Housing • July 16th, 2020

The World’s Cheapest, Safest Retirement Countries

Gail Kellner

Key Takeaways
  • Retiring in a different country may be the retirement dream you’ve been looking for.
  • Research taxes, foreign residency requirements and cost of living before you make a decision.
  • You’ll likely still owe income taxes to the United States, even if you live somewhere else.

Retirees looking to get the most out of their retirement money may want to consider moving to a different country. Countries with a lower cost of living will get you the biggest bang for your post-retirement buck. Obviously, you’ll want to move somewhere safe as well. What are the best places to retire? What should you consider when you ponder a move overseas? We’ll break down the top ten safest, cheapest places to retire.

Criteria for Being The Best Retiree Country

Every year, International Living compares a myriad of factors into what they call the Annual Global Retirement Index. They crunch numbers, compare facts, and speak with expats currently living in countries throughout five continents. They compare things like:

  • Cost of living
  • Climate
  • Political stability
  • Entertainment
  • Residency requirements
  • Ease of buying a property as an expat
  • Culture
  • How easy it is to meet and connect with others
  • Health care

You can also check the Global Peace Index (2019) to assess a country’s safety.

The Top Ten Places to Retire

This year, the following countries ranked as the top ten best places to retire.

10. Vietnam

Vietnam has a low cost of living, lovely beaches, and a rich cultural history. It’s easy to get around the country by train, bus, or bicycle. English is spoken by almost everyone, and people are warm and friendly.

Since Vietnam is right in the middle of Southeast Asia, it’s also easy to fly from Vietnam to anywhere in the world. Vietnam is booming and has one of the strongest economies in Asia.

9. France

In addition to amazing food, France also has a temperate climate, great wine, and fantastic shopping. Universal healthcare is available to all residents, even if you’re an expat. Paris is a glittering capital city, with great art and culture. The French lead a more relaxed lifestyle than your typical American, which you’ll appreciate as a retiree.

8. Spain

Spain has a very low cost of living compared with the rest of Western Europe. They have a wider range of climates than you might think. There’s forests, mountains and beaches, where hiking, swimming, even skiing are possible. Spanish people are friendly, and the food is delicious. And who can argue with the benefits of a late afternoon siesta?

7. Malaysia

Malaysia is a beautiful country with over 800 islands to choose from and an average daily temperature of 82 degrees. Ancient rainforests, hiking trails, and a variety of water sports will keep you in good shape. And if something happens and you need medical care, health care in Malaysia is both affordable and efficient.

6. Ecuador

Tropical breezes, mountain ranges, and lush green valleys are all present in Ecuador. Rental properties are plentiful and affordable, and the climate makes heating and cooling costs almost nil. There are lots of expat communities, where you’ll feel right at home. Food is inexpensive as well, with many amazing fruits and vegetables available year-round.

5. Columbia

When you think of Columbia, chances are you think of Columbian drug cartels. Those days are now past, leaving Columbia an up-and-coming spot for retirees to relocate. The climate is temperate, so no need for expensive heating and cooling costs, and Columbian people are warm and welcoming. The cost of living is low, and Columbian healthcare is excellent. If bird watching is your thing, Columbia is home to 1958 species of birds. And of course, the coffee is amazing.

4. Mexico

If you want a low cost of living within easy proximity to the United States, consider retiring to Mexico. Stunning beaches, breathtaking mountain ranges, and sunburnt deserts are all part of the Mexican landscape. The cost of living is quite low; you can rent a two-bedroom home for about $750 U.S. dollars a month.

The food is delicious and inexpensive. Once you establish Mexican residency, you can sign up for the national health care plan.

Be aware that parts of Mexico are under a travel advisory by the U.S. State Department.

3. Costa Rica

Costa Rica is a beautiful country with miles and miles of white-sand beaches and affordable housing. The country is so peaceful that they disbanded the army in 1948, and the money went to education and healthcare. There’s plenty to do in Costa Rica, from soaking up the sun to surfing, horseback riding, golf, diving, and swimming. It’s easy to pursue an active lifestyle in Costa Rica.

2. Panama

One advantage of living in Panama is that the government doesn’t tax income earned outside of its borders. This is great news if you have retirement accounts in the U.S. and want to continue to invest. It’s also one of the safest countries in Latin America, with a much lower cost of living than the U.S.

Their Pensionado program offers members a long list of discounts, and the program is open to anyone, including expats.

1. Portugal

Portugal is the third safest country in the world. Retirees will enjoy a relaxed, appreciative culture and friendly people who are welcoming to those coming to live in their country. English is spoken by most people, especially in the cities. Portugal is one of the most inexpensive European countries, and changes to the tax laws are particularly appealing to expats. You might be eligible to receive ten years of tax benefits when you retire to Portugal.

Retiring Abroad Checklist

Check Visa and Residency Requirements

After you’ve chosen your dream retirement country, check Visa and residency requirements, as they vary from country to country. Check with the state department’s Traveler’s checklist. Some countries require you to provide proof of assets and or income before they’ll let you settle there. Different countries may consider pensions, retirement accounts, or even overall net worth.

Research Safety Scores

Vision of Humanity publishes the Global Peace Index every year. They rank 163 territories and countries according to their levels of peacefulness.

You can also check the U.S. State Department to see if there are any travel advisories.

Political situations can change quickly, so keep an eye on the news as well.

Determine Rules of Foreign Ownership

Foreign countries also differ in their approach to expats trying to buy property. International Living has a country-by-country list of ownership and property requirements. They also recommend you contact a lawyer from the country you’re considering moving to, for guidance.

Organize your assets (and taxes)

Unless you give up your U.S. citizenship, you won’t have to give up your Social Security check. It might be a good idea to leave your retirement accounts and investments in the United States as well.

However, you’ll still have to file an income tax return with the IRS, and possibly with your new country. You should consult with a U.S. tax attorney before you go, to make sure you’ve got everything covered.

Now that the internet is available everywhere, online banking is easy and convenient. Visa, Mastercard, and American Express are accepted everywhere as well, and they have the advantage of keeping a detailed list of expenses.

Prepare healthcare scenarios

Most U.S. health insurance companies will cover at least some portion of expenses if you’re traveling outside the U.S. However, if you live outside the U.S., they probably won’t cover you. And Medicare doesn’t move along with you, even though you’re still able to collect Social Security.

Some U.S. health insurers offer international health insurance--check with your insurer. The good news is that health care in many foreign countries is very affordable, and you may still end up paying less.

If you’re planning on spending some time in the U.S. even after you move, it might be worth holding on to your U.S. health insurance for situations that arise when you’re on U.S. soil.

Budget

How much do you want to spend on a property if you buy one? What's your vision as far as trips back to the United States to see friends and family? Cost of living may be cheaper in most of these countries but if you're making two or three international trips home to visit then you may not be saving as much as you thought.

Consider how much housing, travel, and other lifestyle considerations is going to cost, and whether or not it makes sense given your retirement income.

Citizen vs. Resident Status

Being a permanent resident is different than being a citizen. Most foreign countries are happy to let people from other countries retire there, especially if they bring assets with them. Escape Artist has a list of residency requirements and citizenship requirements for every country. The benefits of being a resident vs. becoming a citizen also vary from country to country.

Permanent residency is usually faster and easier. You can maintain your citizenship with the United States and apply for dual citizenship. You will still have to pay taxes with the IRS, even if you’re living in a foreign country. You can take the somewhat unusual step of relinquishing your citizenship, but keep in mind that such a step is permanent and irrevocable.

Bottom Line

There is a lot to consider if you’re thinking of pulling up stakes and retiring to a foreign country. Taxes, residency, health care, purchasing a home all come with paperwork and preparation. Get your questions answered with a Certified Financial PlannerⓇ to make your transition to your new country as smooth as possible.

Author

Gail Kellner

Gail Kellner lives with her husband, two sons, and various fur-children. She writes about personal finance and insurance mostly, with a little bit of parenting thrown in. She also writes YA Fantasy fiction in her spare time, and her first YA novel will be published later this year.