Friday, May 11, 2012

Retiring to Nicaragua

Jack Griffin and his wife Margaret have found their new retirement home in Nicaragua. When the stock market crashed and the value of their home in the States plummeted by 30%, they began to worry about how to fund their retirement. The final straw came with a 37% hike in their annual health-insurance premium. At age 60, they felt they deserved the retirement they had worked for all their lives, so they found a new home in Managua, the country’s capital.

Today their international medical insurance costs them 62% less than their policy did back home (yet their local hospital is internationally accredited and the doctors speak English).

Retired now without money worries, they spend their days exploring, horseback riding, going to the beach or gym, and doing yoga. They have a full-time maid and a gardener and, says Jack, “We do it all for less than half the cost of a moderate lifestyle back home in Atlanta, Georgia.”

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Why Nicaragua?

Nicaragua appears in each and every listing of the top retirement destinations; however, it is not as saturated as some other popular places, such as its neighbor Costa Rica is, for example.

Geographically, Nicaragua is blessed with two long coastlines, two big lakes, volcanoes, highlands, rain forest, and rivers. In this regard, it’s got everything Costa Rica has, but is less discovered and developed. This makes it the perfect spot for adventurers, eco-travelers, retirees, and those interested in bargain rates.

Nicaragua is notable architecturally too. Its two sister colonial cities, Granada and Leon, vie for the title of oldest city in the Americas. Both cities have impressive colonial-era churches, public buildings, and parks.
Nicaragua is a colorful land, from its red clay-tiled roofs to its powder blue church steeples. There are also the yellow, green, red, and blue facades of its centuries-old haciendas and the pink and purple bougainvillea that cascades down its inland hillsides.

Nicaragua is a quiet and peaceful country struggling to repair its historical image.

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Public Safety

Questions around the safety in Nicaragua always arise when you talk to friends and family about your idea to retire to Nicaragua. Isn't it a dictatorship? How about political stability? 

Somehow those questions are understandable. After all, Daniel Ortega, the infamous Nicaragua Sandinista leader, was re-elected in 2007. After the election, real estate prices plummeted and foreign investors feared for the worst. However, once the initial period of panic was over, the Nicaraguan constitutional democracy emerged to be as peaceful and stable as before.  

Whilst President Ortega has not lived up to his promises in terms of creating new jobs and fostering economic growth, he achieved some positive developments, like re-establishing free education and health services.

What might surprise you: Nicaragua is reportedly the safest of all Central American countries today, at least according to a study by INCAE, the Harvard Business School affiliate in Managua.

Petty crimes like pick pocketing and bag snatching are your biggest concern. Don't wear flashy jewelry and keep your bag close to your body when you are out and about, especially in crowded places like markets and buses. Assaults, violent attacks and rape are much less common in Nicaragua than elsewhere in Central America, and even in many places in the USA. 

All in all, the Nicaragua safety situation is definitely better than its reputation!

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Although Nicaragua’s health infrastructure is relatively poorly equipped in terms of nurses and hospital beds per capita, you will have no problem in finding modern private hospitals in the Managua area. Opened in 2004, the Vivian Pellas Hospital in Managua is considered to be the best in Central America.

Other hospitals with modern equipment and often English speaking doctors are Hospital Privado Salud Integral, Hospital Bautista, the Military Hospital and the Private Hospital Cocibolca in Granada. The further away you get from the capital and the other major cities, the rarer and more rustic the health services get.

Many Nicaragua doctors have been trained in the US, Mexico, Europe, Cuba or the Caribbean before taking their positions in Nicaragua. A doctor's visit usually costs between $10 and $30, and even if you have to spend the night in a hospital, a private room won't cost you more than $100. 

You'll find that healthcare in Nicaragua is of high quality and costs you much less than in the US or Europe. Emergency treatment in public hospitals is even free of charge. You only have to pay for the medication.

Retirement Incentives in Nicaragua

The country’s special retirement program is much like the Costa Rican program was in the 1980s, attracting thousands of expatriates to Nicaragua. The eligibility criteria are very tolerable. To be eligible, you need only be over 45 years old and have a monthly income of at least $600 (plus $150 for each dependent family member).

Compared to other countries, this amount is still low (in Panama you need at least $1,000 and in Belize twice as much), but not as low as it used to be before the new residency law came into effect in 2009. Before 2009, you only needed a guaranteed income of $400 (plus $100 for each dependent). 

Nicaragua offers an attractive and competitive retirement program designed to encourage retirees and pensioners to move to Nicaragua. The key piece of legislation is Decree No. 628, the "Law of Resident Pensioners and Retirees" which states that retirees are eligible for benefits.

In June 2009, the Tourism Institute announced changes to the residency and retirement laws that increased the tax exemptions and benefits even more. All in all this new suite of laws make Nicaragua's retirement program one of the most benefit-laden in the region.

Here are some of the specifics of the program:
  • Pay no taxes on any out-of-country earnings.
  • Bring up to $20,000 worth of household goods for your own home, duty-free (The previous exemption was for US$10,000).
  • The tax exemption for vehicles increased from $10,000 to $25,000.
  • Import an additional vehicle every 5 years under the same tax exemptions.
  • The minimum age for eligibility is 45, but this can be waived if if the applicant proves stable income.
  • Applicants can present a naturalization certificate instead of the birth certificate.
  • An exemption from sales taxes now applies on home construction materials up to the first $50,000.

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Cost of Living

Nicaragua’s lower cost of living does not mean you have to sacrifice the quality of life you have been accustomed to in the U.S. or Canada. In fact, you will probably be able to live in Nicaragua with even more luxuries than you are accustomed to, simply because the prices are so economical.

Bottom of Form
Below is a sample monthly budget for two people:
·         Household expenses:                                               
o   Electric (without air-conditioning) - $45
o   Water - $20
o   Propane gas (tank for cooking) - $20
o   Satellite TV (100 channels) - $35
o   Internet (plus start-up costs) - $50
o   Cell phone - $25
o   Groceries - $200
o   Entertainment - $100 or sky’s the limit
o   Gasoline or Diesel - $80
o   Health insurance (Hospital plan) - $100
·         Household help:                                                      
o   Maid-three times a week - $60
o   Gardener-three times a week - $60
o   Incidentals - $100                                       
·         Monthly total: $895

If you decide to give Nicaragua a test drive before settling here or purchasing real estate, you’ll find rents to be very reasonable. In Granada, you can rent a modest apartment for a little as $350 per month.

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Documents needed for applying for retiree status in Nicaragua include:
  • A copy of your birth certificate (or naturalization certificate)
  • A copy of your passport
  • A certificate of letter from your doctor stating that you are in good physical health, are free from communicable diseases and are mentally sound.
  • A letter from your local police department stating that you have never been convicted of any crime
  • A certificate of income from your bank or pension plan
  • A list of the household items that you will be importing

All documents have to be less than 6 months old. Once you have the documents, get them authenticated at the appropriate local authorities in your country of origin. Then send them to the nearest Nicaraguan consulate in your country, where they are authenticated once again and sent back to you. Calculate at least 4 to 6 weeks for the authentication process.

Sources and Additional Information:


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