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Retiring on Social Security

Posted by Ali on: Feb 08, 2011

central valley house front view
 - Costa Rica

How much can you really save by retiring in Costa Rica? For many baby boomers, the question isn’t what you can save -- it’s how you can improve your lifestyle and get more bang for your buck. At present, the average Social Security benefit runs just under $1200 a month for most individuals. Even if you receive the maximum monthly benefit of $2,346, the realities of a fixed income often equate to a lower standard of living, especially in the present U.S. economy.

Retirement’s silver lining lies in the opportunity it affords you to make changes in your life: to re-prioritize, simplify, and participate in new hobbies you never had time for before. While Costa Rica boasts the modern conveniences of a first world country, the daily life of its residents moves at much a slower pace, with a true appreciation for family, friends and life’s simple pleasures. In short, it is easy to downsize and become less of a consumer here. More time is spent in the great outdoors, as you have mountains, volcanoes and miles of beaches at your doorstep.

So is it possible to live comfortably in Costa Rica on a retirement pension of $1200 a month? That depends on your preferences and needs. It is entirely feasible to live on such a budget, but you'll give up certain amenities like car ownership, frequent restaurant outings, and splash outs on imported goods. By shopping at local farmers’ markets and using public transportation, you’ll cut your costs tremendously. Another way to stretch your dollar is in housing costs. In many parts of the country, you can rent a modest Costa Rican-style home for under $500 a month, including utilities. And with a little extra effort, you can find rentals for even less. Here’s a breakdown of typical monthly costs for individuals living on a budget:

Rent: $300-$500 (2-bedroom apartment or home)
Food: $250
Public transportation: $100
Public health insurance: $50
Utilities: $25
Telephone: $15
Cable TV and Internet: $75
Entertainment: $150
Miscellaneous: $200

Total: $1165- $1365

Monteverde WaterfallsIf you're retiring with a partner or spouse who also earns Social Security benefits, your housing options will increase dramatically. Gorgeous, 2000 square foot homes within gated communities can be rented for $1200+ a month, and offer American-style amenities complete with gardeners and security personnel. Almost all labor costs are lower in Costa Rica; services like house cleaning, gardening, odd household jobs, clothing repair, and hair styling are quite cheap in comparison to the U.S.  A maid earns about $2 an hour, a basic hair cut costs $3, and a gardener charges less than $10 for a half-day’s work.

If you plan to own a car and travel frequently, yearly taxes, upkeep and gasoline will significantly raise your monthly expenses. Unleaded gasoline currently costs more than $4.00 a gallon, or upwards of $60.00 to fill up your tank. Alternatively, the country’s public transportation system is cheap, reliable and efficient. The availability of inexpensive taxis and convenient bus service makes daily errands and local sightseeing an affordable option.

Central Valley relocation hotspots like San Ramon, Grecia, Heredia, Atenas and Santa Ana enjoy a temperate climate year-round, which eliminates the need for air conditioning or heat. For many, this represents another giant savings in monthly utility bills. Home to more than 70% of the country’s total population, the Central Valley has easy access to top-notch hospitals, the international airport, shopping and restaurants, and modern infrastructure.

The country's hospitals and clinics offer high-quality medical care at a tiny fraction of its U.S. equivalent cost. The United Nations ranked Costa Rica’s public health system within the top 20 worldwide -- so relax in the knowledge that internationally-trained doctors and cutting edge technology are available and economically priced. Both public and private medical insurance plans are affordable, ranging from $50-$100 per month, depending on age, gender and other factors.

Even though Costa Rica boasts one of the highest standards of living in Latin America, your purchasing power is greater here than in the States. If you lead a modest lifestyle, you can live comfortably on a pension and enjoy your golden years in Costa Rica.

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