Wednesday 22 September 2021

Should I Stay Or Leave Costa Rica For A Lower Cost of Living?

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QCOSTARICA by Ivo Henfling – Many of you know that the cost of living in Costa Rica has gone up a lot in the past few years. One of the reasons is that the Costa Rica government decided to stop with the mini-devaluations in 2006 and move over to a system of exchange rate bands that has kept the Colon on the same value since then.

Exporters are suffering with the bad exchange rate but more and more companies for the US and other parts of the world are still getting installed in Costa Rica, even though the social security system in Costa Rica is expensive and adds onto the labor cost and operating cost of a business.

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Procomer, the Costarican entity for commerce promotion, publishes that Costa Rica has 4.6 million people, with 4,600 products exported to 150 countries. In 2014, we exported US$11.304 billion in goods, US$6.341 billion in services by 2,441 exporting companies. It is also true that quite a few Costarican industries have moved to Nicaragua because labor is cheaper there.

Is it true that everything is Costa Rica is more expensive than elsewhere? Why are foreign industries moving to Costa Rica and local Industries moving elsewhere? Is life for a retiree or expat better elsewhere? Should you stay or leave Costa Rica and go back where you came from?

Is Costa Rica more expensive than other countries?

I just got back from Florida and indeed, shopping in a supermarket is much cheaper there than it is in Costa Rica and the choice of inventory is 10 times or more than what you can get in Costa Rica. Most products in Costa Rica that are not included in trade agreements with other countries, have a high import tax and the 13% sales tax (soon going to 14 and 15%) adds onto it even more while in Florida there is only a 6% state tax plus a 0.5 – 1.5% discretionary surtax, depending on where you are.

Health insurance, CCSS (obligatory Social Security) is affordable and you don’t need hurricane insurance in Costa Rica. You don’t need air-conditioning anywhere, just a ceiling fan here and there, fruits and vegetables is a lot cheaper on the farmer’s market and dental work is also a lot cheaper. Mostly, you don’t need all the stuff that the consumer society in the US almost obliges you to fill your garage to overflow. The average American uses 300 shopping bags worth of raw materials every week and an amount of food that weighs as much as a large car. The constant consumption in the US leaves North Americans largely unsatisfied anyway, which has created what is almost an addiction. In Costa Rica, this urge is not so great because the inventory is simply not available or less affordable. Depending a lot on your life-style, the cost of living in Costa Rica is not bad at all.

Why are some industries moving away and do others arrive?

Costarican’s workforce is very well educated because we have no army in Costa Rica and the funds are used for education. This puts the Tico workforce in a much higher educational level than Nicaragua or other Latin countries. This attracts lot of foreign industries who invest heavily in Costa Rica and pay attractive salaries that in their own country would not attract such a well-educated labor force. Costa Rica attracted over $2 billion just in 2014. On the other hand, social security and production cost (mostly power cost) puts Costa Rica out of the market for simple mass production products and it is cheaper for some local industries to move their operations to Nicaragua, where low-skilled labor is a lot cheaper.

Is life for a retiree or expat better elsewhere?

It just depends on the life style you are looking for and what your income is. If you are living in a 1st world country and you don’t really care about the amenities and advantages this country offers you and if you like a fantastic climate every day for the rest of your life, enjoy the advantages a country with 5% of the world’s biodiversity in only 0.3% of the world’s territory and want to live in one of the happiest countries in the world, Costa Rica is a great option for you. Most of those who are living in Costa Rica do not realize that the cost of living has changed everywhere in the world and how good life can be in Costa Rica compared to life elsewhere.

Should you stay or leave Costa Rica and go back where you came from?

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Today’s recommendation: Before you take any wrong decisions, do you homework. Make a list of the issues that bother you when living in Costa Rica and send the list to as many relatives and friends. Ask them to give you their thoughts about how they experience those issues in their own environment.  And if there are certain issues in their environment they think that could bother you when you’d move back as well.

Sure you won’t find a perfect place by moving to Costa Rica, you will have to work hard to make it that place. I did and I still think it is, even with the cost of living higher than before. You might find out that the cost of living is not really such an important factor anymore and that there are other more important issues you should fully take advantage of while you can.

Article first appeared at

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Ivo Henfling
Ivo Henfling, a Dutch expat who has lived in Costa Rica since 1980, founded the American-European Real Estate Group back in 1999 which was the first functioning MLS with affiliate agents from coast to coast. Ivo Henfling can be reached at (506) 2289-5125 / 8834-4515 or at

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