(FORTUNE Magazine) – Even if you're a fresh-faced 40-year-old, it's not too soon to start dealing with the question of where you will live when you retire. Very soon now, wave upon wave of your fellow boomers are going to start spilling into retirement, discovering every undiscovered hideaway across the land.

So it's high time to start scouting, visiting promising locales, and learning what deals are out there. You may even want to buy a property to use as a vacation home now, with the thought of retiring to it down the line. Don't worry--if you change your mind about retiring there, you'll still be able to flip the property for a decent profit, provided you've made a savvy buy. Bottom line: There's going to be a rush for prime retirement realty, and you want to leave your demographic peers in the dust. "The time to buy is now," says Ram Kolluri, a Princeton, N.J., financial planner. "If you want to retire to a nice place, and you're not there first, you're going to pay top dollar."

To help you in your quest, we went bargain hunting. We considered dozens of communities, and we ultimately decided on five, a diverse group ranging from Beaufort, S.C., to Carlsbad, Cal., to Sequim in Washington State. As retirement havens, our featured spots remain relatively undiscovered and eminently affordable. In each, bargains abound, and it's certainly possible to get a nice three-bedroom home for less than $250,000.

Of course, the financial burden of a second home can be onerous. As a general rule, no more than 36% of your current income should be devoted to debt, such as mortgages and car loans. That's not simply a helpful rule of thumb, either; it's a hard-wired rule used by mortgage lenders. Staying beneath 36% can be a squeeze, given the debt on your current home and other obligations. But small compromises can save you big bucks. "Buy a few blocks in from the waterfront or get a one-car garage," recommends Ken Stern, president of Asset Planning Solutions in San Diego.

You also might consider buying a home and renting it out until you're closer to retirement. This makes good sense if your household's annual adjusted gross income is less than $150,000. By designating your place a rental, you can deduct numerous expenses, including mortgage interest, maintenance, even fees from the property management firm that looks after your house when you're away.

But in the end, the key is picking the right place. So read on. All five of our choices will please your pocketbook; see which ones suit your style.

BEAUFORT, S.C.

Here's a great formula for finding an attractive and affordable retirement spot. Take your favorite upscale haven, maybe a resort you've visited on vacation, then simply head down the road. Starting with Hilton Head, S.C., for instance, we traced 40 miles north and found Beaufort. It, too, is a Sea Island town, with the same climate, plenty of golf, and housing at a fraction the price of Hilton Head.

Beaufort's historic district is almost wholly intact, and there is a stunning array of antebellum homes. The grandest once belonged to the owners of cotton and indigo plantations. Many are priced in the stratosphere. But every so often a screaming bargain hits the market. Recently, an 1840s townhouse was listed for $289,000. In newer tracts, however, landing a three-bedroom for around $200,000 is quite realistic. These properties may not evoke visions of Scarlett O'Hara, but massive, 200-year-old live oaks often grace the front lawns. So at least you can own an antebellum tree.

Look, too, at the other Beaufort County Sea Islands. There are 65 in all, though a number remain undeveloped. Plans are in the works to build on another ten, thus assuring that the real-estate market won't get too tight as brand-new properties continually come on line. In the meantime, homes in the $250,000 range can be found on such popular islands as Fripp and Dataw.

All the developed Beaufort County islands are interconnected by a series of bridges and causeways, and all offer a similarly casual Carolina Low Country way of life. There's great eating--shrimp and grits is a local favorite, and backyard oyster roasts are popular in winter.

Lovely, unspoiled Hunting Island is the area's public beach. Many retirees sign on for sea turtle patrol, to protect eggs and guard hatchlings from predators and curious humans during their mad dash to the sea. Dolphins frolicking in Beaufort's bay are an everyday sight. And this is a golfers' paradise that rivals, well, Hilton Head. Within a 15-mile radius of Beaufort there are 14 courses, half of them public.

One caveat for anyone considering Beaufort and the surrounding area: Not for nothing did Pat Conroy title a novel set here The Prince of Tides. You need flood insurance. It's priced by zone, ranging from $300 a year inland to as much as $2,000 right on the water.

CARLSBAD, CAL.

An affordable Southern California dream lifestyle is still available in about one place: Carlsbad. This town of 68,000 is situated in the last frontier between the relentless suburban encroachment of San Diego, 30 miles to the south, and Orange County, 30 miles to the north. City elders have seen what's coming and they have clearly planned accordingly.

Carlsbad has a development blueprint that calls for the town to be completely built out no sooner than 2020, while still retaining 40% open space. Meantime, Carlsbad avoids a whole slew of Southern California ills: It's not in a fault zone, it generally gets a smog-free breeze blowing in off the ocean, and it doesn't have the kind of sheer cliffs that let houses slide, Malibu-like, into the sea. Gangs are nonexistent, and crime is a statistical blip. The town does share San Diego's extraordinary climate, however, averaging 78 degrees in July and 69 degrees in January.

Retirement properties are a relative steal here, thanks in part to the recession that rocked Southern California during the first half of the decade. The town wasn't hit nearly as hard as San Diego, where thousands of defense industry jobs were lost. (Carlsbad's big industry, by contrast, is golf-equipment manufacturing. Callaway, Cobra, and Taylor Made have headquarters here.) Nevertheless, housing prices fell about 20% in Carlsbad. But they have held steady the past couple years. The upshot: You can now get a home at a 1980s price and pay a lower, 1990s interest rate.

A comfortable Spanish-style house--single-level, white stucco, tiled roof--would run you between $200,000 and $250,000. Carlsbad is a big condo market, too. A suitable condo can be had for $100,000 to $150,000. Because Carlsbad is in hill country, coveted ocean views are available all the way to the edge of the city limit, eight miles inland.

Certain new amenities are likely to make Carlsbad an even more livable place in the years to come. An esplanade has just been completed, at a cost of $4.1 million, along a portion of the town's seven miles of surfer-perfect white sand beach. Seniors can take a train to San Diego for $3 round-trip, and a free transfer to a trolley can get them all the way to Tijuana across the Mexican border. Bike lanes line the streets; new housing is being built within walking distance of a train station. Southern California living without a car--what a concept!

One last Carlsbad feature: It's close to a number of classic attractions, good for luring grandkids out for a visit. Disneyland, Sea World, and the San Diego zoo are all within about an hour or less of town. When Legoland, an amusement park aimed at kids, opens in 1999, Carlsbad will have its own attraction.

SEQUIM, WASH.

For starters, it's pronounced "squim." And for weather, it cannot be beat. Sequim is directly in the middle of a topographical anomaly, a so-called rain shadow produced by the nearby Olympic Mountains. The town gets a mere 16 inches of precipitation annually, about the same as L.A. So residents enjoy a moderate climate here (average: 71 degrees in July, 46 degrees in January) without the Northwest's typical dampness.

Sequim is also a recreational wonderland. Nearby Olympic National Park features 600 miles of hiking trails, some through lush rain forests. John Wayne loved boating in the region and willed a tract of land to Sequim that has been developed into a marina. Dungeness Bay, just five minutes from town, offers a popular pastime: gathering world-famous Dungeness crabs. "When the tide is out, the table is set," goes a saying of the local S'Kallam Indians. If you don't want to work that hard, just grab a fresh-caught meal at the renowned 3 Crabs Restaurant.

There's plenty to do indoors as well. Several area halls owned by local agricultural cooperatives offer up space to be used for everything from square dances to painting classes to flea markets. Sequim is also one of the most club-crazed places on earth, with a computer club, gemology club, and a quilting club, just to name a few. The reason: Sequim has long been known regionally as a retirement haven, particularly for workers from Boeing and other Seattle companies. About half the 24,000 people in the town and surrounding area are retirees.

There are still, however, plenty of deals to be had. The average price for a three-bedroom is $150,000. With 50 square miles of developable land surrounding Sequim, an abundance of lots is also available, typically for about $40,000 an acre. Building a new home is the way many retirees choose to go here.

Of course, the area's natural beauty also means it is somewhat isolated. Getting to Victoria, B.C., the nearest big city, requires a 10-minute drive, followed by a 45-minute ferry ride. Making it all manageable, however, is the fact that the town of Port Angeles, just 15 miles from Sequim, has a full-service hospital and a tiny "international" airport. From there, it's possible to board a puddle-jumper for a quick flight to Seattle's airport and points beyond.

OXFORD, MISS.

University towns offer a great deal to intellectually curious retirees. Such places tend to be small, safe, and inexpensive, with good hospitals and an abundance of cultural activities. Towns such as Chapel Hill, N.C., Lawrence, Kan., and Austin, Texas, already receive their share of retirees, and they can expect to get more as boomers start pushing 60 and become all misty about the sites of their youthful folly.

But the college town we recommend is Oxford, Miss. Living in the midst of Ole Miss, as the state university is known, retirees can take advantage of a rich cultural life--and cheaply to boot. Any given day brings a wide selection of plays, concerts, and free lectures. Anyone can audit a university class, and for those over 65 one class per semester is free. Mississippi retirees are also exempt from state taxes on income drawn from Social Security, IRAs, pensions, and 401(k)s.

Oxford has a strong literary tradition, thanks in large part to favorite son William Faulkner, who set 13 novels and more than 100 short stories in the town and its environs. Rowan Oak, his former home, is a tourist draw, and is approached through a canopy of stately cedars. Present-day authors, including John Grisham, Barry Hannah, and Willie Morris, give Oxford an impressive writer-to-citizen ratio for a town of 10,000. Square Books, one of the few independent stores with the character and selection to stave off a biggie like Barnes & Noble, holds regular readings and book signings. Says Gail Mangold, 54, a former New Hampshire entrepreneur who retired to Oxford: "This is a thriving little beehive of bookstores, and blues bands, and occasions with wine and cheese."

But Oxford isn't just about living up in the intellectual ether. The area has excellent deer and quail hunting. For sports fans, look once again to Ole Miss, which is in the Southeastern Conference, and enjoys near-religious support for the Rebels football, baseball, and basketball teams.

The prime real estate here surrounds the town square, a kind of a miniature New Orleans French Quarter, where people lean off balconies and talk to passersby. The market for properties within walking distance is tight, but when available, a three-bedroom house can be had for $150,000. Values on some of these properties have shot up as much as 100% in the past five years. But there are still deals available. Susan Barksdale, daughter of Jim Barksdale, Netscape's CEO and an Old Miss alumnus, recently snapped up a dilapidated inn for a song.

Further out from town center, but never more than a 15-minute drive, plenty of three-bedrooms are available in the $100,000 to $150,000 range. In a newer development called Tara, a six-bedroom, 4,400-square-foot hilltop home is currently on the market for $267,000.

OCEAN COUNTY, N.J.

Ocean County benefits from many of the same trends that make our other featured retirement havens good bets. It's within about an hour of one of the world's great cultural spots--New York City. It's close to some pretty robust job markets, too, good for retirees who wish to continue working. Here again we're talking New York City, as well as the Northern New Jersey suburbs and Philadelphia. Even so, Ocean County is a world away from all these places, and offers a beach-centric lifestyle that's relaxing and relatively inexpensive.

Uncrowded and unspoiled, the area can come as a real surprise to East Coast-phobes. Sequim it ain't, but it does have an unexpected degree of natural beauty. Roughly half the county is pine barrens, and development is often restricted. There's even a wildlife refuge in the area, on Long Beach Island.

Summers can be hot, averaging 85 degrees in July. But sea breezes make the heat more tolerable than in the region's cities. There are numerous public beaches, and the so-called pedestrian boardwalks are a welcome antidote to their more commercial counterparts. Winters are surprisingly mild, averaging 40 degrees in January.

Ocean County covers a large area, 638 square miles, and includes a chunk of mainland and a long barrier island. Countless properties are available, some on the ocean, some on bays, some on inland streams, some altogether inland. There's quite a price range: In Mantoloking, Ocean County's most expensive town, houses average $800,000, while in bargain-basement Barnegat Township, they average $90,000. Popular towns where you can get a prime property for $250,000 or less include Lavallette, Toms River, and Point Pleasant Beach.

Property taxes vary from town to town, and are steep, ranging from 1% to 3% of assessed value. The annual burden on a $200,000 home taxed at 2.12%, the county average, would be $4,240. By contrast, taxes on a home of the same value would be $2,485 in Oxford, our cheapest choice taxwise.

But bear in mind that property-tax assessment is an extremely tricky game. The same $200,000 Oxford house, owned by a non-Mississippi resident, carries a tax bill of $4,080 a year. Now hand the same house to a resident, over 65 in age, and the taxes drop to $1,900 annually. Always check with realtors and chambers of commerce to learn about local quirks regarding tax codes, building permits, and so forth.

Wherever you look to retire, hew to one basic rule: Keep an open mind. You might be surprised, for example, to discover the cosmopolitan flavor of Hot Springs, Ark., a historic spa town. Grand Junction, Colo., puts you close to great skiing, yet has surprisingly mild winters. So look around carefully and you're certain to find a deal that's right for you. Even if you don't retire there, you'll benefit as the property appreciates. "Buy a retirement home with your heart and your head," recommends Barbara Steinmetz, a Burlingame, Cal., financial planner. "If you make a purchase for an emotionally correct reason in a savvy location, it's a win/win."