The most affordable places to retire

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One of the biggest misconceptions people saving for retirement have is that Social Security alone will cover basic expenses later in life, like housing, healthcare, and food. The reality? Not so much.

There are nearly 44 million retired Americans currently collecting Social Security benefits, but the actual dollar amounts might not be what you’d expect. In a nationwide survey of recent retirees, 25% of respondents said their Social Security payments ended up being “less” or “much less” than anticipated.

Today, the average Social Security retirement benefit is just over $1,400 per month. For some perspective, the average rent for an apartment in San Francisco is around $3,600 per month. But hey, let’s say you’re feeling optimistic and plan on receiving the maximum Social Security benefit. That’ll double your Social Security income to just over $2,800 per month—still not enough to live in San Francisco, but closer. (Side note: In order to qualify for that maximum benefit, you’ll need to have worked for at least 35 years at a taxable annual salary of at least $132,900.)

Oh, right, and then there’s that whole other issue: the fact that by 2035, the Social Security Administration predicts it will only be able to pay out 75% of its scheduled benefits. Which is another reminder that when planning for retirement, Social Security shouldn’t be Plan A.

The destination retirement

With the cost of living rising rapidly in cities across the country and the future of Social Security looking a bit murky, it’s no surprise that many retirees (and near retirees) are looking for ways to stretch their Social Security dollars further. And one option that’s been growing in popularity in recent years is the “destination retirement.” Instead of retiring in place, or near where they live, more and more Americans are retiring abroad, often ending up in places that are warm, beautiful, and where the cost of living is way, way lower.

Sound like a dream come true? The Social Security Administration reports that there are approximately 680,000 American retirees currently living abroad while collecting Social Security—up from 400,000 just a few years ago. And while the cost-saving aspect is certainly one reason why people do it, it’s not the only reason. As retirement consultant Kathleen Peddicord explained, the lifestyle “upgrade” that comes with retiring abroad is also a major draw:

“There’s a big budget upside, but more than that there’s a lifestyle upside. Retirement conventionally has been about scaling back, retiring from your previous life and job and adult children, and embarking on a life that in many ways could be considered less. It’s smaller. Until you consider taking that retirement to another country, and it becomes bigger… Going to a new country turns this phase of life into the biggest adventure of your life.”
Kathleen Peddicord

Of course, once you’re sold on the idea of retiring abroad, it begs the obvious question: Where do you retire?

The world’s best places to retire

Let’s be clear: There’s no perfect place to retire. Ultimately, the country you choose needs to align with your own specific preferences and circumstances. For example, if you have family on the West Coast of the U.S., finding a retirement destination nearby (or at least in the same hemisphere) will likely be a consideration.

That being said, there are definitely some universal attributes you should keep an eye out for while doing your research. That includes things like cost of living, safety, climate, essential goods and services (e.g. healthcare), along with recreation and entertainment. Based on those criteria, the following five countries are among the best places to retire abroad.


Monthly cost of living for a retired couple: $1,765

Panama recently took first place in International Living’s annual rankings of the world’s best places to retire. And when you consider its tropical (and hurricane-free) climate; its friendly tax policies; its high-quality, low-cost medical care; and the fact that it uses the U.S. dollar as its currency, you can begin to understand why. Another thing about Panama that makes it such an attractive place to retire: It has something for everyone. For the metropolitan crowd, there’s the bustling, vibrant capital, Panama City, which is situated at the Panama Canal’s Pacific entrance. For nature-lovers, there’s the mountain town of Boquete—located 3,500 feet in elevation—which is full of lush greenery and Swiss-style chalets. Meanwhile, an hour away from the capital, on the Pacific coast, you’ll find Coronado, a beach bum’s paradise. Not too shabby for $1,765 per month.


Monthly cost of living for a retired couple: $1,700

When Live and Invest Overseas came up with its annual rankings of the world’s best places to retire, it reached a different conclusion than International Living. Instead of going with Panama, it awarded the gold medal to Portugal—specifically to The Algarve, Portugal’s southernmost region. What’s the appeal? Let’s start with the weather: The Algarve receives more than 3,300 hours of sunshine each year. And from May until August, it receives 12 hours of sunshine each day. Then there’s the first-rate infrastructure to consider, as well as the low cost of real estate. You could buy your own place in The Algarve for around $150,000 (USD) or potentially even less. Another perk to consider: residents receive free health care—and becoming a resident is simple and inexpensive.


Monthly cost of living for a retired couple: $1,500

Mexico appears high in both International Living’s and Live and Invest Overseas’ rankings, so it’s definitely worth a mention here. Overall, there are more than 1 million American retirees living in Mexico, making it the most popular international retirement destination. Recently, the city of Mazatlán on Mexico’s Pacific coast has begun to stand out as both an affordable and enjoyable retirement destination. From its 20 miles of beach to its historic (and walkable) city center, Mazatlán has a lot to offer. Of course, one of its biggest draws for American retirees is its travel accessibility.


Monthly cost of living for a retired couple: $1,000

Ecuador, like Mexico, is another country that International Living and Live and Invest Overseas both ranked highly in their respective lists of the world’s best places to retire. While Ecuador offers a variety of different places you can live, from metropolitan cities to coastal communities, one place that stands out is the historic city of Cuenca, which is situated in the Andes mountains. Cuenca’s cobblestone streets are walkable, its tap water is drinkable, and its mild climate means you’ll save on air-conditioning and heating costs. Other benefits worth mentioning: the healthcare is inexpensive, and (just like in Panama) the U.S. dollar is the official currency.


Monthly cost of living for a retired couple: $1,500

Rounding out our list of top places to retire abroad is the Southeast Asian country of Malaysia—the only Asian destination to appear in both International Living’s and Live and Invest Overseas’ rankings. The population of Malaysia is a melting pot of Malay, Chinese, Indian, Indonesian, Thai, Burmese, and several other ethnicities, but—on account of the country’s colonial past—English is the language that ties all of these groups together. For American retirees, the city of George Town, located on Penang Island, is a popular option. George Town is a modern city, but behind its high-rises rests its historic core, which was deemed a UNESCO World Heritage Site in 2008. There are also plenty of sandy beaches nearby. Couple this with the low cost of living, friendly tax policies, and excellent healthcare, and it’s easy to see why George Town has been called one of Southeast Asia’s “most livable” destinations.

Thanks for reading!

So, there you have it: Five of the world’s most affordable places to retire—perfect for helping you stretch your Social Security dollars further. Thinking of making a move? Wherever you end up, be sure to send us a postcard!


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