and finally do some of the things that full-time work has prevented you from doing. Volunteer work, enjoying a hobby, traveling, getting more exercise, experiencing less stress – whatever it is, we all hope our Golden Years offer the time and space to pursue those dreams. And they can if you consider the advantages of retirement in Costa Rica, where your limited income fits nicely with the lower cost of living.

The most obvious ways that expats save money here is in housing costs. In many parts of Costa Rica, you can rent a comfortable Tico-style home for less than $500 per month, including most utilities. In outlying rural areas, it can be even less. You can also find a well appointed, 2500 square foot American-style home for $1200 to $1500 per month, if your budget allows. You can spend considerably more but if you can see the advantages of a somewhat modest home with a lower overhead, you can certainly find such a place. In addition, in the Central Valley where most people live, you will have no need for heating or air conditioning, as the climate is temperate all year round. Even in the higher elevations or at the ocean, where temperatures range lower and higher, the need for climate control is minimal. For most Americans, that would represent another huge savings in monthly expenses.

And if you choose to buy property and build a home, as many expats do, that is also a bargain in most areas. For instance, we know a transplanted Texan contractor in the Orosi Valley, east of Cartago, who can construct a beautifully detailed 900 square foot home for less than $100,000. Since so much of life is lived out of doors here, the interior of a home, which costs the most to build, can be smaller because your living space is supplemented by covered patios and detached ranchos where you will enjoy warm evenings watching a tropical sunset, sipping your favorite cocktail. Who needs a big house? It’s just that much more to clean.

And speaking of cleaning, our housekeeper costs us $10 per week for about four hours of work. And that’s actually on the higher end of such costs, we’re told. She does an excellent job, too, including the windows, floors, patios, shower walls. She even rakes the leaves in the back yard! In fact, all labor costs are lower here, which means services such as gardening, household repairs, remodeling, bicycle repair, haircuts and massage are dirt cheap in comparison to the U.S. To give a couple of examples, I had my hair dryer repaired for only $4; a recent very good haircut cost me $6. When visiting a friend recently near Turrialba, she had a plumber come out to replace her on-demand water heater. Although he had to drive quite a ways over terrible roads to near the top of a mountain, the total tab was $10 for about an hour of work.

Another area of savings for us living in Costa Rica is transportation. The latest U.S. Department of Labor survey [4] indicates that Americans spend more than 15 percent of their income on transportation costs; based on a household income of $63,000, that’s a whopping $7,658! For expats living in Costa Rica, the availability of inexpensive taxis and convenient bus service makes that look extravagant. Based on four round-trips to town by taxi each week at about $4 each (most of the time we walk), and two or three bus trips into San Jose per month, we probably spend no more than $70-$80 per month on transportation, leaving the rest of that money in our bank account. And as we hop on that bus, we smugly think to ourselves just how much we are cutting our carbon footprint!

Here in Atenas on the edge of the Central Valley, we live in a modern apartment with utilities paid, including broadband, surrounded by beautiful jungle with toucans and monkeys as visitors, a swimming pool and a rancho with a gas grill just up the hill, all for about $650 per month. We enjoy good wine and dinners out, buy household supplies as needed and live comfortably here on our two Social Securities. Back in California our overhead still includes some $250 a month for the care of my retired horse, plus the cost of a property manager and any needed maintenance on our leased horse property there. Here, we save money in so many ways — local fruits and vegetables, medical care and health insurance, entertainment. But we also know that if the need arose, we could cut our costs even further. For now, we are grateful we can enjoy the pleasures of Pura Vida. Clearly, for a laid-back lifestyle with a lower cost of living, it’s hard to beat retirement in Costa Rica.

Footnotes:
[1] https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/
[2] http://faq.ssa.gov/
[3] http://www.census.gov/prod/2009pubs/p60-236.pdf
[4] http://www.creditloan.com/blog/how-the-average-us-consumer-spends-their-paycheck/