International Living magazine's Fifth Annual Global Retirement Index said that following Mexico as a great place to retire are: Ecuador, Italy, Panama, Australia, Malta, Spain, South Africa and Malaysia.

"Mexico offers the perfect mix of centuries-old traditions and contemporary lifestyles. Moving to Mexico means you can still have all of the amenities you grew accustomed to north of the border: cable TV, high-speed Internet, and modern home appliances," Laura Sheridan, International Living's managing editor, said in a statement.

Clinics and hospitals are staffed by expert physicians, and medical care and prescription drugs cost a fraction of what is charged in the United States, the magazine said.

Panama fell from the top spot, in part because the price of real estate has risen dramatically -- particularly in Panama City.

The United States ranks 19th in the report and gets particularly bad marks in the area of special benefits for retirees -- tax breaks, discounts and freebies that various governments offer to residents, sometimes specifically to foreign residents in an effort to attract retirement dollars. However, the United States scores well in safety and infrastructure.