The idea of retiring overseas might seem appealing to you with its inexpensive living and the chance for a new adventure. Kathleen Peddicord, publisher of the Live and Invest Overseas site and the Overseas Retirement Letter estimates that 1.4 million American retirees are doing it.
But where in the world should you retire to?
The beachfront Algarve region of Portugal, according to Peddicord’s newly-released (and somewhat surprising) 2014 Retire Overseas Index.
“It’s the most affordable option in Europe for retirees,” says Peddicord, whose number crunchers estimate you can live on $1,500 a month in the Atlantic Ocean-hugging southernmost province of Portugal. “Not only will you find quintessential old world culture in the Algarve, with medieval villages and Eurocharm, but also some of the best beaches in Europe. And the weather is great and stable.”
(MORE: How to Retire All Over the World)
Portugal has also recently made residency easier for expats and now lets those who qualify receive pension and foreign income in Portugal tax-free for 10 years.
Runners-Up In the New List
Close behind the Algarve in the second-annual Retire Overseas Index, are the following six locales (and their chief attributes) spread among Latin America, Asia and Europe; I'll bet you haven't heard of all of them:
Cuenca, Ecuador — ideal climate, inexpensive, expat community
George Town, Malaysia — city living on a budget, low taxes, sunny, expats, English spoken
Chiang Mai, Thailand — inexpensive, expats, weather, health care
Dumaguete, Philippines — inexpensive, great beaches, expats, balmy climate, health care
Pau, France — Old World lifestyle (think Beauty and the Beast cobblestone streets), low crime, health care
Medellin, Colombia — city living on a budget, health care
And rounding out the 2014 Retire Overseas Index are these 14 places, grouped by region (nine in the Americas, three in Europe and two in Asia):
In The Americas: Ambergris Caye, Belize; Buenos Aires, Argentina; Cayo, Belize; City Beaches, Panama; Granada, Nicaragua; La Serena, Chile; Mendoza, Argentina; Puerto Vallarta, Mexico and Samana, Dominican Republic
In Europe: Abruzzo, Italy; Barcelona, Spain and Istria, Croatia
In Asia: Istanbul, Turkey and Nha Trang, Vietnam
A Comparison With the International Living List
Earlier this year, I wrote about the 2014 International Living Annual Global Retirement Index, which did its rankings by country. Its Top 10: Panama, Ecuador, Malaysia, Costa Rica, Spain, Colombia, Mexico, Malta, Uruguay and Thailand.
So four of the seven best places in the Retire Overseas Index can be found in International Living’s Top 10 countries (Columbia, Ecuador, Malaysia and Thailand) but three — including No. 1, The Algarve, Portugal — can’t. No place in Costa Rica or Uruguay made the Retire Overseas Index list this year because of the rising cost of living. In addition, Costa Rica just trimmed back its famous pensionado benefits program for expats.
(MORE: Why Not to Retire Abroad)
How the Winners Are Chosen
Both the Retire Overseas Index and International Living rankings are derived by combining statistics (from cost of living to health care) and personal observations from their publisher’s correspondents around the world.
Peddicord starts by asking her team for their recommendations, then whittles the list down to 21 places. She formerly worked at International Living, helped launch its annual ranking and decided when producing her own to focus on cities, towns and regions rather than countries.
“Looking at countries doesn’t make sense. It’s like saying you want to retire in the United States instead of saying Naples, Florida or Scottsdale, Arizona,” says Peddicord, who is based in Panama City, Panama. “In a place like Panama, living in Panama City is entirely different than living on a little beach town on the west coast. Everything about your life would be different.”
(MORE: Retire Overseas for Under $25,000 a Year)
But Peddicord concedes that even the “best” places to retire aren’t perfect. The Algarve gets a "C" for the "English-spoken" category in the Retire Overseas Index rankings, for example.
And many expats in Chiang Mai decamp seasonally when the farmers burn their fields because, as her rankings article says, “the quality of the air can become intolerable.”
Retiring Overseas Part-Time
So, for places like Chiang Mai, you might want to toy with the notion of living overseas part-time.
“Then, you won’t have the hassle of establishing full-time residency somewhere,” says Peddicord. “Retiring somewhere part-time can also be a good idea for couples where one spouse wants to live near a beach and the other wants a city — they can live six months of the year in each.”
She also believes it’s critical for pre-retirees to remember that what you would want in a place to retire might not be what someone else would. So even some of her list’s winners might be losers in your book.
A Conference for Beginning Your Search
If you’d like to explore the notion of retiring abroad and have some time later this week, you might want to attend the Live and Invest Overseas Retire Overseas Conference in Nashville, Tenn., August 29 to 31 (cost: $845 for one; $1,295 for two).
And here’s a bargain tip: The conference is holding a free Retire Overseas Expo there on August 28, with seminars ranging from the cheapest places to retire to where you can find top medical care around the world.
Not a bad deal for a penny-pincher plotting a move abroad.