How to decide on the right place to retire abroad

Retiring abroad seems like a great idea, but it’s a big world out there. How do you decide where the best place is for you?

We faced that question over 15 years ago before moving to Cuenca, Ecuador. Moving abroad is a major decision. Some retirees choose to move in an effort to save money and prioritize cost of living, while others want a new adventure in this next chapter of their lives. Regardless, there are a lot of factors that go into selecting a new hometown.

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To narrow down what seemed like countless possibilities when we were deciding, here are the steps we went through to go from clueless to confident.

1. Imagine your dream location and make a list of all the attributes. Tired of spending frigid winters shoveling snow, or of sweating bullets and swatting mosquitoes in the summer? Fed up with sitting in gridlock traffic?

The good news about moving to another country is you get to choose what you’re going to wake up to all year long. Take the time to think about all the factors that describe your ideal new home, then write them down in a wishlist.

Avoid what we call “vacation mentality” when going through this important exercise. Many people have a favorite vacation spot they love to visit and think, “Wow, this is the kind of place I want to retire.”

Maybe. Keep in mind that living somewhere full time is much different than spending a week or so there. Small inconveniences you overlook on vacation can become major issues when they are part of your daily life. Or your favorite vacation spot might be the perfect beach town in the summer, but desolate and lonely in the winter.

Things to consider when making your wishlist:

2. Research countries and places within those countries that match up most closely with your wishlist. Here is where the fun begins. Because you have taken the time to define what you want your experience to be, pinpointing possible locations has become much more manageable.

Maybe you have decided you want a tropical beachfront location in a smaller city with lots of expats, and that you will be traveling to visit family on a regular basis. If you live in the United States or Canada, your focus will probably be on Latin America.

Or maybe you are looking for the excitement of a big city where English is widely spoken, have no family attachments and enjoy seasonal weather. That last requirement eliminates countries near the equator, including those in Southeast Asia and much of South America.

3. Select the top three choices from your list. If your wishlist is thorough (and it should be), most likely no single choice is going to satisfy every item you’ve written down. Rank the entries on your wishlist in order of importance, then determine three locations that check most of those boxes. If you have already decided on your top pick, all the better.

4. Make sure you meet the requirements for a permanent visa. It doesn’t do any good to fall in love with someplace if you can’t actually live there full time. Most countries have a two-step process of first obtaining a temporary visa and satisfying the residency requirements for a certain number of years, and then applying for permanent residency.

Go online and search “financial requirements for residency visa in [fill in the country].” The government’s official website will have the most up-to-date information. You will quickly find out the amount of monthly income or savings you must prove when submitting your initial application, as well as what is needed for a permanent visa down the road.

You may be surprised at what you learn. Italy, for instance, wants proof of around $3,000 in monthly income for a temporary visa, but less than $700 a month five years later when you apply for long-term residency. Go figure.

Mexico, often touted as a cheap retirement destination, now asks for proof of $4,185 monthly guaranteed income or $69,750 in savings for its temporary visa. After four years, when you can seek permanent residency, those numbers jump to $7,300 in monthly income or $293,000 in savings.

5. Plan a scouting trip to the top pick to confirm your research. When we discovered Cuenca during our internet research, its description checked all the boxes on our wishlist and seemed too good to be true.

We immediately booked a scouting trip to verify what we had read, and more importantly to be on the lookout for red flags that might derail any thoughts of relocation. As an example, Cuenca sits at 8,400 feet above sea level. Would we be comfortable living at that high of an altitude?

Once you have zeroed in on your No. 1 pick, we strongly recommend you do the same. We recommend a stay of at least two weeks.

Beyond investigating prices, exploring neighborhoods, and meeting with attorneys and other expats, you need to decide if this place speaks to your heart. Putting boots on the ground is the only way to truly know.

If time and budget permit, it’s a great idea to return for a longer period (a month or more is ideal) prior to making a final decision. Your U.S. passport allows you to visit most countries up to 90 days per year.

6. If the trip is a success, get ready to move! At the completion of your scouting trip, you should know whether you want to go forward with relocation plans.

If not, hopefully you mixed in some fun excursions and leave with pleasant memories. Better to realize this now, rather than discover after great effort and expense that you have made a mistake. Still sold on the idea of retiring abroad? Perhaps one of your other top picks deserves a second look.

Depending on a multitude of factors, actually showing up in your new country could take months or years. You may have a house or business to sell, or perhaps adult children or aging parents who require your presence.

However long it takes to unravel your current life, you have methodically gone through the necessary steps to arrive at an informed decision about your future retirement destination abroad.

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