5. Mexico

You knew we'd get to it. Time-tested Mexico ranks fifth in International Living's retirement index. It's close, it's accessible and it's still one of the most popular retiree destinations, Peddicord says. But compared with what it used to be six or 10 years ago, it's getting a little bit expensive, she says. "Ten years ago, Mexico was dirt cheap. Six years ago, it was still very affordable. Today, it's not expensive but it's certainly more expensive than Panama or Uruguay," she says. "In certain parts your cost of living could be comparable to the U.S., but also with a comparable standard of living."

Some of the places that International Living thinks make most sense for retirees heading down south: Rosarito Beach, Puerto Vallarta, Queretaro, Mazatlan and Merida.

Pros: Close to the U.S. and accessible; a big country with diversity, from Pacific living through small towns and big cities; an established haven for U.S. retirees.

Cons: Not as affordable as it used to be.

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