The Best Places to Retire

For the Baby Boomer generation, the current economic recession has meant both reduced investment accounts and impeded prospects for continued employment. In fact, many Americans are facing the prospect of retiring with social security as their primary means of income.

Naturally, most people do not want to see their living standards decline dramatically in retirement. As a result, many people have begun to ponder retiring overseas — particularly in the developing world — as a way to maintain their standard of living, or perhaps even elevate it.

While retiring overseas is an option, it’s not a perfect solution. Poor countries have many problems. The poorer the country, the more problems: poor infrastructure, political instability, and perhaps most importantly, economic instability. Further, poor countries might even suffer from periodic currency devaluation (as a result of defaulting on their debts).

Where You Can Retire

As a foreign retiree, you are essentially an immigrant. That means you will require a special visa to settle indefinitely in a new country. Most countries in the world do not have retirement visas and therefore make it next to impossible for foreign retirees to settle in their country. The United States, for instance, does not have a retirement visa program.

However, some countries around the world, particularly in Latin America and Southeast Asia, have created special retirement visas for foreigners. These countries believe that retirees with state pensions — such as social security — are a revenue generator, and they have made it possible for this group to settle permanently in their countries.

So which countries are best for a person to retire to? If you are approaching retirement with considerable assets and income, the list of countries you can retire to is considerable. If you are facing a retirement with low income, you really can only retire to the developing world. Developed countries are simply too expensive.

Best Places to Retire Abroad: Limited Income

Most of the following countries suffer from periodic currency devaluations, political instability, and poverty. But, on a limited income, they’re the best of the bunch.

Costa Rica: In many ways the most politically stable and economically vibrant country in Latin America (with the exception of Chile), this country is extremely popular with American tourists. It’s outlook is certainly bright, and it boasts a large number of nature preserves for those interested in a more ecologically friendly country for their retirement.

Malaysia: The most developed country in Southeast Asia outside of Singapore, this country is affordable and far more stable than its neighbor Thailand. It has a developed retirement visa program, and it boasts pristine beaches and wilderness. Beware though, that its conservative Muslim government is known for restricting the rights of some ethnic minorities.

Uruguay: One of the most affordable places to live in the Americas. It has a relatively low crime rate, and a politically stable government. However, its small economy can be dramatically affected by the volatility of its neighbor to the South, Argentina.

Panama: This progressive Central American country probably has the most economic incentive programs for foreign retirees. There are discounts for shopping if you are over a certain age, you can import some goods duty free, and you pay no tax on all foreign income. The Panamanian economy also uses the dollar as its currency. Beware the high humidity and somewhat-high crime.

Nicaragua: This is another Central American country trying to attract western retirees looking for a lower cost of living. Nicaragua is quite poor, but it is stable and has a rapidly growing economy. For those trying to get the most bang out of their buck, it may be ideal. But beware the lack of sophistication and high levels of poverty.

Best Places to Retire Abroad: Higher Income

France: A stable, strong economy with great healthcare and of course great scenery. However, it doesn’t come free, and this country has the highest cost of living of any retirement destination on this list. But if you can afford it, go for it.

Spain: Spain has great infrastructure that is improving by the day due to government investments. It has low crime and decent healthcare. While it’s cheaper than France, it’s still far more expensive than anywhere in Latin America.

Italy: Italy, particularly in its Southern and rural regions, is more affordable than France and Spain, but in urban centers it can get expensive. It’s famous for its ineffective bureaucracy, which can make applying for a retirement visa a headache. Infrastructure can be spotty in areas as well.

Portugal: The most affordable part of Western Europe, it is a country that is growing in popularity as a retirement destination. While it is cheaper to live there than other places in Europe, that affordability comes with a price: economic instability.

New Zealand: The ideal place for an American to retire. It’s cheap, has a diverse ecology, and English is the national language. The problem is that New Zealand’s retirement visa program literally costs millions of dollars in order to qualify. If you can afford it, and are not comfortable living in a country where English is not widely spoken, go for it. For others interested in New Zealand, a snow bird alternative — liveing in the country on a tourist visa for up to six months a year — will be the only realistic option.

Do Your Research

Retiring overseas is not easy. It is not a matter of simply picking up and moving. It requires research and a well thought out plan. It helps if you speak the local language of the country you plan to live in. And it is best if you visit the country before moving.

Visit the country, and see how far your budget will really go. Explore the country thoroughly in all seasons of weather to determine whether you can handle the climate. And ask other expats, particularly those from your own country, about their experiences and for their advice. Most importantly, however, make use of common sense when approaching an overseas move. If it sounds too good to be true, it probably is.

About the author: Rick Todd writes at Expat Investing, where he covers such topics as whether retiring abroad is right for you and how much it costs to retire overseas.