The Boomer is a column written for adults nearing retirement age and those already in their golden years. It will also promote reader interaction by posting e-mail responses and answering reader questions. E-mail your questions or topic ideas to email@example.com.
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Living your golden years outside the U.S. used to be a foreign concept, but a growing number of baby boomers are choosing to retire beyond American borders.
A 2007 survey by New Global Initiatives, in conjunction with the Zogby International, found that more than three million U.S. citizens have decided to live outside of the U.S. for retirement and another 17 million were mulling leaving. The survey listed Europe as the top place among 55 to 69 year-olds who plan to retire abroad and Central America came in second. But a lot has happened in the last four years, a financial crisis wiped away a lot of boomers retirement savings and now Central Americas relatively-low cost of living makes it more appealing to boomers looking for adventure.
I reached out to Christopher Howard, an author specializing in books about retirement in Costa Rica, Nicaragua, Panama, Mexico and Cuba. Howard, currently residing in Costa Rica answered the following questions via email regarding baby boomers retiring and relocating to Central America.
Boomer: Why are so many baby boomers retiring in Central America?
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Howard: Boomers are retiring to some countries in Central America: Costa Rica, Panama and Nicaragua are their prime destinations. First, these countries offer good year-round weather and a lower cost of living. All are within two-and-half hours of the U.S. so their proximity is a factor. In the case of Costa Rica, all of the factors I just mentioned plus an affordable first-class medical care seem to be the attraction. Mexico used to be the retirement haven for retirees, but obviously the country has some serious problems with drug-related violence as does Guatemala.
Boomer: What happens with my health care coverage in Costa Rica?
Howard: Medicare doesnt cover U.S. citizens in any country outside of the United States, but they should. Blue Cross, V.A. Disability and a few other plans will cover their clients in Costa Rica.
There is really no need for U.S. medical coverage because of the affordable options found here. "The Caja" or the socialized system offers 100% coverage for foreign residents and doesnt exclude them because of pre-existing conditions. The monthly premium is around $50. The second option is the private insurance the National Insurance Institute provides. I use this plan and it runs around $2,000 per year. Some people in the U.S. pay nearly that amount per month.
Boomer: If I buy a house or a condo, are there property taxes involved and if so, how much?
Howard: In general, property taxes run 0.1% of the declared value of a home or condo. Thus, a home valued at $100,000 would mean paying $100 yearly.
Boomer: With the influx of baby boomers retiring outside of the US, are real estate prices still affordable?
Howard: Until the crisis in 2008 Costa Rica was one of the five best emerging real estate markets in the world and driven mostly by customers from the U.S. Now Costa Ricans make up the majority of buyers. The local market is strong, however, in the beach areas there are some excellent values for foreigners since prices have dropped considerably because of world events. There has been an adjustment in prices.
Boomer: How would you compare the cost of living to that of living here in the US?
Howard: It really all depends on ones lifestyle. I know single people who live on under $1,000 per month. On the other hand I know others who live on a few thousand monthly. I pay $60 per month for electricity and water and dont need air conditioning or heat in my home because of the Central Valleys good climate. I have two cell phones and the average bill is $25 per month. My maid comes once a week and the cost is $80 per month. I mentioned the low cost of property taxes above. Public transportation is dirt cheap and outdoor farmers markets offer fresh fruits and vegetables at rock-bottom prices (a bag of 6 to 8 bell peppers for $1). Once you get settled and know the "ins and outs" you can save a lot. Here are two sample budgets to give you an idea.
a) Here is an example of a budget for a single person who has no more than $1,500 to spend a month:
Rent $200 to $300
Electricity and water $20
Cable TV $25
Monthly Transportation $50
Monthly public health insurance (medicines included) $50
Entertainment $100 -$150
b) Budge for someone with $3000, to $4,000 to spend per month
A couple who owns a $150,000 home (three bedrooms and three baths) free and clear and has a car will probably have the following monthly expenses in Costa Rica.
Private medical insurance $200
Dental care $50 per month
A part time maid $100 to $150
Part time gardener $30
Beauty parlor $75
Food including inexpensive fruits and vegetables from a
Farmers market and many imported American products $500 per month
Entertainment (movies, socializing) $200- $300
Dining out a couple of times a week $300
Private gym $50 - $100 per couple
Country Club (after you pay initial fees) $100 to $200 per month
Car insurance for a relatively new car $100
Utilities (water and electricity) $100
Telephone (using Vonage or Skype for long distance) $75-$100
High speed Internet $50
Cable or satellite TV $50
Car repairs $50
Garbage $40 per year
Property taxes on your $150,000 home $20 per month
Misc. expenses $300
Other possible expenses
Travel to U.S. or other countries $3000-$5000 or more per year
Boomer: If I am living abroad do I still have to file an income tax return?
Howard: Yes, all U.S. Citizens have to file one. However, if you are working and earning money abroad there is a foreign exemption of $91,500. So, a married couple can make $183,000. Not bad. However, the money you make in the U.S. is subject to regular income tax.
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