In the past several weeks, I’ve been interviewed on the topic of retiring overseas by CNN, the Wall Street Journal, CNBC, Fox News, Bloomberg, and The New York Times. I don’t say this to brag but to make the point that retiring overseas is an idea whose time has come.
I’ve been covering this beat for 30 years. Used to be, those of us who recognized the appeals and attractions of retiring to a foreign country were considered part of the lunatic fringe. Today, we enjoy mainstream company.
Retirement overseas begins as an infatuation. The idea of launching a new life in a new country… of starting over someplace sunny and exotic with white-sand beaches or Old World culture… that’s sexy. That’s fun. Tempting… irresistible even.
We’re talking about reinvention, a chance to be who you want to be, to become who and what you’ve dreamt you’d like to be your whole life. In addition is the appeal of “new.” New comes with the promise of better. In your new life in a new country, you could enjoy better weather, you could have better (or at least more) friends, you could live cheaper, meaning you could afford to do things (travel, eat out, etc.) that you can’t afford to do now.
That final point leads to the primary practical motivation behind a notion to retire to a new country—which is financial. The unfortunate reality is that many retirees today are realizing they don’t have as much budget as they thought they might have for retirement, so they’re looking for options. Retiring to a new country where the cost of living is lower is, I’d say, the best option you’re going to find. I am not overstating things when I say that, many places around the world, a little retirement nest egg goes a lot further than it would in the United States.
Regardless why you’re considering the idea of retiring overseas—for the fun and adventure, for the chance for a fresh start, or to reduce your cost of living—the big question immediately becomes: Where?
Where would be the best place in the world for you to retire?
I don’t know, but, after three decades of experience considering the whole world in this context, I have some good ideas about where makes sense generally for a high quality of retirement life… where probably doesn’t… and why. It is in that spirit that, each year, I publish a Retire Overseas Index.
In fact, I’ve been researching, compiling, and publishing indices rating and ranking the world’s best places to retire overseas as long as I’ve been covering this retire-overseas beat. After 30 years of approaching this mammoth project in more or less the same way, I decided this year it was time to mix things up.
My Managing Editor Kat Kalashian took the lead. She put out a call to her far-flung cadre of correspondents, then Kat & Co. proceeded to reinvent our annual survey, soliciting input from more on-the-ground contributors and tracking more data points than ever before. In addition, in some instances, Kat and her team have reconsidered what data should be tracked. What’s most important to the would-be retiree in a new country when it comes to things like infrastructure, health care, and taxes, for example? We all agreed that, fast and reliable Internet is an infrastructure priority, and our Infrastructure scoring this year reflects that.
For the Health Care category this year, we shifted our focus from general to very specific. That is, rather than awarding a grade based on the quality, standard, and cost of the health care in the countries featured in our survey, this year we score each particular destination. In Panama, for example, Panama City would get an “A” for Health Care, thanks to its Johns Hopkins-affiliated hospital and other top-notch health-related resources. However, Panama City is not in our Index this year (because it’s not a top retirement choice but a top business and investment choice). In Panama this year, we target El Valle in the mountains and the City Beaches, both of which are top retirement options but neither of which has “A”-standard health care facilities. Retired in either of those places, you’d have to travel to Panama City for medical care. While Panama City would get an “A” for Health Care, its City Beaches get a “C” and its highland El Valle region a “C-.”
For the Taxes category this year, we consider all taxes that would affect a retiree. Most countries don’t tax foreign pension income. That’s why we typically say that retiring to a new country is a tax-neutral event. It’s earned and investment income that complicates your tax situation. However, other taxes affect anyone living in a place, including sales and property tax. This year, our Taxes category takes these into account.
Some things we consider in this annual survey have changed dramatically over the years, including residency options. North American retirees are a hot commodity in this Retire Overseas era, and more and more countries are competing for their attention (and disposable income). Today, Panama, Belize, Ecuador, Nicaragua, Colombia, the Dominican Republic, the Philippines, and Malaysia all offer residency visa programs specifically targeting foreign retirees. Countries with such pensionado programs, as they’re typically called, receive top marks in our Residency category.
As do countries with established communities of expat retirees. Today, there are many of these, including in Las Terrenas, Dominican Republic; the City Beaches of Panama; Algarve, Portugal; Ambergris Caye and Cayo, Belize; and Puerto Vallarta and San Miguel de Allende, Mexico.
This year we break our Recreation and Entertainment category into two, as recreation and entertainment are two different things. Cayo, Belize, is an outdoorsman’s paradise but a culture vulture’s inferno.
Playing an important role in this year’s final rankings is our new Affordability of Real Estate category. In the past, we’ve considered the cost of buying real estate as part of the overall cost of living. However, when figuring your retirement budget, your housing cost is best considered independently of your monthly expenses otherwise, so we thought our Index should reflect that strategy. Thanks to a strong U.S. dollar and recessed and depressed property markets, this is the best time perhaps in our lifetimes to be thinking about owning digs of your own in locations of particular interest to the retiree. Europe, especially, is a bargain of our age.
Where should you be thinking about reinventing your life in retirement overseas? Again, I can’t say for sure, but our new Retire Overseas Index can help you to compare and contrast the best options right now.
This year’s survey considers 21 thin-sliced destinations. The winner?
I won’t hold you in suspense any longer. This year, for the second year running, Algarve, Portugal, takes top honors, thanks to its low cost of living, low cost of real estate, great weather, established expat community, new retiree residency program, and endless options for how to meaningfully fill your days and evenings. In addition, you can get by speaking only English, and I’d say that this coast is one of the safest places on earth right now.
In fact, three of our top five picks this year are in Europe. Thank you, soaring Greenback.
I don’t want to steal anymore of my editorial team’s thunder. The fruits of their months of research are featured in full in this month’s issue of our Overseas Retirement Letter, an expanded, illustrated, bumper issue that includes budgets, tables, charts, graphs, maps, and more.
The world’s top retirement havens? Read this month’s Overseas Retirement Letter for the complete details on all 21 of them.
If you’re an ORL subscriber, you should have received this special issue last week. If not, you can still get on board in time to receive your hot-off-the-virtual-presses copy. Do that here now.
Kathleen Peddicord
