Retiring in Puerto Rico: a complete guide

1 min readLast updated May 17, 2024by Kate Morgan

Discover the pros and cons of retiring in Puerto Rico and what you need to settle there successfully after leaving the workforce as a US senior.

Summary 

  • According to Numbeo, the cost of living in Puerto Rico is 8.12% cheaper than in the US. 

  • There is no minimum retirement age for retirees in Puerto Rico. 

  • US seniors do not need a visa to emigrate or retire in Puerto Rico. 

  • Finding an expert financial advisor can make retiring in Puerto Rico easier and ensure your financial future is secure.  

What are the pros and cons of retiring in Puerto Rico? 

Warm and vibrant, Puerto Rico is mostly known for being a popular tourist destination. However, with its small population of 3.2 million and relatively easy emigration process, it is also becoming an attractive retirement destination for US citizens.  

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Here are some major pros and cons of retiring in Puerto Rico to consider: 

Pros 

  • No minimum retirement age: You don’t have to be of any particular age to retire in Puerto Rico.  

  • Tax benefits for US retirees: US citizens won’t be subject to income tax

  • Warm weather and vibrant, diverse culture: Puerto Rico has a thriving expat community, and its warm climate makes it an attractive retirement destination.  

Cons 

  • Turbulent weather: Hurricanes and catastrophic storms are not uncommon in Puerto Rico. Protection for your home and belongings, as well as insurance, is essential.  

  • Poor public transport: The public transport systems in Puerto Rico are known for being unreliable and densely populated.  

  • Dangerous creatures: Scorpions, fleas, mosquitoes, and mongooses are just a few of the critters you can expect to encounter in this environmentally tropical country.  

What is the best place to retire in Puerto Rico? 

When curious about retiring in Puerto Rico, there are multiple locations that people should consider. It is a diverse and balanced environment with both active city life and quiet natural spaces.

Some of the most popular options include: 

  • Dorado: If you have access to enough finances, Dorado is a comfortable retirement destination with a high quality of life and varied luxury amenities.  

  • Ponce: Ponce is a large city on the South Coast of Puerto Rico. There is a lower cost of living than Dorado, and there is plenty of natural beauty to enjoy.  

  • Vieques: Vieques is a peaceful, naturally beautiful, but slightly rural community. Access to regular facilities and services is relatively limited.  

Puerto Rico is also home to multiple retirement communities. These senior care communities offer US retirees expert care while also enjoying the beauty and enriching experiences Puerto Rico has to offer.

At what age can you retire in Puerto Rico? 

One of the biggest perks of retiring in Puerto Rico is that it has set no minimum retirement age. That means you can retire whenever you are financially and personally ready to.  

However, there are some age-related benefits and considerations for retirees in Puerto Rico: 

  • Social Security benefits: The earliest age at which you can begin receiving Social Security benefits is 62, but if you delay taking benefits, your monthly payments will increase. Full retirement age (FRA) is between 66 and 67, depending on your birth year. Delaying benefits until after FRA can result in even higher monthly payments. 

  • Medicare eligibility: Medicare eligibility begins at age 65, regardless of retirement status. However, if you choose to retire before age 65, you will need to find alternative healthcare coverage until you become eligible for Medicare. 

  • Age discrimination: It is illegal for employers to discriminate against employees or job applicants based on age. 

  • Retirement savings: Regardless of retirement age, it is important for individuals to start saving for retirement as early as possible. Many financial experts recommend saving at least 15 percent of your income for retirement. 

In fact, according to data from the U.S. Census Bureau, over 18% of the 3.3 million people living on the island are over 65, making it one of the top destinations with a large retirement population.

What is the average cost of retirement in Puerto Rico? 

In order to comfortably retire in Puerto Rico, you will need approximately $2,000 per month. The cost of living in Puerto Rico is 8.12% lower than it is in America, making retirement in this country a much more affordable option.  

Rent, utilities, and other basic living services are the biggest expenses you can expect when retiring in Puerto Rico. Healthcare is accessible via the US Medicare system, which carries over from the States to Puerto Rico, making it more medically feasible than most other retirement destinations.  

Do you pay taxes after retirement in Puerto Rico? 

Puerto Rican residents are exempt from paying taxes on dividends, annuities, interest, or capital gains, and any income sourced in Puerto Rico will not be subject to taxation from the US government. 

In simple terms, Act 60 provides tax exemptions to those who relocate to the island. Income sourced in Puerto Rico is exempt from US federal and state income taxes. However, an individual’s “worldwide income” is still taxed by the US.

To qualify for Act 60, you need to meet a number of requirements, including:

  • An individual must become a “Resident Individual Investor” after becoming a resident of Puerto Rico before January 1, 2036.

  • You must not have lived on the island for at least 10 years prior.

  • You must purchase residential property within the first two years of becoming a resident.

Act 22 is a tax law in Puerto Rico that is particularly desirable to potential retirees. The Act allows qualifying people to be excluded from paying any taxes on dividends, capital gains, or interest. To qualify for this exemption, you must live in Puerto Rice and stay there for more than 183 days a year.

To qualify for these tax exemptions, you must stay in Puerto Rico for at least 183 days a year - which shouldn’t be a problem if you are retired.  

Withdrawals on tax-deferred accounts, including your IRA and 401(k), are taxed as normal. If you're wondering does Puerto Rico tax Social Security benefits, income from Social Security is taxed as normal.

What programs are there for emigrating to Puerto Rico? 

If you are a US citizen or green card holder, you do not need a visa or any special documentation to retire in Puerto Rico.  

American citizens can easily establish residency in Puerto Rico without permits or applications by spending over 183 days a year on the island and taking steps to make it their tax home.

Additionally, to solidify Puerto Rico as your home base for tax purposes, you can obtain a local driver's license or update the voter registration to Puerto Rico with the IRS.

The emigration programs for relocating to this US-owned country as a retiree are numerous and accessible, but they are much easier to navigate with the help of a financial advisor.  

What visas do I need to retire in Puerto Rico? 

Retiring in Puerto Rico does not require a visa. Puerto Rico is a US territory, which automatically grants US citizens access to it without the need for a special visa.  

However, to be granted retiree admittance, you will need all of your other identity documents and a clear criminal record.  

What are my healthcare options in Puerto Rico? 

The good news about healthcare in Puerto Rico is that you can access it easily with a US Medicare card. This makes the healthcare system easy to access and utilize.  

The bad news is that the healthcare options in Puerto Rico are not as extensive or technologically advanced as they are in the US. If you have complicated medical issues, retiring in Puerto Rico can be an expensive and frustrating process.  

Is it safe to retire in Puerto Rico? 

Safety varies depending on the location in Puerto Rico.

Although living in a gated community or retirement home is widely considered safe, violent crime is a reality that should be considered. Caution is advised.  

Is Puerto Rico a good place to retire? 

Puerto Rico's affordability, tax benefits, warm climate, natural beauty, and close proximity to the US make retiring there an attractive choice for many US seniors.  

While the turbulent weather and limited healthcare infrastructure can be challenging, it is overall a good place to retire.  

Get expert financial advice 

Puerto Rico is an increasingly popular retirement destination for its tax benefits, tropical climate, and easy emigration process for US citizens. Retiring in Puerto Rico is also easier than many other destinations, as US citizens do not require a visa to settle there. 

To find out more about retiring in Puerto Rico and navigating the emigration process, get matched with an Unbiased financial advisor today.  

Content writer

Kate Morgan

Kate has written for leading publications and blue chip companies over the last 20 years.

Want to retire in Puerto Rico?

A financial advisor can help you plan and realize your dream retirement.