Can You Collect Social Security While Living in Costa Rica?
Yes, in full, with no reduction. US citizens receive their complete Social Security benefits while living in Costa Rica. Payments can go to a US bank account or directly to a Costa Rican bank through the SSA's International Direct Deposit program. Costa Rica is not on the SSA's restricted country list. And under Costa Rica's territorial tax system, your benefits are exempt from local taxes. You only owe US federal income tax.
Why Social Security Works Differently When You Leave the US
Social Security doesn't change when you move abroad. Your benefit amount stays the same, your COLA adjustments still apply, and your direct deposit keeps hitting your account on schedule.
What changes is everything around it.
Medicare stops working. Your cost of living drops. Your tax situation shifts. And the conventional wisdom about when to claim, the advice built on US cost assumptions, stops applying the way most people expect.
The families I work with who are planning a move to Costa Rica almost always need to rethink their Social Security strategy. Not because the rules are different, but because the math is.
How Social Security Payments Work from Costa Rica
The Social Security Administration pays benefits to US citizens in Costa Rica without any restrictions. According to the SSA, only Cuba and North Korea are fully blocked. Seven former Soviet countries require in-person embassy verification every six months. Costa Rica has none of those limitations.
You have two options for receiving payments:
| Method | How It Works | Pros | Cons |
|---|---|---|---|
| US bank account | Benefits deposited to your existing US bank; access via debit card or transfer service (Wise, Schwab) | Simple, no changes needed, familiar | Transfer fees, currency conversion, slight delay accessing funds |
| International Direct Deposit (IDD) | SSA sends payment directly to a Costa Rican bank account in US dollars or colones | Money arrives locally, no middleman | Requires CR bank account setup, fewer bank options, currency risk |
Most of the families I work with keep a US account at Charles Schwab or Fidelity and use a transfer service like Wise to move money to Costa Rica as needed. It's simpler, avoids the bank account setup process in Costa Rica during the first year, and gives you flexibility.
The Federal Benefits Unit at the US Embassy in San Jose can help with any Social Security issues that come up. They handle benefit verification, direct deposit changes, and proof-of-life requirements.
What Happens to Medicare When You Leave?
This is the single biggest gap people miss.
Medicare does not cover healthcare outside the United States, with rare, narrow exceptions (emergency care near the US border, some situations on cruise ships). If you're based out of Costa Rica, your Medicare card is essentially decorative.
That creates a real decision:
Option A: Keep paying Medicare Part B ($202.90/month in 2026). You maintain coverage for any trips back to the US and avoid the late enrollment penalty if you return permanently. Over five years, that's $12,174 in premiums for coverage you're not using.
Option B: Drop Part B and rely on Costa Rica's healthcare system. You save the premiums but face the late enrollment penalty if you re-enroll later: 10% added to your premium permanently for every full 12 months you weren't enrolled. Skip five years, and your premium goes up 50% for life.
| Scenario | Monthly Cost | 10-Year Cost | Risk |
|---|---|---|---|
| Keep Part B while in CR | $202.90/month (2026) | ~$24,348+ (increases annually) | Paying for unused coverage |
| Drop Part B, return after 5 years | $304.35/month (50% penalty, permanent) | Penalty cost over 20 years: ~$24,000+ extra | Higher premiums forever |
| Drop Part B, stay in CR permanently | $0 | $0 | Must manage healthcare entirely in CR |
There's no objectively right answer. But here's the framework I give my clients: if you're 80% sure you're staying in Costa Rica long-term, the math usually favors dropping Part B. If there's a realistic chance you'll return to the US within 5–7 years, keep it.
Part A (hospital insurance) is premium-free if you paid Medicare taxes for 10+ years. Keep it regardless. There's no cost and no penalty.
How Social Security Is Taxed When You Live Abroad
Costa Rica's territorial tax system does not tax US-sourced income. Your Social Security, pensions, IRA distributions, and US investment gains are all exempt from Costa Rican taxes. That part is straightforward.
The US side is more complex. Up to 85% of your Social Security benefit may be subject to federal income tax, depending on your "combined income" (AGI + tax-exempt interest + half your SS benefit).
| Filing Status | Combined Income | Taxable Portion of SS |
|---|---|---|
| Single | Under $25,000 | 0% |
| Single | $25,000–$34,000 | Up to 50% |
| Single | Over $34,000 | Up to 85% |
| Married filing jointly | Under $32,000 | 0% |
| Married filing jointly | $32,000–$44,000 | Up to 50% |
| Married filing jointly | Over $44,000 | Up to 85% |
These thresholds haven't been adjusted for inflation since 1993, according to the IRS (Publication 915). They catch more retirees every year.
For a married couple collecting $4,000/month in combined Social Security ($48,000/year) with $30,000 in IRA distributions and $10,000 in investment income, the combined income is roughly $64,000, well into the 85% taxable bracket.
This is where Roth conversions before the move become powerful. If you convert traditional IRA money to Roth in the years leading up to retirement, those future withdrawals don't count as income. They don't push your Social Security into the taxable zone. And Costa Rica doesn't tax them either. I cover this in detail in the tax obligations guide.
"The most valuable tax planning for Costa Rica retirees happens 3–5 years before the move. Roth conversions during that window can mean the difference between paying federal tax on 85% of your Social Security and paying tax on zero percent of it." Brennan Vitali, CFP®
When Should You Claim Social Security If You're Moving to Costa Rica?
This is where living abroad genuinely changes the calculus.
The standard advice in the US is to delay claiming as long as possible, ideally to age 70, because each year of delay past your full retirement age (67 for those born in 1960 or later) adds 8% in delayed retirement credits. That's solid advice when your monthly expenses are $6,000–$8,000.
But in Costa Rica, a couple can live comfortably on $3,000–$4,500/month. That changes the equation.
The Numbers at Each Claiming Age (2026)
| Claiming Age | Benefit Reduction/Increase | Average Monthly Benefit | Maximum Monthly Benefit |
|---|---|---|---|
| 62 | 30% reduction from FRA | ~$1,450 | $2,969 |
| 67 (FRA) | Full benefit | ~$2,071 | $4,207 |
| 70 | 24% increase from FRA | ~$2,568 | $5,181 |
Source: SSA, 2026 figures. Average based on $2,071 FRA benefit adjusted for early/late claiming.
The Break-Even Analysis
| Comparison | Break-Even Age |
|---|---|
| Claiming at 62 vs. 67 | ~78–79 years old |
| Claiming at 62 vs. 70 | ~80 years old |
| Claiming at 67 vs. 70 | ~82–83 years old |
If you live past the break-even age, you come out ahead by waiting. Average life expectancy at 65 is roughly 83 for men and 86 for women (CDC, 2024 mortality data). On paper, delay wins for most people.
But paper doesn't account for what happens to your portfolio during those extra years.
The Costa Rica Twist
Here's what I tell my clients. If you claim at 62 and your reduced benefit covers 60–80% of your Costa Rica living expenses, you can leave your investment portfolio almost entirely untouched for five to eight extra years. At a hypothetical 7% average annual return, roughly in line with long-term market averages, though actual results will vary, a $1 million portfolio would grow to approximately $1.4 million in five years without a single withdrawal. Past performance does not guarantee future results, and portfolios can lose value.
Compare that to waiting until 67, which means drawing down the same portfolio for five years to cover all living expenses. Even if your Social Security is 30% higher when it starts, you've already spent $180,000–$270,000 from the portfolio during the wait.
This isn't universally true. It depends on your portfolio size, your health, your other income sources, and your risk tolerance. But for many of the families I work with, the ones with $800,000 to $2 million in liquid assets moving to Costa Rica in their late 50s or early 60s, claiming at 62 and preserving the portfolio is often the stronger long-term play.
The one exception: if you're still working and earning above the earnings test threshold ($24,480/year in 2026), SSA withholds $1 for every $2 you earn above the limit. If you're running a remote business or consulting from Costa Rica, wait until at least FRA to avoid that haircut. The withheld benefits aren't lost permanently. SSA recalculates at FRA, but the cash flow disruption matters.
Does COLA Still Apply When You Live Abroad?
Yes. The 2026 cost-of-living adjustment (COLA) was 2.8%, applied automatically to all Social Security benefits regardless of where you live. Your benefit increases every January just as it would in the US.
The COLA is based on the Consumer Price Index for Urban Wage Earners (CPI-W), which tracks US inflation. If Costa Rica's inflation runs lower than US inflation, which it often does, your benefit's purchasing power actually increases faster than your local cost of living. That's a structural advantage of earning in dollars and spending in colones.
Over the past decade, the average annual COLA has been roughly 2.6%. On a $2,071/month benefit, that's approximately $54 more per month each year. Not dramatic in any single year, but compounding over a 25-year retirement, it adds up to a meaningful buffer.
What About the Totalization Agreement (or Lack of One)?
The US has totalization agreements with 30 countries, but Costa Rica isn't one of them. These agreements let workers combine work credits from both countries to qualify for benefits in either system.
In practice, this affects very few Costa Rica retirees. If you've already earned your 40 US work credits (10 years of work), you qualify for Social Security regardless. The gap only matters if you're employed locally in Costa Rica and contributing to the CAJA system. Those contributions won't count toward US Social Security. Your US work history won't help you qualify for Costa Rica's pension system.
For most retirees moving to Costa Rica with an established US work history, the absence of a totalization agreement is a non-issue.
The Social Security Checklist Before You Move
- Verify your benefit estimate at ssa.gov/myaccount: check estimates at 62, 67, and 70
- Set up reliable payment delivery: US bank account with international access (Schwab, Fidelity) or International Direct Deposit to a CR bank
- Make the Medicare Part B decision: keep or drop, based on your return probability
- Run a Roth conversion analysis: 3–5 years before claiming, convert traditional IRA to Roth to reduce the taxable portion of your SS benefits
- Contact the Federal Benefits Unit at the US Embassy in San Jose after you arrive. They handle benefit verification and proof-of-life
- Update your address with SSA: use ssa.gov or call 1-800-772-1213 (works from Costa Rica via internet calling)
- Review FBAR requirements: if your Costa Rica bank accounts exceed $10,000 at any point during the year, you must file FinCEN Form 114
FAQ
Can I collect Social Security while living in Costa Rica?
Yes. US citizens receive their full Social Security benefit in Costa Rica with no reduction. Costa Rica is not on the SSA's restricted or blocked country list. Benefits are deposited on the normal schedule to either a US bank or a Costa Rican bank via International Direct Deposit.
Does Costa Rica tax my Social Security benefits?
No. Costa Rica's territorial tax system only taxes income sourced within Costa Rica. Social Security, pensions, IRA distributions, and US investment gains are all exempt. You still owe US federal income tax on up to 85% of your benefits depending on combined income.
Should I keep paying for Medicare Part B if I move to Costa Rica?
Medicare doesn't cover healthcare outside the US. Many expats drop Part B to save $202.90/month. But if you re-enroll later, the penalty is 10% added permanently to your premium for every full 12 months you weren't enrolled. If you're confident you're staying long-term, dropping it often makes financial sense.
Should I claim Social Security at 62 if I'm retiring to Costa Rica?
It depends on your full financial picture. But the lower cost of living in Costa Rica means a reduced benefit at 62 often covers most monthly expenses, letting your investment portfolio grow untouched for years longer. For families with $800,000+ in liquid assets, this portfolio preservation approach may compare favorably to waiting for a larger benefit, depending on market conditions and individual circumstances.
Does Costa Rica have a totalization agreement with the US?
No. Work credits earned in Costa Rica's CAJA system don't count toward US Social Security, and vice versa. This rarely affects retirees who've already earned their 40 US work credits. It primarily matters for people employed locally in Costa Rica.
This article is for informational purposes only and does not constitute personalized investment advice. Social Security claiming strategies depend on individual circumstances including health, income, portfolio size, and goals. Consult a qualified financial professional before making decisions. Vitality Wealth Planning is a registered investment adviser. Registration does not imply a certain level of skill or training.
Brennan Vitali is a CFP® and cross-border financial planner who helps families navigate the financial architecture of moving to Costa Rica. If you're wondering how Social Security fits into your relocation plan, take the Readiness Quiz or book a discovery call.