Costa Rica

Flood of retiring baby boomers is just a few years away



Anyone who was wondering where all those expats will come from to fill those Pacific condos and build out those lots need not worry. But the trend spells trouble for North American businesses.

In 2011, the so-called baby boomer generation of Americans born after World War II will hit 65 and start looking at its options for retirement. While more than 78 million baby boomers are contemplating how to spend their golden years, businesses are bracing themselves for labor shortages and the biggest brain drain in history.

According to a recent study by the Conference Board, a global research and business group, organizations are not prepared for the retirement of the baby boomers. Diane Piktialis is a baby boomer working with the Mature Workforce Program at the Conference Board.

"The baby boomer population is going to be retiring in record numbers and the number of workers coming up through the labor force behind them is not enough to fill all the positions that are going to be left vacant," she said. "Companies not only don't have enough bodies to replace retiring workers, but most organizations have not formalized any programs to transfer knowledge from those mature workers to others coming up through the organization."

A baby boomer is someone born in the United States between 1946 and 1964. After World War II, the United States experienced an unusual increase in birth rates, now commonly described as the baby boom. Piktialis says that, instead of worrying about the retirement of the baby boomers, companies should start finding ways of keeping them on board.

The good news is that while baby boomers may be old enough to retire and cash-in on their benefits, most of them don't want to give up active lives. Many are willing to go on working as long as it's on a part-time or flexible schedule.

Some will do so when they move their lives to Costa Rica and other offshore retirement havens. They will be assisted by improved Internet connections.

"All of the studies show that somewhere between 70 and 80 percent of these baby boomers, when asked, said that they would like to continue working in some capacity," she explained. "Part of the reason is the fact that they are better educated and healthier than in the past. People want to stay engaged. They want to contribute. They want to keep their minds intellectually challenged."

To tap into the potential of the baby boomer generation, according to Piktialis, companies and non-profit groups need to rethink their approach to recruitment and start including older people in their search for talent.

Stephen Kotlikoff, a Boston University economics professor, says that the major impact of the baby boomers' retirement will be financial. He says once they retire and no longer are earning a salary and paying taxes, policy makers will have to find ways to finance government programs in a fiscally responsible way.

"The real issue with the baby boomers retirement is that there are going to be a lot of old people to support relative to the number of workers that are making Social Security contributions. We are currently handing out $30,000 per old person in Social Security, Medicare, Medicaid benefits. And when the baby boomers retire, that number in today's dollar will be about $50,000. You are talking about close to $3 trillion, $4 trillion a year in outlays."

The government and the private sector have been busy for years trying to find solutions to the problems the retirement of baby boomers will cause. They have less than five years.

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posted by Costa Rica real estate @ 10:53 AM    

Five presidents challenged



Óscar Arias Sánchez told his four fellow presidents Wednesday that the biggest challenge of the region was in promoting human development for the benefit of each of its citizens.

Arias was speaking at a ceremony marking the 20th anniversary of the Esquipulas II peace accords that ended a war that killed 300,000 persons in Central America.

Arias had praise for the political leaders who helped put the peace plan into action. Among those he named Daniel Ortega, the current president of Nicaragua who was president 20 years ago.

Ortega did not attend the morning meeting in San José.

The praise was not mutual. A report from Nicaragua said that Ortega at almost the same time said Arias conspired against the Nicaragua government 20 years ago in foisting the peace plan on the country.

Relations between Costa Rica and Nicaragua seem to be chilling as Ortega adopts more authoritarian trappings and aligns himself closer to Hugo Chavez, president of Venezuela.

Also at the San José event were Elías Antonio Saca González of El Salvador, Oscar Berger Perdomo of Guatemala, Manuel Zelaya Rosales of Honduras and Martín Torrijos Espino of Panamá.

Arias is generally credited with devising the peace plan that
began to end hostilities 20 years ago. He was awarded the Nobel Peace Prize in 1987 for his efforts. At the time there was civil war in El Salvador between the elite and the general population. There was the Nicaraguan civil war promoted by the United States and its contra creations.

This war spilled over into northern Costa Rica and into Honduras, which was a major staging area for the contras. In addition, Guatemala had its own war between the majority Indian population and the national elite, which controlled the military.

The event Wednesday was sponsored by Arias and the Fundación Arias para la Paz y el Desarrollo Humano. Each foreign president received a booklet prepared by the Arias foundation that summarized the social situation in Central America and included recommendations to moderate the social problems and preserve peace. The text is the result of extensive interviews throughout Europe and Central America conducted by the foundation.

The booklet encouraged access to information, citizen participation and accountability by elected officials as well as protection of the environment. Arias also plugged the free trade treaty with the United States as a good way to assure development.

Luis Alberto Cordero, executive director of the Arias foundation, also listed as problems drug trafficking, juvenile gangs, the economy, poverty and education. He urged the five presidents to meet again within four months to continue discussing these problems.

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posted by Costa Rica real estate @ 10:51 AM    

Luxury home tax bill Costa Rica



The central government has nominated its tax plan on so-called luxury homes to be among those measures the Asamblea Legislativa will consider during the session that runs until Sept. 1.

The government seeks to enact a tax of from 0.25 percent to 0.55 percent on homes worth more than 100 million colons, about $192,000. The tax on homes with the lowest value would be about $480 a year. A home worth 1.8 billion colons, about $3.37 million, would pay an annual tax of $18,500 at the highest rate, according to the plan.

However, the proposed law would do more than that. In order to establish the tax, the bill sets up a system of reporting the value of properties that are constructed or sold, based on the sales price. And it requires sworn statements that specify the price.

The requirement to report value once every three years would seem to apply to all homes, condos or apartments even if their value was so low as to escape the tax. The income from the tax is earmarked for the Banco Hipotecario de la Vivienda. which would use the funds to build housing for the poor now living in slums, according to the proposal.

According to figures from the Ministerio de Vivienda y Asentamientos Humanos there are 182 such slums in the metropolitan area with 116 in San José, 41 in Cartago and 16 in Alajuela. Some 208 slums are outside the Central Valley, according to the ministry.

The ministry reported that by 2004 some 32,797 families were living in slums or makeshift subdivisions, but the number certainly is much higher.

There is another catch to the proposal. The value of a condo would include the living unit's share of the commons areas. And everyone would have to value the improvements to a home such as swimming pools, green areas, sports fields and gymnasiums.

Thee bill as written would require owners of existing homes to conduct an appraisal using the traditional value of a price that a willing buyer would pay a willing seller.

However, the actual value of sales in Costa Rica are clouded because many lawyers do not report true values in order to save their clients future taxes. The only way to evaluate land is via that type of appraisal.

New construction and some existing properties could be evaluated by a cost approach using market prices for things like windows and wood. The Colegio Federado de Ingenieros y Arquitectos would have a role in that process.

The proposal to tax homes of higher value is part of the government's five-part plan to raise more money. Also proposed is an increase in the income tax, the establishment of a value-added tax instead of the current sales tax, a tax on financial transactions and a tax on corporations.

The free trade treaty with the United States is the government's top priority, and many of these bills have not advanced the way the Arias administration wanted in the legislature.

During so called extraordinary sessions of the legislature, the executive branch sets the agenda. Extraordinary sessions are periods when the Costa Rican Constitution does not require the legislature to meet.

The period from Aug. 1 to Sept. 1 is one of those times.

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posted by Costa Rica real estate @ 12:33 PM    

AOL founder planning $800 million project in Guanacaste



Another major project has been announced for northwest Costa Rica, and this one, at Punto Cacique, has some big names at the helm.

The first is Steve Case, the chairman, who was here Friday presenting the project before President Óscar Arias Sánchez. Vice chairman of the parent firm is Philippe Bourguignon, former president of Club Med and president and chief executive officer of Euro Disney.

The president of the parent firm, Revolution Places, is Donn Davis, who with Case helped build America Online, the Internet firm. The company has Philippe Cousteau, grandson of the famous undersea explorer, as an environmental adviser.

The project is being presented as an integrated luxury resort. The first phase, due to open in 2010, is on 263 hectares, about 650 acres. The estimated investment is $800 million, said the company. The project seeks to bring in One&Only Resorts, which will build 120 detached casitas. Also planned is an 18-hole golf course and a tennis center. Exclusive Reports was listed to build 30 residences. Miraval Cacique is contracted to build 60 villas and 120 luxury rooms.

The location is just north of Playas del Coco.

Although Case and his associates do not have extensive experience in real estate development here, the president of Revolution Places Costa Rica is Darren Linnartz, who worked for 15 years with Marriott/Ritz Carlton.

As expected Casa Presidencial praised the plan and said that the project would provide jobs for 2,500 direct and indirect employees.

The project also would generate $20 million in taxes.

The company promised to donate a million trees for a conservation group to plan nearby and $1 million for organizations that develop initiatives to protect the Costa Rican environment.

The Pacific coast of Guanacaste is facing serious infrastructure problems, not the least of which is the availability of good water. Another major project, involving an estimated $600 million investment, was announced for Esparza earlier this year.

The Instituto Costarricense de Turismo said that more than $2 billion in projects have been announced for Costa Rica this year. Those in the real estate industry estimate that only about 30 percent may actually be built.

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posted by Costa Rica real estate @ 10:49 AM