Although small in size, these microstates represent developed countries with relatively modern economies and infrastructure.

It's location in the Pyrennes gives Andorra a cooler climate.

Andorra Retirement Today

The Principality of Andorra is about 180 square miles in area with a population of about 85,000 people. Interestingly enough, Andorrans represent a minority within their own country. Approximately 40% of the population are actually Andorrans. The country is located between France and Spain in the Pyrennes Mountains.

The economy of Andorra is primarily based on tourism today, with international banking and finance following behind. In the past it attracted many visitors from France and Spain because of its low tax rates. Many goods are lower in cost than neighboring France and Spain because of these tax rates.

The official language of the country is Catalan although Spanish and French are widely used. The government is a parliamentary type of democracy. Laws are fairly restrictive for citizenship (because of the Andorran minority) but the country is quite open to foreign investment.

On the downside, there is a housing shortage that tends to drive prices up. The country provides national healthcare to employed persons. If not employed, one must acquire private health insurance. The cost of living is also relatively high. Per capita incomes are about $45,000 USD – almost the same as the USA.

Although an Andorra retirement is not ideal for cost savings, the country boasts the longest life expectancy in the world. Because of its mountainous geography, it offers the retiree with a temperate climate that is cooler than its Mediterranean neighbors.

Castle nestled in the Alps - Lichtenstein.

Liechtenstein Retirement Today

The Principality of Liechtenstein is about 62 square miles in size and is located between Switzerland and Austria. The population of the country is about 35,000 people, with approximately 30% being foreigners.

The government is a constitutional monarchy. Its economy is mixed but has a very strong financial services industry and is considered to be a tax haven for foreign investors. Approximately 30% of the nation’s income is derived from financial entities designed to a safe haven for foreign money through “corporations” or “foundations”.

Liechtenstein is a developed country but its small urban and finances based economy gives it an annual per capita income of close to $120,000 USD. This is perhaps the highest per capita income in the world. This does not make the country an ideal retirement haven, although for some, it may make for an ideal tax haven for retirement funds.

Liechenstein is located in the Alps, and offers a cold continental type of climate. Unlike its Mediterranean neighbors, the country is more ideal for a winter style of living than any type of warm Mediterranean climate.

Although not a typical retirement destination by any means, the country does offer a range of financial services that may be of interest to retirees in need of tax havens for their wealth. The high cost of living and cold climate probably would not make this one of the best places to retire for a sun loving retiree on a modest budget.

Shipping, trade, and tourism fuel the Maltese economy.

Malta Retirement Today

The Republic of Malta is a small archipelago of islands located in the Mediterranean, south of Italy. It has an area of approximately 120 square miles. The climate of Malta is a typical Mediterranean climate with a hot and dry summer combined with a warm and rainy winter.

The population of Malta is approximately 400,000. Its economic base is built on foreign trade/shipping, manufacturing and increasingly, tourism.

In addition to a typical Mediterranean climate, the cost of living is more in line with other countries in Southern Europe. It’s per capita income of $21,000 USD is about the same as Portugal, making it one the more affordable retirement destinations in Southern Europe.

For retirees, Malta offers a socialized national healthcare system (for residents) and a more expensive but more sophisticated private healthcare system. For comparative purposes, Malta’s healthcare system is ranked fifth in the world by the World Health Organization (compared to the USA, which is 37th). Retirees will need to purchase private medical insurance. Although Malta is attempting to develop medical tourism, none of its hospitals are JCI accredited.

Malta may provide retirees with a decent retirement destination for expatriate living due to its mild climate and low cost of living.

Gambling fever - Monte Carlo at night.

Monaco Retirement Today

The principality of Monaco is the smallest of the microstates with an area of under 1 square mile and a population of 32,000. It is located on the Mediterranean Sea on the southern coast of France. Monaco is a constitutional monarchy, with a Prince as the head of state. Political power is shared with an elected National Council.

Monaco’s economy is based primarily on finance and many foreign companies are drawn to Monaco for its low tax rates. These corporations provide Monaco with half of its national income. Monaco is considered another tax haven with no income taxes on individuals.

Tourism accounts for about a quarter of the country’s gross domestic product and has been an important part of the economy ever since Monaco opened its first casino. And of course, the annual Monaco Grand Prix draws its own fair share of tourists.

Retirement in Monaco is probably reserved for retirees with a more than adequate pension. The estimated per capita income is about $71,000. On the other hand, if you are in need of a tax haven and have sufficient wealth, then Monaco may be of interest as a retirement destination.

San Marino Retirement Today

The Republic of San Marino is about 24 square miles in size with a population of 30,000 inhabitants. It is located in the Apennine Mountains and landlocked within the borders of Italy. San Marino is a democratic republic.

Per capita GDP is about $35,000 USD a year, making its cost of living similar to that of Italy.  Tourism accounts for about half of San Marino’s national income.

Like Andorra, the country boasts a high life expectancy. The climate is Mediterranean but on the cool side due to its location in the Apennine Mountains.

European Microstates Retirement: Summary

The southern European location of these microstates give them a Mediterranean climate. However, the mountainous locations of Liechtenstein, Andorra, and San Marino results in cooler Mediterranean to cold temperate types of climates.

Many of the microstates are considered tax havens and are dependent on tourism. Combined with the fact that most are highly urbanized results in relatively high costs of living for the region. Malta has the lowest cost of living and Lichtenstein the highest.

Despite the relatively high cost of living (on a global basis), there are certain advantages to select these microstates as a retirement destination. They are all relatively modern with a decent infrastructure in place. They are urbanized and provide decent access to healthcare. And the life expectancies of residents in many of these small countries are among the highest, if not the highest in the world.

(Photos by: Polenta, Sheepy, Rob29yo, Betacam)