Month: October 2015

A lot of times when I am touring people around the area looking at some great properties and all the conveniences that the area has to offer, I tell this to folks in my car all the time. Just this past week Alfredo and Audrey, a great couple from Maui Hawaii, yes that’s right Hawaii. See they decided to make the move to Costa Rica. Over a year ago they had contacted me asking lots of questions about Costa Rica. I told them straight out. “Look you live in Hawaii, a tropical paradise, the best way to describe Costa Rica (and I am a bit biased) is to get on a plane come for a month and travel the whole country. See all the beauty that this small country has to offer. I told them to think about what Hawaii was 30 years ago and you have Costa Rica, except with the exception, IT IS BETTER! Low and behold they took my advice and came for a month, they traveled almost the entire country looking at areas they would consider to relocate to and basically said to me, Well you were right Joe, while many parts of Costa Rica reminds us of Hawaii, we do not want to be off the grid that much. This area you live in would be where we want to live as well there are just so many advantages and services. DUH!! Sometimes no matter how much you tell people the truth they need to find out for themselves.

So Audrey and Alfredo made the decision to make the move to Costa Rica. They sold both their homes in Hawaii moved all their stuff by container to California as a holding location until they find their dream property in Costa Rica.

Anyway back to the grocery store. Last Friday I had some other folks, Darren and Jacqueline from Canada, closing on a grand oceanfront penthouse condo, one just to die for and I wanted to present them with a bottle of champagne to celebrate their new purchase. So I headed into town to the grocery store. Yes, you can buy liquor in the grocery store even at 8:00 am in the morning; got to love Costa Rica! Bet you can’t do that in Hawaii. Anyway, I walked in and made my way to the aisle with all the booze. I grabbed a bottle of Moet Chandon and as I turned I see this woman further down the aisle, she looked really familiar but I am only seeing the back of her. So I casually walk that way to try to get a look at her face. Low and behold it was Audrey. She, Alfredo, and Bella, their beautiful Rottweiler, had arrived on a redeye from Los Angeles that morning, which got in at 6:30 am. We Hugged and I asked her “where is Alfredo?” “Oh, he is out in the car with Bella waiting for me. I just wanted to get some things and go back to the condo you helped us rent and crash for the day.” Then Audrey proceeds to tell me that she is surprised that she thought things in the grocery store would be much cheaper than Hawaii.

So I took a look in her basket and what do I see? A sixpack of Heineken, IMPORTED! A bag of Snyders pretzels, IMPORTED! A container of Middle Eastern hummus, IMPORTED! A box of Nabisco Wheat Thins, IMPORTED! The list goes on and a bunch of cosmetics. I looked her straight in the eyes and said, “Audrey we are going shopping together when you get rested and settled in” She laughed at me said, “I know how to shop do you think I made it this far in life with going to the grocery at least once  a week.” I was thinking, yes you may have but you do not know how to shop like a Tico.

This scenario happens often; North Americans come here on vacation, go grocery shopping and then freak out when they get to the cash register. The reason being, they usually purchase items that they know, brands that are familiar, and a good many of them are imported. Hence, the higher price and sticker shock. The other thing is they are drawn to the fancy big box grocery stores with bright lights, rotisserie ovens, a Sushi station, well-displayed produce, and deli and food counters.

I ended up taking Audrey out shopping once they settled in. I took her to the farmers market in Liberia, a short and easy drive from Playa Hermosa. She was totally blown away by the quality and the super low prices on produce. Nothing Imported. Then I took her to the Mercado central.  What a great experience this is.  Butcher shops, little soda restaurants, shoe stores, flower shops, and the list goes on. Again, Audrey was pleasantly surprised at the prices. When we headed back toward Hermosa, I stopped at a great butcher shop that specializes in beef. Have you ever had the beef from the grocery stores here? You might as well chew your sandals.  To get it tender you will have to braise it for hours in a crockpot. We purchased a whole tenderloin of beef; this where Filet Mignon comes from. All cleaned up and ready to cut into steaks for a whopping $29.00 USD. She was blown away.  She said on Maui that cut of beef would have been over a hundred dollars.

THERE YOU GO!

Then once back in the area I took her to the full blown grocery store and taught her how to shop locally, Meaning: read the labels on the back, see where it is made and, if made in the US, Canada or anyplace else outside of central America, you can be assured you are going to spend more.

So, to help my friends and clients get acclimated, I like to take them to the grocery store even before they ask. It is a lot easier to explain when standing there in the aisle comparing products made in Central America and those that are imported versus them asking me why things are so expensive.

Most people do not like going to the grocery store.  Of course, it is a necessity and for most men, it is a chore that they don’t like.  Me, on the other hand, I like it.  I am a retired chef so all things related to food interest me.  Hence, why I like grocery shopping and getting to really experience the Costa Rica way of life.

When you are ready to come down for a visit and do some serious local grocery shopping be sure to drop me a message and I’ll be happy to point you in the right direction.

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Here are 5 lesser-known facts about US Social Security the every Ex-Pat should know.

Social Security is often the foundation of retirement plans but many Americans have been paying into the system for years without knowing how the system actually works – especially when they retire abroad. Here are 5 lesser-known facts about Social Security that any retiring ex-pat needs to know.

Qualifying for Social Security benefits is really easy

To receive benefits at retirement, you must simply earn 40 ‘credits’ over at least 10 years of work. This boils down to about $1,200 a quarter, which is so low that you could probably qualify by working a seasonal job! Many ex-pats contribute to the US Social Security system even when living abroad so the ex-pat status does not ‘exempt’ one from Social Security benefits.

In addition, if you earned money in the US and paid into the US system, the credits you earned will remain on your Social Security record.

You can receive Social Security benefits overseas

Eligible US citizens can receive benefits when living abroad, with a handful of small exceptions. The Social Security Administration (SSA) is prohibited from sending payments to Cuba or North Korea but they will send all withheld payments you were eligible for once you leave the restricted country. Note that non-US citizens cannot receive payments for the months they lived in Cuba or North Korea, even if they move to a country where payments are allowed.

There are also a handful of countries where payments cannot be made, but for the purpose of this article we are talking about Costa Rica and yes you can receive your benefits here.

The Social Security system isn’t penniless (yet)

According to the 2014 annual report from the Social Security Board of Trustees on the financial status of the program, without policy changes, the combined Social Security trust funds will become depleted and unable to pay scheduled benefits in full on a timely basis in 2033. After that, Social Security could pay about three-fourths of scheduled benefits through 2089.

Analysts and reports differ as to what year the funds will begin to fall short but the guesstimate has remained between 2029 and 2042 for the past 20 years. Americans are encouraged to diversify their retirement portfolio to ensure they don’t rely too heavily on benefits that may (or may not) be available when they are needed.

Totalization Agreements prevent dual-taxation

The US has entered into agreements with 24 countries to ensure expats are not forced to pay into two Social Security systems. These agreements allow you to choose which system you would like to pay into.

If you are self-employed, this may not the case, as self-employed individuals are generally subject to the US Social Security system. These taxes are included in self-employment taxes, currently 15.3%, and are assessed on net business income. However, in countries with a Totalization Agreement, self-employed individuals who are subject to self-employment tax in the foreign country will be exempt from US self-employment tax. A certificate of coverage must be obtained from the country of residence to provide proof of the individual’s participation in another Social Security plan.

Self-employed individuals will be subject to dual taxation if they choose to live in a country with which the US does not have a Totalization Agreement, as in Costa Rica.

SSA benefits may be taxed

No matter where you go, US taxes will follow! US citizens and residents can expect up to 85% of Social Security benefits may be subject to federal income tax. How much is actually taxable depends on the total amount of your benefits and other income you receive.

Generally, the greater your total income, the higher the taxation. The taxes are calculated as follows:

Up to 50% of your benefits will be taxed if your income is greater than $25,000

Up to 85% of your benefits can be taxable if either of the following situations applies:

• The total of one-half of your benefits and all your other income is more than $34,000 ($44,000 if you are married filing jointly)
• You are married filing separately and lived with your spouse at any time during the year.

It is important to note that many foreign governments tax US Social Security benefits so we encourage you to check your country’s tax laws to get an accurate picture of your overall taxation.

Note: This article was written by David McKeegan and edited for Costa Rica, all credit goes to David.

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