For decades, Costa Rica has been marketed as a tropical paradise where foreigners—especially North Americans and Europeans—could enjoy an affordable, relaxed lifestyle surrounded by lush rainforests, warm beaches, and friendly people. Many imagined retiring here, stretching their savings, and living comfortably in what was once considered a low-cost haven.
But today, a common question arises: Why is the cost of living in Costa Rica so high? And perhaps more importantly, what happened to the dream of “living in paradise”?
If you are thinking about moving to or retiring in Costa Rica, it is absolutely essential to do thorough homework. You must carefully evaluate both the advantages and disadvantages, and—most importantly—understand how much money you will truly need to maintain the lifestyle and standard of living you are accustomed to back home.
This article explores the reality behind Costa Rica’s rising cost of living through personal experience, economic factors, and practical observations from someone who has known the country for decades.
A Long-Term Perspective on Costa Rica
I have been coming to Costa Rica annually since 1970 after marrying a Costa Rican. I lived here continuously for five years between 1998 and 2003, and I returned again in 2011. What I witnessed over the last 7–8 years was a steady and undeniable increase in the cost of living.
Between 2010 and mid-2011 alone, the U.S. dollar lost approximately 14% of its purchasing power in Costa Rica. The exchange rate fell from about 580 colones per U.S. dollar to around 498 colones, where it has hovered since.
If your income is in dollars, this fluctuation is not a minor inconvenience—it directly affects your ability to pay rent, utilities, food, and transportation. Exchange-rate uncertainty is a major concern for anyone living on a fixed income.
Why Is Costa Rica So Expensive?
1. Import Taxes and a Small Economy
Costa Rica is a small country and imports a large percentage of consumer goods, including:
- Household appliances
- Automobiles
- Electronics
- Processed food
Although Costa Rica produces much of its own fresh food due to its agricultural strength, anything imported into the country is subject to high import taxes, sometimes dramatically increasing retail prices. Appliances, vehicles, and even specialty foods can cost far more than in the United States.
2. Electricity: A Government Monopoly
Costa Rica’s electricity provider, ICE (Instituto Costarricense de Electricidad), is government-run and operates as a monopoly. As with most monopolies, this leads to high prices.
Electricity costs are especially painful for residents:
- Commercial electricity: approximately $0.05 per kilowatt-hour
- Domestic rates: slightly lower, but still high
I manage a small B&B and pay around $110 per month for electricity—even with no guests. I cook with propane, wash dishes by hand, rarely use a dryer, and do not iron clothes. I use energy-efficient bulbs and have no air conditioning or heating, which is unnecessary due to the mild climate at 3,500 feet above sea level.
The biggest electricity drain is the hot water heater. Unlike many locals, I do not use the inexpensive “Tico showers,” which heat water instantly as it flows. While cheap, these showers are often unreliable, resulting in cold or lukewarm water.
3. Telecommunications: Pay-As-You-Talk
Telephone service in Costa Rica is charged by usage:
- The more you talk, the more you pay
- This applies to both landlines and mobile phones
High-speed internet is available but typically costs about $35 per month, added to your phone bill.
My cell phone bill is around $18 per month because I rarely use it. My landline, which I use more frequently, runs about $50 per month, plus internet charges.
4. Water: One of the Few Bargains
Water is plentiful in Costa Rica and relatively inexpensive. When I have no guests, my water bill is about $1 per month. This is one of the few true cost advantages of living here.
5. Domestic Help: Affordable, But Regulated
Domestic help costs around $3 per hour, but the real expense comes from legal obligations. Costa Rica has strict labor laws covering domestic workers, including:
- Paid holidays
- Vacation pay
- Social security contributions
- Severance requirements
Before hiring help, you must visit the local Labor Office and fully understand these rules. Failure to comply can become very expensive.
6. Automobiles: Shockingly Expensive
Cars are one of the biggest financial surprises for foreigners:
- Import taxes can reach 100% of the vehicle’s value
- Gas costs about $5.50–$5.66 per gallon
- Insurance costs are similar to U.S. prices
- Annual inspections and December registration fees can be very high
Road conditions—potholes, rough terrain, and stop-and-go traffic—cause faster wear on tires and brakes. Mechanical labor is not cheap and often comparable to U.S. prices.
7. Housing, Construction, and Land
Construction costs in Costa Rica average $90–$100 per square foot, depending on finishes. Construction is slow, and during the rainy season, workers often lose hours—but you may still be required to pay for some of that time.
Land prices are high due to limited availability:
- Central Valley land can cost $80–$90 per square meter
- Beachfront property is significantly more expensive
- Planned developments charge even higher prices
Speculation is rampant, and foreigners—especially North Americans—often pay more than locals for the same property. Due diligence is essential.
Food, Dining, and Daily Life
Food costs are roughly comparable to cities like Atlanta, Georgia:
- Fruits and vegetables are cheaper
- Meat is more expensive
A good restaurant costs about the same as in the U.S., and tourist areas charge more. Local “sodas” (small family-run restaurants) offer simple, affordable meals and are a great way to save money.
Safety and Security
One thing visitors immediately notice is the presence of bars on homes and businesses. Unfortunately, theft and robbery are serious issues, particularly in rural areas where police presence is limited.
Major cities have visible police patrols, but outside urban centers, security is largely your responsibility.
Cultural Adjustments and Patience
Living in Costa Rica requires patience and tolerance. Deadlines are flexible, bureaucracy is slow, and confrontation is avoided. Learning Spanish is invaluable—not just for communication, but for understanding cultural nuances.
You will likely be charged more than a Tico for the same service or property. Accepting this reality makes life here easier.
Practical Advice for Potential Expats
- Rent for at least one year before buying
- Learn Spanish
- Budget conservatively
- Understand labor laws
- Ask lawyers for prices upfront and negotiate
Costa Rica offers incredible beauty, tropical weather, and friendly people—but it is not cheap, and it is not easy.
Final Thoughts: Is It Still Worth It?
Given today’s costs, I honestly cannot say there is a compelling financial reason to retire in Costa Rica. That said, life is about “different strokes for different folks.” Some will gladly trade convenience and organization for sunshine, greenery, and a slower pace of life.
After all these years, what do I miss most? Organization, efficiency, and convenience. What keeps me here? The people, the climate, and the natural beauty.
Perhaps after reading this, you’ll decide Costa Rica is best enjoyed as a vacation destination—and that’s perfectly fine too.
