Kamikaze expats are the ones who are convinced that to succeed they have to “believe” in themselves and “prove” it by fully committing, burning their parachute and jumping in with both feet.
Boomerang Expats are the Majority
A recent article in Travel and Leisure Magazine about “Boomerang Expatriates” observed that most retirees that leave the U.S. return within a few years. People who relocate to Costa Rica are no exception and reasonable estimates say 8 out of 10 are back home in less than 3 years. There are no accurate statistics because the majority never complete the residency process and therefore never officially exist as expats.
The article goes on to point out that many who stay a few years end up returning later when they’re ready to exchange surfing and sunset cocktails for assisted living, need to care for loved ones “back home,” or because of their own medical issues.
It’s not just retirees either.
Over the past three decades we’ve known a number of young and middle aged people who’ve started businesses and new lives in Costa Rica. Hotels, rental car agencies, publishing companies, rafting companies, restaurants and others. Some lasted ten years or more but eventually the majority departed.
Don’t Kamikaze Expatriate
It may be hard to accept while dreaming of a new life in Costa Rica but odds are good you’ll boomerang. So what can you do to avoid crashing and burning?
More importantly, what can you do that won’t hurt your odds of succeeding in Costa Rica while easing the landing if you do return.
Costa Rica Real Estate
Often the first (often inadvertent) step on the road to becoming a relocation kamikaze is the misconception that Costa Rica real estate is an “investment” and selling a house in the States, Canada or Europe to buy one on the beach is a good idea.
If you’ve got millions stashed for retirement and you’re considering selling a second or third home in Hawaii it’s no big deal. But if you’re planning to sell your primary residence and using the equity to buy in Costa Rica that’s the fastest way to turn the adventure into a suicide mission.
Buying property is easier than selling and that’s ten times more true in Costa Rica. It’s not uncommon for properties to languish on the market for years even at deeply discounted prices. There are many other reasons it’s a bad idea. Far and away the most common piece of advice found on all Costa Rica expat forums and facebook groups is “rent for a few years before you buy.”
Instead of selling your property “back home” consider renting it out and using the rent you collect to pay rent in Costa Rica. This has immense advantages should you decide to return and no downside if you decide to stay.
Cheap medical care is one reason cited (especially by transplants from the U.S.) for moving to Costa Rica. The “free” public health care system is definitely cheaper but some find the care inadequate and waits too long. The private hospitals are more state of the art but also cost a whole lot more and neither Costa Rican caja nor foreign insurance covers the cost.
Consider using a little of the money you’re saving on healthcare in Costa Rica to enroll in Medicare Part B. It’s not expensive if you start at 65, but if you sign up later you’ll be penalized 10% for every year you should have been enrolled and the penalty is added every year for the rest of your life.
Leave Your Money Home
You may be required to deposit your social security, pension or other payments into a Costa Rican bank account to qualify for residency but if you have savings, IRAs, stocks, bonds or big piles of cash you’re probably better off leaving it where it is. The financial institutions are reliable in Costa Rica and it’s easy to deposit but because it’s an international center for money laundering there may be challenges to repatriating large sums if you go back.
There are easy, free and secure ways (like Schwab online checking) to transfer funds for rent and other expenses.
Get a P.O. Box
California and many other states will bill you for back payments of state income tax on your social security or other income if you move back in two years or less. Florida and a few others don’t have state income tax so consider changing your “home” address just in case. Check with an accountant and/or attorney.
There’s almost never any good reasons to burn all your bridges and strap in for a one way or die mission to Costa Rica. If you really feel that you need the motivation succeed that comes with making it very difficult or impossible to return then perhaps you should reconsider the move. If it turns out not to be what you want for the rest of your life it’s okay to try something else.