Flying into Iceland for the first time, you can't help be impressed by its dramatic landscape: Europe's largest glacier, rugged moss-covered cliffs and endless fields of black lava. And that's only what you can see from the plane. Residents and travelers also enjoy the lure of geothermal springs, waterfalls, exotic vegetation, remote fishing villages and vast nature reserves where one can spot reindeer and arctic foxes.

During 2008-09, when Iceland was at the depths of its financial crisis (see Iceland's Near Collapse: What Can We Learn?), the country wasn't exactly a top contender on lists of best retirement destinations. After all, its three biggest banks had collapsed, followed by its stock market and widespread bankruptcy among private companies. But with its finances now in order, Iceland's a good contender for your where-in-the-world-to-retire list. Which cities in Iceland might best suit you?

As the capital and the nexus of cultural life, Reykjavík is naturally the default choice. And you certainly won't be alone: With 200,000 residents (more than 60% of Iceland's population), the city is popular among retirees not only for the easy access to hospitals and healthcare, but also for restaurants, nightlife and fine arts. If you're accustomed to urban amenities and can't imagine living without them, this is probably the only spot on the island where you'll feel at home. Those who plan to use Iceland as a home base for far-flung travels will also appreciate the ease and efficiency of getting to – and flying out of – Keflavík International Airport. And with more budget flights scheduled to both the European continent and the United States, you'll be able to economically indulge both your wanderlust and your nostalgia, if any, for your native land: See How To Fly To Europe For $100 (Maybe).

Locals recommend living in downtown to take advantage of Reykjavík's decidedly laid-back urban charms. However, expect housing price tags to match high demand, especially in zip codes such as 107, 105 and 101. A more affordable option, with easy access to outdoor activities? Townships Laugardalur and Seltjarnarnes, both less than 10 miles from the city center, are areas worth considering: The former flush with geothermal springs (including the city's biggest pool), the latter home to picturesque seaside walking paths.

By Icelandic standards, this university town of 17,000 is practically a metropolis. While urbanites will be placated by a pedestrian-friendly downtown that's packed with culture, dining and nightlife, the bragging point for many residents is more obvious: It's far less rainy than Reykjavik.

As the biggest town in East Iceland, riverside Egilsstaðir is blessed with close proximity to Lagarfljót, the country's third-largest lake. The surrounding area, Fljótsdalshérað, is a veritable hiker's paradise, with no fewer than 26 trails running through the mountains and valleys. All this bucolic beauty, unfortunately, doesn't extend to the town center, which has grown around its function as a transit hub. However, decent dining options exist for the town's 2,300 residents, and the ferry to the European continent is less than 19 miles away at Seyðisfjörður. Known for its turn-of-the-20th century wooden chalet-style homes, Seyðisfjörður's status as a summer artists' retreat explains its cosmopolitan feel – despite its diminutive size (the population numbers less than 700).

Nestled in the northwestern fjords,Ísafjörður is a fishing settlement that provides much of the country's fish, both for export and for locals to consume. Reykjavik it's not, yet the number of charming restaurants, cool cafes and cultural festivals belie its small population (roughly 2,600). Sure, it's remote, but the town's fetching setting on the harbor goes a long way in convincing you that you wouldn't rather be anywhere else.

No matter where you choose to live in Iceland, the country is, economically speaking, a dramatically different place than it was five years ago. With a 4% unemployment rate – low even by European standards – and positive predictions for GDP growth, this picturesque island of 320,00 people has also become a more attractive place to retire.

While many associate Iceland with an abundance of natural beauty, the country has other selling points that rank of high importance to retirees: strong marks for safety as well as a buzzing cultural scene, which both government and citizens support. The fact that Reykjavik's stunning Harpa Concert Hall was built during the crisis is testimony to the country's strong allegiance to the arts.