The world's best places to retire

The best place in the world to retire, according to expatriate lifestyle magazine International Living, is sunny, cheap, cosmopolitan and 8,000 feet high in the Andes.

Cuenca, Ecuador's third-largest city, is a well-preserved colonial city of cobblestone streets and dramatic period architecture, with modern suburbs, shopping and all the comforts American retirees might expect. Yet they can live there -- and well -- for about $17,000 a year, the magazine says.

• On Bing: A photo gallery of Cuenca

Cuenca and Ecuador in particular have so much to offer, says International Living Managing Editor Laura Sheridan, that the country bumped Mexico from the top spot in the publication's Annual Retirement Index, released last month.

The index analyzes and ranks 29 countries in categories including real-estate costs, special benefits offered to retirees, culture, safety and stability, health care, climate, infrastructure and cost of living. The rankings are below.

"We look closely at the best opportunities worldwide for retirement living," Sheridan says. "Where will the retiree's dollars go farthest? Which country is the safest? Where is the health care best? We give top priority to those things that matter most to anyone planning for retirement, including programs with special benefits for retirees . . . things like tax breaks and discounts, for example, that various governments offer in an effort to attract investment and retirement dollars."

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The best of the best

"In the place that wins this year's Top Retirement Haven, you can't ignore the doorways. In fact, if you have a camera with you, you'll find yourself taking pictures of them. This one is arched. That one square. The wood is always ancient -- like the cobbled streets you walk along. But it's carefully tended -- sanded and stained, or painted red or blue or teal.

"Look up, and you see waves of terracotta tile roofs. And rising from them, renaissance cathedral domes -- each a soft blue and white, carving a crisp arch in the cobalt sky. "

The editors cited Cuenca's intense greenery, year-round fruits and vegetables, inexpensive health care and some appealing benefits for retirees, including half-price airfares and big discounts on other expenses such as taxes, utilities and entertainment.

But it was the glorious weather and affordable real estate that sold Ron and Donna Carlson of Camas, Wash., who expect to move full time to Cuenca by the end of 2010.

"We bought a 4,000-square-foot penthouse apartment in Cuenca with fantastic views and all the amenities we could want," Ron Carlson says. "We paid far less for it than we would have elsewhere. And we have the world's best weather."

Cuenca is almost on the equator but at 8,000 feet elevation. "The weather is perfect year round," said Kent Zimmerman, a U.S. expat who lives in Cuenca. "There are flowers everywhere, green grass and rushing rivers. The elevation sounds high (it's about the same as Aspen, Colo.), but studies continually show how healthy it is for you. It's so energizing, you feel 10 years younger." (Check the current weather in Cuenca.)

Here is International Living's monthly budget for a couple in Cuenca:

The Carlsons knew their retirement dollars would stretch further outside the U.S., so they began to explore the idea of retiring in Latin America. They made trips to Panama, Brazil, Mexico and Europe before settling on Cuenca.

Ecuador may be the best-kept retirement secret in the Americas, Sheridan says, especially when it comes to real-estate prices.

"For a decade now, Ecuador has been one of our favorite locations for overseas retirement," she says. "In fact, it won the top honor in 1999 and has been among our preferred locales ever since. This year, it's back at No. 1, followed by Mexico, Panama, Uruguay and Italy.

International Living's top retiree destinations

• No. 1: Postcard from Cuenca, Ecuador
• No. 2: The 4 C's of Merida, Mexico
• No. 3: On the beach in Coronado, Panama
• No. 4: The crowds flock to Punta del Este, Uruguay
• No. 5: Secret passages, $15,500 homes in Calitri, Italy

The same is true of Mexico, Sheridan says, which last year earned the top spot on the retirement index. "Living in a resort city like Puerto Vallarta is more expensive -- and arguably more stressful -- than living in a smaller and lesser-known town like Tepic, just a few hours north."

The United States ranks No. 22 in the index and receives particularly bad marks in the area of special benefits for retirees. It scores well in both safety and infrastructure. At the bottom of the list are the United Kingdom and South Africa, primarily because of high real-estate prices and, in the U.K., the overall high cost of living. In the case of South Africa, the country didn't score particularly well in any category.

"No place scores a perfect 100," Sheridan stresses. "Even Ecuador, our No. 1 retirement destination, earns a score of only 79. The best, but not perfect. If you're trying to pick a place to retire, keep that in mind. There will be good points and bad, no matter where you go. Realizing that ahead of time will help eliminate disappointments later."

International Living's retirement index:

Here's how the countries were scored:

• Real estate. Countries where real-estate prices are low and the purchase of real estate is relatively easy receive the highest scores. Weight: 15%
• Entertainment, recreation and culture. This category considers the number of newspapers per 1,000 citizens, the number of museums and cinemas per capita, the number of university students, the literacy rate and the variety of cultural and recreational offerings. Weight: 10%.
• Cost of living. This score is based on statistics from the Indexes of Living Costs Abroad, Quarters Allowances, and Hardship Differentials, published by the U.S. Department of State, and on data published by Business International. The lower the score, the higher the cost of living. Weight: 20%.
• Safety and stability. This measure of unrest in each country is based primarily on Interpol data and State Department statistics. It also takes into account the civil liberties and political rights granted by each government. Weight: 5%.
• Health care. Considered in this category are the cost of a typical visit to a general practitioner and the cost and coverage particulars of health insurance. Weight: 20%.
• Climate. Countries with temperate weather throughout the year, moderate rainfall and little risk of natural disaster come out on top in this category. Data represent each country as a whole. Weight: 5%.
• Special benefits. This category considers government provisions that make moving to and living in each country easier and more affordable for foreigners. Taken into account are property rights for foreign residents, property tax rates, duty-free imports on personal belongings, currency controls, employment restrictions, voting rights and transportation discounts for seniors. Weight: 20%.
• Infrastructure. This section considers the number of cars and telephones per 1,000 residents, the length of railroad track in usable condition, the number of airports, the quality of the country's road and highway network, and the availability of telecommunications. Weight: 5%.

Published Oct. 13, 2009

[Related content: retire overseas, retirement, retirement planning, retirement savings, boomers]

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