Costa Rica Retirement Guide for US Citizens

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Costa Rica enjoys a tropical climate with a distinct rainy (May to November) and dry season (December to April), largely due to its location within the tropics and between the Pacific and Atlantic Ocean. The temperature variations are minimal throughout the year; however, what distinguishes the seasons is the amount of rainfall.

Temperatures are typically warm, with coastal regions enjoying higher heat and the central mountains offering cooler climates. For instance, on the Caribbean coast, in places like Puerto Limón, you can expect hot and humid weather all year round, with maximum temperatures ranging from 84°F (29°C) in January and February to 87°F (30.5°C) in September and October.

On the Pacific coast, it’s slightly warmer, especially in the dry season. Daytime temperatures average around 86-90°F (30-32°C) during cooler months like October and November and can climb to 93-95°F (34-35°C) in the hotter months of March and April.

The Central Valley, which includes San José, is celebrated for its pleasant climate. Daytime temperatures there generally range from 70-80°F (21-27°C) with cooler nights that might see temperatures drop to the mid-60s°F (around 18°C).

US expats tend to prefer these milder climates of the Central Valley, especially the areas around San José and the nearby towns, due to the comfortable temperatures and the convenience of amenities. The coastlines offer stunning beaches and are popular too, but the heat and humidity are more intense, which can be a significant shift for those used to more temperate climates.

Costa Rica’s healthcare system is ranked 30th out of 167 countries in the Statista, above Canada, United States, Portugal and United Kingdom, showcasing its effectiveness and quality. The country is ranked 36th in the world by the World Health Organization, above the United States, Cuba, and New Zealand. Meanwhile, the United Nations places healthcare in Costa Rica within the top 20 in the world. The country offers universal healthcare to its residents and expatriates, ensuring access to medical services through a system funded by taxes and insurance contributions. Known for its high standard of care, Costa Rica’s healthcare system is a significant factor in its popularity as a destination for retirees and expats. The blend of public and private healthcare services provides comprehensive coverage, contributing to the country’s high life expectancy rates and overall health outcomes.

Since the 1940s, Costa Rica has embraced universal healthcare and social security, embodied by the CAJA system. This system ensures that all medical needs—procedures, appointments, hospital visits, and medications—are fully covered for citizens and permanent residents. Funding for CAJA is sourced from modest monthly contributions by residents, which are determined by their income levels.

Private healthcare is an option for those seeking quicker access and more personalized care compared to the public CAJA system. Private healthcare costs are higher but still affordable compared to US standards, with visits ranging from $60 to $100 and procedures costing a fraction of US prices. Many expats use a mix of public and private healthcare to optimize their medical care in Costa Rica.

For flights from Costa Rica to Miami, prices can be as low as $181 for a direct flight, with an average journey time of around 5 hours. Flights are available daily, with multiple airlines offering direct and connecting routes. When it comes to flying from Costa Rica to New York, the flights might take around 15 hours and 33 minutes with one stop, and prices start at approximately $210. Airlines like Frontier, Avianca, and JetBlue offer various options, with JetBlue providing a non-stop flight that takes about 5 hours and 3 minutes.

In the 2023 Global Peace Index, Costa Rica climbed two spots to rank 39th, outperforming nations like South Korea and Uruguay,  vastly surpassing the United States, which ranked 131st. This improvement reflects Costa Rica’s commitment to safety, underscored by the US State Department’s Level two travel advisory, akin to that of European countries like Spain, France, and Italy.

Costa Rica ranks 73rd out of 138 countries in the Gallup Migrant Acceptance Index, which measures local attitudes towards migrants. Conversely, it holds the 7th spot among 50 countries in the “Ease of Settling In” category of the 2023 Expat Insider Index, which gauges expatriates’ perceptions of their host country. This notable discrepancy can be attributed to the generally more favorable views local communities hold towards expatriates .

Costa Rica is ranked 38th out of 113 countries on the EF English Proficiency Index, showing a moderate level of English proficiency compared to other global nations. The country ranks third in Latin America, showcasing its commitment to improving English skills among its residents. This ranking reflects Costa Rica’s educational focus on English, beneficial for communication in tourism and international business.

In Costa Rica, particularly in the capital, San José, and in Heredia, English proficiency is considered high. This is reflected in the EF English Proficiency Index, where these regions demonstrate stronger English language skills compared to other areas in the country. This proficiency is especially beneficial in professional and educational contexts, enhancing communication with international visitors and residents.

When comparing the cost of living between San Jose and New York, NY, it’s clear that San Jose presents a more affordable option in several categories. Consumer prices in San Jose are 45.5% lower than those in New York, which is a significant difference for residents and potential movers. This discrepancy extends to the overall cost of living, including rent, where San Jose is 62.8% more affordable. The gap in rent prices alone is quite staggering, with San Jose being 81.9% cheaper. This substantial difference suggests that housing in San Jose is vastly more accessible compared to the notoriously expensive New York City.

The disparities in housing costs between San Jose and New York City further underscore the significant differences in living expenses in these two cities. When examining rent prices, the contrast is stark. For instance, the average rent for a one-bedroom apartment in the city center of New York is $4,189.81, while in San Jose, it’s significantly lower at $689.06, marking an 83.6% decrease. The price drop is even more pronounced for apartments outside the city center, with New York’s average at $2,871.75 compared to San Jose’s $433.97, an 84.9% reduction. Larger three-bedroom apartments in the city center also show a substantial price difference, with New York’s rent at $8,250.20 dwarfing San Jose’s $1,444.31, an 82.5% difference. Turning to the real estate purchase prices, the gap remains vast. The price per square foot to buy an apartment in the city center of New York stands at a steep $1,644.57, whereas in San Jose, it’s drastically lower at $165.10, reflecting a 90% decrease.

The tax system in Costa Rica for expatriates is notable for its territorial tax system, meaning that individuals are taxed on income generated within Costa Rica, not on their worldwide income. Expats residing in Costa Rica are subject to income tax on any income earned within the country. The rates are progressive, ranging from 0% to 25%, depending on the income level.

The Pensionado program in Costa Rica is an initiative aimed at attracting foreign retirees by offering them residency in exchange for demonstrating a stable income from a pension or retirement fund. With a historical income requirement around $1,000 per month, this program targets individuals who can bolster the local economy without displacing the local workforce. Beneficiaries of this program, known as Pensionados, are granted temporary residency, which can transition to permanent residency after  approximately three years. These individuals, along with their spouses and potentially dependents under certain conditions, can enjoy the perks of living in Costa Rica, such as importing personal goods and a tax-free vehicle every couple of years, although they are prohibited from seeking employment.

Moreover, Pensionados gain access to Costa Rica’s universal healthcare system, Caja, by contributing a monthly fee relative to their income. This ensures they receive comprehensive healthcare services, a crucial aspect of the program that adds to its appeal for retirees. To retain their residency status, Pensionados must reside in Costa Rica for a minimum of four months annually, ensuring their active participation in the local economy. This balance of requirements and benefits is designed to attract retirees who are financially self-sufficient and seeking a peaceful, healthful retirement in the lush environment of Costa Rica, all while contributing to the country’s economic vitality.

While the US and Costa Rica do not have a double taxation agreement, US expats can often avoid double taxation on their Costa Rican income by using the Foreign Earned Income Exclusion (FEIE) or the Foreign Tax Credit when filing their US taxes.