Imagine if someone from another country asked you this question: How would you rate America as a place to retire? I suspect you’d have a little trouble coming up with a good answer.
After all, there’s no "American weather" (it ranges from, say, winter in St. Paul, Minn., to summer in St. Petersburg, Fla.). The median home price is $717,000 in San Francisco and $127,000 in Charleston, W.Va. The unemployment rate, which might interest a prospective retiree hoping to work part-time, is 27.5 percent in Yuma, Ariz., and 2.6 percent in Bismarck, N.D. You get the idea.
Ranking the World’s Top Retirement Locations
I bring this up because the 2013 International Living ranking of the World’s Top Retirement Havens just came out and it's getting a lot of buzz.
(MORE: The Retirement Talk Couples Need to Have – Now!)
To come up with its Global Retirement Index, International Living gathered data and anecdotal information from its far-flung correspondents for the 22 countries its editors think Americans and Canadians might consider as a retirement relocation. “There may be somebody who has always dreamed of retiring to Bhutan, but it’s not high enough on the radar for the vast majority of our demographic to put it in our index,” says Dan Prescher, International Living’s special projects editor.
This year, the editors added new criteria to gauge each country’s “bang for the buck,” as well as how comfortable North Americans find the local climate. “And we’re relying more on people who are living in these countries with real-life experiences,” Prescher says.
This Year’s No. 1 Country for Retirees
For the fifth year in a row, Ecuador ranked No. 1.
“That didn’t surprise me — Ecuador is an incredible value,” says Prescher, who lives in the village of Cotacachi, Ecuador, with his wife, Suzan Haskins, International Living’s Latin America editorial director. “If we try really hard, we can spend $2,000 a month here and that ain’t bad.”
Even Ecuador isn’t without its drawbacks, though.
“There are world-class medical facilities in Ecuador, but they’re based in the larger metropolitan areas, like Quito,” Prescher says. “It could take me two hours to get to Quito.”
Once again, Latin American countries dominated the winners’ list, taking six of the top 10 spots. Three countries vaulted into the Top 10: Costa Rica (No. 5), Uruguay (No. 6) and Malta (No. 10), a necklace of seven islands located halfway between Sicily and North Africa. The other world beaters: Panama (No. 2), Malaysia (No. 3), Mexico (No. 4), Colombia (No. 7), Spain (No. 8) and Thailand (No. 9).
The Drawbacks of Country Rankings
But should you rely on a ranking like this if you’re contemplating retiring outside the United States? To quote Ronald Reagan, I’d say: trust, but verify.
(MORE: Ideal Places to Grow Older in Retirement)
International Living does a fine job crunching the numbers, but a country vs. country ranking doesn’t fully match up with the real world.
“I think the approach is fundamentally flawed because it attempts to address each country as a whole,” says Kathleen Peddicord, who blogs about overseas retirement for U.S. News and World Report from Panama City and is a former publisher and co-owner of the International Living business. “You can’t talk about the climate in Ecuador or the cost of living in Panama any more than you can talk about the weather or the cost of living in the United States as a whole.”
Peddicord also thinks International Living should give more weight to a country’s accessibility for North Americans.
“Malta is a little remote," she says. "It’s not at all easy to access, except from certain points in Europe.”
Peddicord also says “there’s not much to do once you’ve arrived” in Malta. “That could suit some people very nicely, but I don’t think it qualifies the country to be the 10th best place in the world to think about retiring.”
The merits of Malta aside, Peddicord raises an excellent point about choosing a retirement place: it’s a highly personal decision. What’s important to you — and your spouse or partner, if you’re part of a couple — may be far different than what’s important to me.
International Living’s Prescher agrees. “Ecuador tops our list, but someone might visit and say ‘I’d never live there in a million years,’” he says.
4 Steps Before Relocating
If you think you’d like to settle in some other country for retirement, I suggest you take these four steps before making a commitment:
1. Figure out what’s essential to you in a retirement location. Write down the things that matter most to you, such as the type of weather you prefer, how far you’d want to live from your current home, the importance of high-quality medical care nearby and whether you’ll want to work part-time.
“If you’re moving with a significant other, make the list together,” Peddicord says. “Then agree on the top three or so priorities — and don’t compromise on them.”
After you do this exercise, you just might realize that you’d be happiest staying in the United States.
“The vast majority of people would not feel comfortable moving to a foreign country to spend their retirement years,” Prescher says. “It takes an appetite for novelty, a taste for adventure and an ability to think outside the box.”
(MORE: Best Cities to Retire and Work In)
2. Treat this as the most important research project of your life. Any locale will have its drawbacks, of course, but you’ll want to do your best to keep them to a minimum. Online articles can be very helpful, as long as you follow up with visits to potential retirement spots. “I wouldn’t urge anyone to use our retirement index as the only source of information if you want to move abroad,” Prescher says.
To begin your online research, burrow through International Living's country scores, its Top 10 places slideshow and its related articles. Also, read Kathleen Peddicord’s U.S. News articles: “Best Overseas Retirement Options for 2013” and her instructive piece, “11 Things to Know Before You Retire Overseas.” You’ll likely discover other helpful sources online specifically for countries on your list.
Find out whether you’d qualify for international health insurance or local health insurance in the countries you're considering. “Depending on your age, you may not qualify for either,” Peddicord says. “In that case, your only option is going to be to self-insure. The idea of ‘going naked,’ as it were, is very scary to many Americans.”
3. Decide if you want to live the expat life or “go local.” Retiring to a community filled with foreign retirees and expats may make the transition easier than moving to a place where there aren’t many people with your background.
“Going local means eating like the locals, shopping where the locals shop, spending your time the way the locals spend their time and speaking the language the locals speak,” Peddicord says. “Some people find that exhilarating. Some people find it terrifying.”
In such places as Coronado, Panama, and Puerto Vallarta, Mexico, it’s possible to live a very “U.S.-like” lifestyle, Peddicord says.
4. Visit and stay awhile. “Get on the ground in the place you think might be your top pick and spend as much time as possible before pulling the trigger,” Prescher advises. “You may find after spending three months in the ‘place of your dreams’ that it’s not the place for you.”
Living in a foreign country for a few months or longer, Prescher says, will allow you to learn all about everyday life there. “You’ll see what it’s like to open a bank account, hook up utilities, how often your power and water go out, what discounts you can get as an expat and what other expats who live there are like.”
Those experiences could clinch the deal for you — or they might make you embrace the cliché "There's no place like home."
Next Avenue Editors Also Recommend: