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May 08 2014

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Retire for Less Newsletter – May 8, 2014

Welcome to our RetireForLessInCostaRica.com Newsletter!

Gloria, Paul, & “Machito” – Yes, that’s a MONKEY on my head!

 

In This Issue:

 

 

 

Our trip to Costa Rica

by Gordon & Bea Stanley

BeaGordonStanley

Bea and Gordon

We are planning to move to Costa Rica this fall after I retire at the end of August. This was our second trip to continue investigating where we want to be.

I had just bought a used Blackberry (my first cell phone at age 64!), and needed a SIM card for Costa Rica. Our flight arrived at 10:00pm so, by the time we got our baggage picked up and were almost through customs, it was well past 10:30pm. As we passed by the Kolbi phone kiosk, it was closed. Since we were staying at a nearby hotel, I figured I would just slip back to the airport in the morning when everything was open. When we got back there the next day we entered from the exit, as the Kolbi kiosk was just around the corner from the final luggage check. The security officer wasn’t too eager to grant me access until I showed him by passport to prove it was “after hours” that we arrived. So it really wasn’t a big deal, just something others need to be aware of if it is their first trip.

We spent the next couple of nights at the Casa Amanecer B&B while we snooped around San Ramón some more. We had spent a couple of nights there last year on our trip and had really enjoyed it. Helen, the manager, is a really great gal and we would certainly recommend her place to anyone! Saturday night we had the pleasure to stay with Paul and Gloria at their house and really enjoyed their friendship and hospitality.

On Sunday and Monday, we had reservations at the Vista Valverde B&B as we had stayed there one night last year during George Lundquist’s tour. On this trip, we had rented a small Kia car, and would recommend to anyone planning to tour around the country to get something bigger, as our little buggy didn’t have very much clearance. We had forgotten the narrow winding road up to the B&B after you turn off the main road! Four-wheel-drive would have been a plus! But the views from the top are just spectacular and the hostess is fantastic.

fingerprintingOn Monday, we had to take a trip into San Jose. We are in the process of applying for residency in Costa Rica and had an appointment with Mayanye from Residency in Costa Rica for fingerprinting and to meet with the lawyer. We were advised in advance to take a taxi into the city as there was no parking near our meeting place, and also because driving in the city can be “fun.” So, we drove as far as the airport and then took a taxi the rest of the way. I’m glad we did, even with a G.P.S. in the car! The appointment with Mayanye went well. She had everything lined up for us and in no time at all we were finished with finger printing and on the way to the lawyer’s office. As we didn’t have our retirement pension benefits paperwork with us, the time with the lawyer was slightly shorter than normal, but I must say the whole process with Mayanye went very smoothly and was quick. After having gone through finger printing at airports where you just place you fingers on an electronic pad, it seemed like a step back in time to use the black ink pads that you roll on fingers across, but one must remember “we’re not in Kansas anymore, Toto!”

Crocks at the Tárcoles River Bridge

Crocs beneath the Tárcoles River Bridge

On Tuesday, we headed to the coast and drove down to Quepos. Of course, we had to stop at the “crocodile bridge” (aka, the bridge over the Tárcoles River) and check out “those snappers” in the river below and along the banks. We found that interesting, as we had never seen crocodiles in the wild before – if you can call that “in the wild.” That evening, as we were relaxing by the pool in the hotel, all of a sudden we could hear a bunch of drums playing outside. When we went out, we found a group of drummers and dancers performing on the raised embankment between the street and the beach. It went on for close to 2 hours, so we got treated to some great entertainment. It was, however, nice when they stopped as you once again realized how pleasant silence can be after standing in the vicinity of some huge speakers!

Esterillos Este Beach

Esterillos Este Beach

On Wednesday, we had a tour of Manuel Antonio Park, and got to see lots of smaller wildlife, thanks to our guide’s telescope! It was a great little tour and we enjoyed some refreshing coconut water right from the coconut at the end of the tour. From there we drove up to San Isidro De General where we met up with some folks from our neck of the woods back in Canada who have a winter home there. We spent Thursday with them and, then Friday, headed back to the coast to Esterillos Este, where we would be meeting with a group of “Retire for Less” friends for a beach day on Saturday. We stayed at an awesome little hotel, “The Pellicano,” for two nights and thoroughly enjoyed ourselves – a fantastic strip of beach and met a great bunch of people as a bonus!

From there it was back to San Ramón for two days where we checked some rental houses that were on the market at the time to give us an idea of what kind of places are available and at what price. Then, Wednesday morning, bright and early, it was off to the airport so we could come back home to “enjoy” some -40C weather the following weekend! Arrrrrgh! Come on retirement time!

So, as a result of the trip, we are still liking San Ramón (& area) as a place to initially settle. Why? Several things: San Ramón is fairly level, which means easy walking for anyone with bad knees. (Can anyone else relate?) We also like the idea of the college being there for access to all the things available there, and the Community Action Alliance which gives one opportunity to easily get involved with the folks in the area. And last, but not least, we love the temperature. As much as we both love the ocean and have always said we want to retire by the water, that certainly won’t be the case in CR! Bottom line – watch out, San Ramón, we’ll be heading your way this fall, after the disposing of lots of “stuff”! (more Arrrrrgh!)

 

Questions and Answers: Investing in Certificates of Deposits and Avoiding Bank Fees

If you are thinking about moving to Costa Rica (or anywhere unfamiliar, for that matter), you have lots of questions and are searching for the answers. We get a lot of questions here at Retire for Less in Costa Rica, and often, we get the same questions more than once. Here are this month’s questions:

Don asks, “I am wondering what the interest rate is today if I were to buy a $100,000.00 CD, i.e. How many colones would I have after I year?… I understand that if one owns property in Costa Rica, they qualify automatically to purchase a CD at Coopenae credit union.”

The exchange rate keeps changing but today you would get about 540 colones to the dollar, depending on the bank. What you would have at the end of the year depends on a lot of factors, primarily the interest rate of your CD and the value of the dollar at the end of the term if you want to convert the colones back to dollars.

We’ve contacted Coopenae and they’ve sent us their current CD interest rates, as follows:

CoopenaeCDRatesTo see how these rates compare to the current rates at other banks and credit unions in Costa Rica, click here. 

But before you could do any of this, you would need to qualify to open a bank account in Costa Rica, and it’s much harder to do these days. We wrote an article about this shortly after the laws changed. Also, AM Costa Rica recently published an article called “Foreigners face barriers to open a bank account” (4/14/14) which you might want to read as well. Unfortunately, just purchasing property here does not allow you to open a bank account. Now, due in part to to the U.S. Foreign Account Tax Compliance Act (FATCA) requirements, one almost always has to be a legal resident to open a bank account in Costa Rica.

We are not financial advisers, so be sure to get investment advice from someone qualified to give it.

 

Larissa asks, “I have noticed month after month that you do not pay banking charges. How do you do this?”

 

We did pay bank fees in the beginning but haven’t for at least 3 years now. The short answer is that we write checks from our U.S. bank to our Costa Rica bank (credit union). It takes a month for the check to clear but we plan accordingly. That way we don’t have the high ATM charges whenever we need cash.

Here’s a link to an article we wrote a while back that explains it in more detail: 

Please note that you have to be a legal resident of CR to open a bank account these days (see above).

Related Articles:

 

Bank Interest Rates for Term Deposits in Costa Rica

Published by the Costa Rica Star on March 10, 2014. Used with permission.

UPDATEplease click here for more information about Coopenae in Costa Rica. Thank you to Asdrubal Zamora Corrales for the additional insights and information.

Central Bank of Costa Rica

Central Bank of Costa Rica

Last week, the banking interest rate in Costa Rica dropped to its lowest level since July 2008. The “tasa basica pasiva” is set by the Central Bank of Costa Rica and it is a closely-followed economic indicator similar to the prime rate on Wall Street. The recent drop to 6.45 percent extends the declining trend for interest rates in Costa Rica, which -to the chagrin of term deposit investors- has been taking place since 2003.

The banking interest rate in Costa Rica had been holding steady at 6.5 percent for the last few weeks. This widely-used and important economic indicator serves as a guide for banks to offer loans in colones. In early 2003, the rate was at an astonishing 17.5 percent, which made lending in colones a bit difficult for banks in Costa Rica since borrowers were mostly attracted to loans made in United States dollars. In that country, the prime rate was 4 percent for most of 2003, and it has been stuck at 3.25 percent since the Great American Recession and the global financial crisis reached a peak level in 2008.

Since the turn of the century, conservative investors in Costa Rica have been taking advantage of term deposits offered by banks that market their products based on the going interest rates. In Costa Rica, state-sponsored banks such as Banco Nacional, Banco de Costa Rica (BCR) and Banco Popular (BP) have certain restrictions on the term deposit products they offer in the sense that they cannot take undue risks on the rates of return they offer. For example, a 5-year certificate of deposit (CD) at BP could pay as much as 6.48 percent at this time -notice how close it sticks to the national bank interest rate in Costa Rica.

When it comes to offering term deposits and other investment products, private banks and credit unions in Costa Rica do not have the same restrictions as their state-sponsored counterparts. For this reason, you see institutions such as the Financial Co-Op of National Educators (COOPENAE) offering 1-year CD rates higher than 9 percent -much higher than the going interest rates in Costa Rica, which are expected to continue their gradual decline this year.

Why isn’t everyone in Costa Rica rushing to get CDs from COOPENAE or from private banks?

The Conservative Investment Mindset in Costa Rica

The average Tico investor is extremely conservative. They don’t mind getting a ficha (numbered ticket) at Banco Nacional and standing in line forever as long as they know their money is safe. Deposit accounts in state-sponsored banks in Costa Rica are insured by a system similar to the FDIC in the U.S., private banks and credit unions are not. This means that would-be depositors at COOPENAE should check the institution’s credit rating, which as of June of last year was AA by Fitch Ratings -one of the highest enjoyed by credit unions in Latin America.

As in many other nations, the banking system in Costa Rica basically follows the Teutonic roots of the Rothschild family (for banks) and the teachings of Hermann Schulze-Delitzsch (for credit unions). However, state-sponsored banks in Costa Rica have certain features that make them virtually infallible (this has been previously discussed in great detail by the Costa Rica Star). These features, in turn, attract many depositors who put up with the long lines and puny CD rates.

When credit unions or private banks fail in Costa Rica, they are not bailed out and depositors stand to lose all their money. Such was the case of COOPEMEX, a malfeasant credit union that was intervened by the Superintendent General of Financial Entities (Spanish acronym: SUGEF), but not before COOPENAE tried to buy the ailing assets on the cheap. COOPENAE eventually desisted, and five days later SUGEF officials arrived at COOPEMEX with enforcement orders to shut it down at a loss to depositors.

COOPENAE’s image was temporarily sullied by this incident, and a scathing 2011 Op-Ed piece published by national newspaper La Nacion called into question certain management issues; alas, since then it has grown into one of the most powerful credit unions in Latin America.

 

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In the Mailbag

Here’s one of the many responses we received to Gloria’s article “Home Again…Again — How We Celebrated Our Five Year Anniversary of Living in Costa Rica” about returning to Baltimore, selling our house, and dealing with all of our “stuff.”

I really enjoyed this issue’s article about returning home. It resonated with us because in 2009 we sold most of our possessions and became full-time RV’ers. We know first-hand that “less is better” and what we lifted off our shoulders was just “stuff”. I like the saying, “Have you ever seen a U-haul trailer following a hearse to the cemetery?” No! We also only purchase what we need and that’s usually food or occasionally clothing or supplies for the RV. Otherwise, we are not shoppers! This lifestyle has given us the opportunity to see the US, but return to our home town in the summer (no snow) months to reconnect with friends and family. We travel to Costa Rica every other year when we put together birding groups and have often thought about spending several winter months. We aren’t quite ready to leave the US permanently…there’s still so much to see and do, but following your experiences certainly keeps those options on the table.
Thank you for keeping up this newsletter, which we enjoy so much.

~ Carol S.

 

We also received the following note from a reader concerning international health care:

So happy to find your site! My fiance and I are in the process of buying property (Santa Teresa on the Nicoya peninsula) with an eye toward retiring there in several years. Your site is a god-send!

Also, came across this recent article in Huffington Post on top 5 countries with the best health care (Costa Rica is rated #4!):

Thought your readers might want to know about it as well.

Pura Vida and saludos!

Elisa B.

The article that Elisa mentions, “These 5 Countries Provide The Best Health Care In The World” was written by InternationalLiving.com. They rated the top five countries as follows:

  1. France
  2. Uruguay
  3. Malasia
  4. Costa Rica
  5. Mexico

Here’s what International Living had to say about healthcare in Costa Rica:

Costa Rica’s excellent and affordable health care is largely the result of government investment in the health sector, plus an atmosphere of political stability. Costa Rica comes in fourth in the health care category of the InternationalLiving.com annual Global Retirement Index 2014. By almost any standard, Costa Rica has some of the best health care in Latin America. Not only that, but the country’s public and private health systems are constantly being upgraded—new hospitals, new equipment, and improvements in staff training. InternationalLiving.com

 

How to Improve Your Retirement Tour Experience

by Lynette Hunt

Lynette and Mark

Lynette and Mark

My husband and I just returned from a 7 day trip to Costa Rica.  We have been researching the Central Valley, and signed up for George Lundquist’s “Retire on Social Security” tour. We’d also made contact with Paul and Gloria Yeatman, as we’d followed their “Retire for Less in Costa Rica” newsletter for quite a while.  (Can you detect a theme here??)

We knew we were most interested in the San Ramón and Grecia areas, so we made arrangements with Paul and Gloria to spend two days in those cities with them after completing George’s tour.

We’re Boomers.  Still working, way too hard, and we flew from California to Costa Rica without allowing for more than a day of rest after arrival.  Costa Ricans start their days early, and George follows that pattern, so his tour runs from 7am to 7pm.  Costa Rica is two hours ahead of California, so we felt like we were actually starting the day at 5am.

George promised and delivered an “information overload.”  His tour was excellent, and those of us on the bus learned the practicalities of moving to and living in Costa Rica, as we met Expats who had gone before us, pharmacists, builders, hospital personnel, etc.  We were on the go continually, as we experienced the different standards of living, foods, and housing possibilities.

GreciaChurch

Grecia’s church

We completed the tour late afternoon on a Tuesday, and were scheduled to tour Grecia and San Ramón in more detail with Paul on Wednesday and Thursday. Paul arrived at our B and B on Wednesday morning and showed us Grecia.  He was thorough, but more laid back, and we enjoyed meeting his friends and contacts who will be invaluable as we make this move. Paul took us to a variety of rentals, showed us how to buy clothes in a Ropa Americana, took us to lunch, and we did a lot of walking around the town.  That enabled us to see how very clean Grecia is. Without exception, the Ticos we met were kind and helpful.

The next day was to be the San Ramón tour.  Put simply, I fell apart, exhausted, and could not manage it.  My husband went with Paul and, again, had a wonderful and informative day. To say I was disappointed would be an understatement. I thought I was coming down with the flu, but it was “just” exhaustion.

RunningOnEmptyI would strongly advise anyone planning a tour to Costa Rica to set aside a couple more days and not try to jam in too much in a short period of time.  Even though you think you “have” to get back due to work, and you cannot afford those extra days, when you are considering a major move like this, it’s short-sighted to think you can manage to gather information when you are running on empty.

We highly recommend George’s tour and spending time with the Yeatmans; just put some space in between.

 

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