This article was originally published on Aug. 29, 2015. It was updated on July 19, 2016.
Retirement can bring thoughts of relocation. We might move to be nearer our children or to enjoy a lower cost of living in a smaller home -- perhaps in a different town or state. Consider thinking out of the box a little, though, as you might want to relocate to a different country! Here's a look at some of the best countries to retire in and why you might or might not want to move to one of them.
Pros and cons of retiring in a different country
For most people, the biggest advantage of retiring in a foreign country will be a lower cost of living, often enhanced by lower taxes. That can be a big deal if your retirement nest egg and your expected Social Security income seem insufficient to support you in your desired lifestyle. Some countries, such as Switzerland, are actually costlier places to live than the U.S., but many others will seem quite a bargain. Among low-cost countries you might consider Ecuador, Nicaragua, Vietnam, Thailand, and Belize.
Another plus for many countries is their environment, which might offer a temperate climate and perhaps beaches, mountains, or any other desirable features. Foreign cities can be good choices, as well, as public transportation can make getting around easier, and lots of stores and services can found nearby, not to mention cultural attractions.
The drawbacks to foreign living, though, can be considerable. For one thing, just about everyone you know will remain back home, including close friends and grandchildren. (On the other hand, depending on where you retire to, you may end up with a lot of visitors.) It can be challenging to establish a new social network in a foreign place, though ex-pats will often find each other and band together. As you get older and your health declines, though, living far from home can present difficulties. Currency exchange rates can be another drawback. Right now, the dollar is strong, making overseas living easier. But it won't always stay so strong.
Meanwhile, the cost of getting to your new home can be rather steep -- not only in money spent on packing and moving services, but also in the headaches of research, planning, selling a home and finding a new one, and so on. The planning is especially critical, as you need to see if moving is worthwhile in the first place. You'll need to determine how much it will cost to move as well as how much it will cost to live in the new location. Be thorough in your thinking and budgeting – don't, for example, forget to include health-care costs.
The 5 best countries to retire in
So if you do decide that you want to retire abroad, where should you go? Well, there are many countries with appealing features. You would do well to give at least a little consideration to one or two dozen, lest you overlook the one that's best for you. Here's a start, though -- five countries deemed as the best ones to retire in, based on their climate, cost of living, and healthcare, per InternationalLiving.com's Global Retirement Index.
A key draw for Panama is its Pensionado Visa, which many foreign retirees qualify for if they collect a lifetime pension of at least $1,000 per month. (Social Security checks alone will help many Americans qualify.) It offers hefty discounts, such as 20% off medical services, 15% off hospital bills, 50% off entertainment, and 25% off at restaurants and airlines as well as electricity and phone bills. Panama is highly rated in infrastructure and healthcare, and is known as being very friendly and welcoming to expats. It offers mountains and beaches, too.
Ecuador offers a relatively low cost of living and affordable housing, along with solid public transportation, healthcare, and a growing economy. Retirees can enjoy discounts of 50% on public transportation and utilities, and housing can be found for $1,000 per month or less -- with some ocean-view apartments available for sale for less than $100,000.
Mexico, too, offers solid healthcare and a lower cost of living. It also has established communities filled with expat retirees, which can make living far from home more comfortable. It also means that English is widely spoken. Mexico offers range of climates, too, from tropical to temperate.
Costa Rica is another welcoming country with widely spoken English and a low cost of living. It also offers rain forests, volcanoes, and a great natural park system, along with malls, supermarkets, social clubs, and a temperate climate.
Malaysia is further away, but it sports expat havens such as Kuala Lumpur and Penang, along with a low cost of living, excellent healthcare, and widely spoken English. In last year's report, Thomas O'Neal, who moved to Penang from New York, noted, "I rent a 1,600-square-foot apartment with an amazing pool, just five minutes' walk from the ritzy Gurney Plaza shopping mall. ... It costs me just $850 a month. I don't need a car, either, so I'm saving money left, right, and center."
Rounding out the rest of the top 10 countries are Colombia, Thailand, Nicaragua, Spain, and Portugal. Other nations that pop up in various lists of promising retirement locations include Malta, Cyprus, Belize, Guatemala, and Guam.
Retiring abroad might not be for you, but it's worth considering -- or perhaps at least daydreaming about.
Longtime Fool specialist Selena Maranjian, whom you can follow on Twitter, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.