If you’re approaching your golden years, you may be wondering where you can find the best places to retire on Earth. Living overseas offers many perks, including a lower cost of living, new experiences, a better climate, and access to affordable healthcare. Meanwhile, retiring in the U.S. offers stability and convenience, and you’ll be close to family and friends while staying in your comfort zone.
Of course, most Americans opt to stay in their existing homes or make in-state moves during retirement. For many retirees, family is a key reason to stay put, especially if grandkids are in the picture. Still, you might be able to stretch your retirement dollars—and improve your quality of life—by moving somewhere that better fits your budget and interests. If you’re thinking of making a move, here are 12 of the best places in the world to retire: six in the U.S. and six overseas.
- Retirement in the U.S. means you’ll be close to friends and family and have a familiar lifestyle, but it can get expensive, and you can get stuck in a boring routine.
- Retiring abroad offers a lower cost of living and new and exciting experiences, but navigating the logistics and cultural differences can be tricky.
- The top six countries to retire abroad for 2021 are Costa Rica, Panama, Mexico, Colombia, Portugal, and Ecuador.
- The top six cities to retire in the U.S. for 2021 are Florida, Colorado, Delaware, Virginia, North Dakota, and Montana.
Retiring Abroad vs. in the U.S.
Retiring abroad is an adventure, though just how big an adventure depends on the destination. Still, no matter where you go overseas, you will be a long way from home, and you’ll have to get comfortable with the linguistic, cultural, political, and economic differences.
And though you’re likely to enjoy lower costs, cheaper healthcare, and a nice change of scenery, remember that living abroad is not at all like being a tourist. Be sure to test out a destination before making any long-term decisions. Rent for at least six months, immerse yourself in the culture, get to know the locals (and the expats), and decide if you’d really be happy living there.
According to the Social Security Administration, the average Social Security retirement benefit is $1,563 per month (as of October 2021). That amount may be enough to retire comfortably abroad if you stick to a budget.
On the other hand, you may be happier retiring in the U.S. if you shy away from adventure and prefer a predictable and familiar routine—or if you want to stay close to family, friends, and established networks. Of course, the cost of living in the U.S. is much higher than in many parts of the world, and you’ll also be subject to rising healthcare costs and high assisted living costs. If you decide to stay in the U.S., you may still want to consider relocating to an area that better suits your retirement goals.
Best Places to Retire Abroad
Though a beautiful place may be nice to visit, it’s not necessarily an ideal place for retirement. When considering overseas destinations, try to look beyond being a tourist to imagine what you would experience as a local. Our top picks come from International Living’s Annual Global Retirement Index, which ranks countries based on 10 categories that look at the big picture:
- Retiree benefits and discounts
- Cost of living
- Development (for example, roads, public transportation, and infrastructure)
- Fitting in and entertainment
- Healthcare costs and quality
- Housing costs, taxes, and restrictions for expats
- Opportunities for work, freelancing, and online employment
- Visa and residence requirements
Here are the top six countries to retire abroad for 2021.
Costa Rica was one of the first countries to offer a benefits package aimed at expat retirees. Here, you’ll find sandy beaches, good healthcare, rich biodiversity, a tropical climate, friendly locals (aka “Ticos”), and a healthful diet—plus local coffee and chocolate.
Dubbed “the Switzerland of Central America,” Costa Rica is known for its safety, neutrality (it abolished its army in 1948), and commitment to the environment. Adventurous retirees can enjoy the same activities that attract tourists from around the world: canopy tours, jungle hikes (insider tip: try a night hike for added adventure), volcano hikes, sea kayaking, and white-water rafting.
Panama’s favorable climate, low cost of living, affordable healthcare, and retirement visa program make it one of the world’s top retirement havens. You can use your Pensionado Visa to score deep discounts, including:
- 50% off entertainment
- 30% to 50% off hotel stays
- 30% off bus, boat, and train fares
- 25% off airfare
- 25% off energy bills
- 15% off hospital bills (unless insurance applies)
The country’s infrastructure is modern and in good repair, and Panama City—the country’s capital—rivals many U.S. and European cities in terms of culture, atmosphere, and conveniences.
Mexico hosts retirees from around the world, including more than 1 million Americans and a half-million Canadians. The expat community is very welcoming to newcomers, and retirees will enjoy the country’s pleasant climate, rich culture, abundant natural beauty, affordable healthcare, a robust retirement benefits program, and a low cost of living.
The country’s 2 million square kilometers offer much for retirees to choose from, from quaint colonial villages to vibrant beach towns. Still, keep in mind that five Mexican states are on the U.S. State Department’s Do Not Travel list (another 11 designated as Reconsider Travel To and 14 as Exercise Increased Caution When Traveling To). Be sure to research potential destinations carefully to avoid any high-risk areas.
Colombia has transformed itself from a place troubled by war, rebels, and gangs to a largely peaceful country that’s increasingly attractive to both tourists and expats. The mountains, beaches, and tropical rainforests offer a tempting escape for retirees at a bargain price.
Along with the scenic views, Colombia provides many top-notch amenities, and it has a solid infrastructure with good roads, public transportation, reliable utilities, and excellent healthcare facilities. The country is a short three-hour flight from Miami, so you won’t be far from your friends and family in the U.S.
A low cost of living attracts expats from around the world to Portugal’s sunny shores. The country might be a good choice if you look forward to relaxing on the beach, dining on fresh seafood, and drinking wine—especially port wines, the country’s signature spirit.
Portugal's capital, Lisbon, won the 2020 European Green Capital award, and the city restricts car use and prioritizes walking, cycling (there's an excellent bike-sharing program), and public transportation. Portugal is one of the most affordable countries in Europe, the food is terrific, and the temperate climate never seems to get too hot or too cold.
Ecuador is one of the most ecologically diverse places on Earth. It’s home to 1,200 miles of beaches, one of the highest active volcanoes in the world, and the Galapagos Islands—an archipelago of 19 islands known as the unique “living museum and showcase of evolution.”
Ecuador is known for its temperate weather, and you can enjoy a warm beach town or cooler mountain living (or both). Like the other countries on our list, Ecuador offers a low cost of living, and retirees also appreciate the country’s Indigenous, Incan, and Spanish cultures (and architecture), along with excellent food and a welcoming community of expats.
Best Places to Retire in the U.S.
Our top picks for U.S. retirement locations come from WalletHub’s Best & Worst States to Retire rankings. To find the most retirement-friendly states, WalletHub compared 45 metrics in three key categories: affordability, quality of life, and healthcare (including COVID-19 statistics). Here are the top U.S. states to retire to in 2021.
The Sunshine State has long been a favorite for retirees, who enjoy Florida’s sunny beaches and warm winters. Florida offers a reasonable cost of living and no inheritance tax, estate tax, or state income tax—which can be a big perk for retirees with taxable income from Social Security, pensions, IRAs, 401(k)s, and the like.
Though Florida is famous for its big destinations—Orlando (home of Disney World and Universal Studios), Miami, and the Florida Keys—plenty of other beaches and inland cities are worth considering. And, no matter where you go in Florida, you can expect many other retirees to hang out with, in addition to amenities geared toward older adults.
Though Florida’s sunny beaches are a big draw for retirees in that state, Colorado offers up something different. Ideal for active retirees, the Centennial State boasts four national parks, 32 ski resorts, 300 days of sunshine a year, and countless recreational opportunities on the state’s spectacular slopes, trails, rivers, and lakes.
With four distinct seasonal climates, you can participate in different activities throughout the year. Colorado offers several attractive tax perks for retirees, including a large deduction on all retirement income and some of the lowest property taxes in the country.
Delaware is a tax-friendly state that’s well suited for retirees. It’s one of four states with no sales tax at the state or local level, and there are no estate or inheritance taxes either. What’s more, Delaware doesn’t tax Social Security benefits, and you can exclude up to $12,500 of pension and other retirement income—and the state has some of the lower property tax rates in the country.
Though the tax situation may be Delaware’s biggest draw for retirees, the state features 28 miles of beaches, small-town charm—with big-city attractions—and it’s a short drive or train trip to major cities in the Northeast, including New York City, Washington, D.C., and Philadelphia.
Virginia is the only state on our list that boasts both beaches and mountains, providing retirees with endless opportunities to get outside and enjoy nature (insider tip: the Virginia Creeper Trail is a mostly downhill, 35-mile trail that runs along creeks, through gorgeous scenery, and across old railroad trestles—perfect for a day or two of easy biking).
The state is tax-friendly, too: There’s no tax on Social Security benefits, and you can deduct up to $12,000 in pension and retirement income state taxes.
North Dakota probably isn’t the first place to come to mind when you think about retirement destinations. Still, it consistently ranks as one of the top places to retire based on factors such as cost of living, doctors per capita, and walkability. The Milken Institute ranked Fargo as the 14th-best small metro area for successful aging out of the 281 it evaluated in 2017, citing its stable economy, quality of life, community engagement, and healthcare quality.
Still, if tax-friendliness is a concern, you have better options: North Dakota residents pay state income taxes on Social Security benefits if their federal adjusted gross income (AGI) is above specific limits, and sales and property tax rates are close to the national average.
Montana borders four states (Idaho, North Dakota, South Dakota, and Wyoming) and three Canadian provinces (Alberta, British Columbia, and Saskatchewan), making it a good launching pad for road trips and adventures. It’s one of the largest states in the nation but is the third-least densely populated.
The state is known for its vast natural resources and abundant wildlife—including bison, elk, moose, and grizzly bears. Montana is moderately friendly toward retirees: Property taxes are relatively low, and there’s no state sales tax. But you’ll pay taxes on most forms of retirement income, including a portion of your Social Security benefits if you exceed income limits.
If You Move Abroad
When you have a country in mind, it’s a good idea to spend some time visiting as a resident, not a tourist. Try renting an apartment in an area you might want to live in and talk to some locals. Try to find expats and get their opinions on living there as a foreigner. Moving abroad is a big decision, and you should have as much information as possible before finalizing it.
It’s also important to consult a financial advisor before you move. Your country of choice may have different rules about taxes, and getting that information sorted out beforehand will make your move that much easier. Plus, an advisor can help you set up a budget to follow so you don’t end up spending your nest egg too quickly.
Which States Don’t Tax Social Security and Pensions?
Taxes are a big part of your retirement budget. Fortunately, several states don’t tax retirement distributions—meaning your retirement dollars could last longer. Twelve states don’t tax 401(k), IRA, or pension distributions:
- New Hampshire
- South Dakota
What Are the Cheapest Places on Earth to Retire?
According to International Living’s Annual Global Retirement Index 2021, Vietnam, Sri Lanka, Bolivia, Cambodia, and Ecuador are the cheapest place to retire in the world.
Where on Earth Is the Quality of Life the Highest?
U.S. News, in partnership with the Wharton School of the University of Pennsylvania and BAV Group, ranked the 2021 Best Countries. One of the sub-rankings is Quality of Life, based on nine attributes related to quality of life: affordable, job market, economic stability, family-friendly, income equality, political stability, safety, public education, and public health. The top 10 countries (in order) are:
- The Netherlands
- New Zealand
The Bottom Line
If you decide to retire abroad, it’s vital that you do your homework ahead of time, use common sense, and avoid (or use extra caution) in areas with active travel alerts and warnings (see the U.S. Department of State’s Alerts and Travel Warnings). Rules and regulations vary by country, including visa and residency requirements. In addition, taxes for those retiring abroad can be quite complicated. As such, it is always recommended that you work with a qualified attorney and/or tax specialist when making plans for retiring abroad.