Thinking of Buying and/or Retiring in Portugal?
Imagine a life where each day begins with the sun's warm embrace, the gentle lull of ocean waves, and a table filled with fresh seafood. This isn’t a distant dream—it’s a reality waiting for you in Portugal. This European gem offers the simple pleasures of life: breathtaking coastlines, vibrant culture, and stunning architecture, all at a surprisingly affordable cost.
Portugal has earned its place as a premier retirement destination, ranking number one in the Annual Global Retirement Index for 2023. Recent improvements to Portugal’s retirement tax laws have only increased its appeal to expats looking for a perfect place to retire.
Living in Portugal means enjoying a high-quality lifestyle without the high costs. In its charming towns, a monthly budget of $1,500 to $2,000 is enough for comfortable living, while life in its bustling cities, like Porto or Lisbon, may require a bit more, around $2,500 to $3,000.
Non-EU Citizens: Portugal Golden Visa
For non-EU citizens who wish to retire in Portugal, obtaining a residence permit is necessary under the country's retirement residency laws. This process can be initiated at a Portuguese consular office and requires the following documents:
- A valid passport
- Proof of sufficient income
- Proof of health insurance coverage
- A clean criminal record
The temporary residence permit is generally issued for five years, after which you may apply for permanent residency.
Many non-EU residents opt to obtain residency in Portugal through the Golden Visa program, launched in 2012 to attract international investors. To qualify for the Golden Visa, applicants must meet at least one of these criteria:
- Invest a minimum of €500,000 in a qualified venture capital or private equity fund in Portugal.
- Invest €500,000 in a Portuguese business and create a minimum of five full-time jobs.
- Make a donation of €250,000 to arts, culture, or national heritage in Portugal.
- Contribute €500,000 to eligible research and development activities in Portugal.
The Golden Visa offers several benefits, provided the holder spends at least seven days per year in Portugal:
- The right to live and work in Portugal
- Visa-free travel across the Schengen Area
- The ability to include a spouse, dependent children, and dependent parents in the application
- The option to apply for Portuguese citizenship after five years, assuming all conditions are met
Residency for U.S. Citizens
U.S. citizens have a straightforward path to establishing residency in Portugal. The most common method is through a 120-day visa, which requires applicants to provide proof of income, showing at least $1,070 per month for the duration of the stay. If you decide to stay longer, you can apply for a one-year residence permit, which can be renewed for consecutive two-year periods. After five years of temporary residency, you may apply for permanent residency.
Residency for Sephardic Jews
Portugal grants citizenship to individuals who can demonstrate Sephardic Jewish heritage. Applicants must provide appropriate documentation to prove ancestry. Portugal allows dual citizenship, so you can retain your original nationality if your home country also permits it.
Retirement Laws and Taxes in Portugal
All residents in Portugal are subject to taxes on their global income. You are considered a tax resident if you live in Portugal for more than 183 days in a given tax year. As such, residents must file an annual tax return, declaring worldwide income. The tax implications for retirees in Portugal will be discussed in more detail later in this article.
While the old Non-Habitual Residency (NHR) program is no longer available, Portugal introduced a new version of the NHR program in 2024. Furthermore, Portugal has double taxation agreements with all EU countries and most non-EU countries to prevent residents from being taxed twice on the same income.
Healthcare for Retirees in Portugal
Portugal National Health Service, referred to as Serviço Nacional de Saude (SNS), provides healthcare to all Portuguese citizens and residents residing in Portugal. Although this service is generally free, in certain cases some fees may be applied. SNS serves through local health units, community health centers, and hospitals.
There is a high healthcare standard in Portugal. The public hospitals are modern and well-equipped. Many doctors in both private and public institutions speak English. The national healthcare system covers basic health needs, accidents, and illnesses. On the other hand, facilities may be limited to small health centers in rural and suburban areas.
Roger B. of the Wall Street Journal defines the private healthcare coverage in Portugal as it gives; “The ability to make an appointment, wait less than half an hour for a consultation, see a specialist if I wish and, if necessary, get some important part of me repaired quickly. All health and dental care services and drugs are far less expensive here than in the U.S.”
As for Portuguese pharmacies, they are able to dispense drugs directly, with a few exceptions. It is common for many generic drugs to cost 10 percent to 25 percent of what they would cost in the U.S.
Non-EU Citizens / U.S. Citizens
Non-EU retirees in Portugal, including Americans, are only eligible for free healthcare after obtaining permanent residency. Until then, during the initial five years of their stay, they must rely on private health insurance and paid medical services.
As mentioned earlier, proof of health insurance is required when applying for residency as a retiree in Portugal. After relocating, you can switch from an international plan to a local private Portuguese health insurance plan, which is generally more affordable than U.S. insurance options.
Cost and Requirements for Private Insurance
The cost of private health insurance in Portugal varies depending on age. For those under 55, premiums can start as low as €4 per month. However, the cost can increase to several hundred euros monthly for older individuals. Many insurers do not offer coverage to people over 55, but some exceptions include Tranquilidade, Millennium Bank’s Medis, and Fidelidade/Multicare. Medis, for instance, provides policies for individuals up to age 75 and will not cancel existing policies.
Inheritance Rules for Retirees in Portugal
Portugal does not impose an inheritance tax on real estate, but there is a flat 10% stamp duty. However, spouses, descendants, and ascendants are generally exempt from this fee unless otherwise specified. Additionally, some minor administrative fees may apply during the inheritance process.
According to the Portuguese Civil Code, inheritance matters are typically governed by the laws of the deceased's home country. For American retirees, U.S. inheritance laws will apply. However, if spouses are from different countries, Portuguese law may govern the inheritance if the surviving spouse holds Portuguese permanent residency. This can be avoided by specifying preferences in a will.
A Helpful Tip: It’s important to have a detailed, legally reviewed will in place. For retirees from the U.S., U.K., Canada, and Australia, it may be beneficial to have wills prepared in both Portugal and their home country. Consult a reputable professional for guidance.
Cost of Living and Housing
Portugal is renowned for its overall affordability. According to Numbeo, the cost of living in Portugal is about 30% lower than in the U.S. Although living costs have risen over the past five years, they remain significantly lower than in most Western European countries.
A couple can live very comfortably for €2,000 a month. Roughly half of this budget would go towards accommodation costs.
If you’re retiring with a non-Euro-based pension or income like US Dollars or British Pounds, you should set aside a minimum of three months of living expenses as a safety net. This will save you from a sudden change in the Euro exchange rate against your currency.
Buying a Property in Algarve or Lisbon
Over the last five years, property prices rose in many parts of the country. Nevertheless, it is still affordable compared to the rest of Europe.
In a country like Portugal, it is a smart strategy to invest in a property of your own. This way you remove the housing costs from your monthly retirement budget, eliminating any currency exchange risks in the long term.
In central Lisbon, the square meter prices range between €3,500 to €12,000; this means the square foot prices range from €350 to €1,200. Quite a range for such a small city. It basically depends on the age, size, location, type, and amenities of the property.
Once you go outside of Lisbon to the suburban areas, the above range practically drops by half.
As for Algarve, the square meter prices range between €1,000 to €5,000; this means the square foot prices range between €100 to €500. Again, depending on how fancy you want your home to be.
Banking in Portugal
Portugal has a modern banking system with over 150 banks, most of which are members of the Portuguese Banking Association. These banks can be either publicly or privately owned.
If you are living in Portugal, it's highly advisable to open a local bank account. Managing your finances from a foreign account can be inconvenient and expensive due to currency exchange rates and international transfer fees.
How to Open a Bank Account in Portugal
Typically, you will need to visit a local bank branch in person to open an account. However, there are two exceptions: you can open a non-resident account from abroad, or use a digital bank to open an account online.
Opening a bank account in Portugal is generally straightforward if you have the required documents:
- Passport or government-issued ID
- Proof of address (like a utility bill)
- Portuguese NIF (tax identification number)
Getting a NIF Number
The NIF number, essential for opening a bank account, getting a phone number, buying property, and more, can be obtained quickly. To get your NIF:
1. Locate the nearest Finanças office.
2. Provide your passport or valid ID and proof of address.
3. Receive your NIF number — and you’re all set!
Banks in Portugal
Popular private banks include Novobanco, Millennium BCP, BancoBIC, Santander Totta, Banco Best, and Banco BPI. The most well-known public bank is Caixa Geral de Depósitos.
Food in Portugal
Portugal’s cuisine, rooted in the Mediterranean diet, is known for its health benefits and abundant fresh seafood, including shrimp, tuna, and cod. Most food in Portugal is fresh and organic, with fast food being relatively uncommon. Expect relaxed, sometimes slow, service at restaurants.
In addition to seafood, Portuguese cuisine is famous for its desserts, like Pastéis de Nata, the delicious custard tarts encased in crisp pastry.
Cost of Meals
A dinner for two in Portugal ranges from €20 to €40, depending on the restaurant's level. Lunch is often less expensive. Many retirees find it cost-effective to eat out for lunch and then save the leftovers for dinner, as portions are usually generous.
Portuguese refrigerators are typically small, as residents prefer to shop regularly for fresh food rather than store large quantities.
Wine, Beer, and Coffee
Portugal is a paradise for wine lovers, offering thousands of high-quality local wines. Wine isn't taxed in Portugal, so a decent bottle can cost as little as €3, with a good one priced around €10. Local beers are excellent, with half a pint at a bar costing just over €1.
Coffee is an essential part of Portuguese life. It’s best enjoyed while sitting and savoring each sip, though espresso is also available at the bar for about €1 or €2. You won't find many Starbucks here.
Internet Access
High-speed internet and 4G are widely available across Portugal. However, it’s wise to research service providers in your area, especially if you are moving to a remote location. Almost all cafes, restaurants, and hotels offer free public Wi-Fi, ensuring you're well-connected.
Entertainment
Movies and TV shows are often broadcast in their original language with Portuguese subtitles, so you won’t miss out on what’s popular back home. Movie tickets cost between €5 and €10.
Netflix is available in Portugal, with plans ranging from €7.99 to €13.99 per month. If you enjoy clubbing, expect a €20 cover charge and cocktails priced between €5 and €10.
For those who prefer fitness, a gym membership typically costs around €40 per month. You'll also find numerous golf courses, tennis courts, and soccer fields throughout the country. Portugal's natural beauty is perfect for outdoor activities like yoga or meditation.
Transportation
Public transportation in Lisbon is convenient and affordable. The metro and bus systems provide easy access to most parts of the city. A metro ticket costs €1.50, and a bus ticket is under €2, with monthly passes available for around €40.
Taxi rides in Lisbon usually cost under €10, and Uber is widely available at comparable prices. For trips outside the city, trains are a great option. For example, the train from Lisbon to Porto takes about two hours and 40 minutes and costs around €30, while a bus ride takes longer but costs about €20.
Owning and Driving a Car in Portugal
If you live in central Lisbon, Cascais, or Porto, you can easily get around without a car due to the efficient public transportation system. However, if you live outside these major cities, having a car is more practical.
Portuguese law requires all drivers to carry:
- A valid driver's license
- Vehicle registration
- Vehicle inspection certificate
- Reflective jackets (for each passenger)
- Headlight converters
- Spare glasses or contact lenses (if needed)
- Spare bulbs
- A first aid kit
Gas costs around €1.5 per liter (approximately €5.5 per gallon). Monthly parking fees range from €50 to €120, depending on location. You can rent a car for around €30 per day, but be aware that tolls can be expensive, such as the €30 fee for driving between Porto and Lisbon.
Lifestyle in Portugal
Portugal is known for its relaxed pace of life. The day starts late and ends early, with many national and religious holidays. Bureaucracy can be slow, so it's best to embrace a slower lifestyle.
The Portuguese enjoy life at a leisurely pace, with many people being friendly, talkative, and welcoming. The crime rate is low, making it one of the safest countries to live in.
Fitting in and Making Friends
Portuguese people are generally kind, helpful, hospitable, and law-abiding. Don’t be surprised if a stranger goes out of their way to help you. While many people speak English, learning Portuguese will enhance your experience and help you connect more deeply with the culture.
Best Places to Retire in Portugal
Portugal offers a variety of regions and cities, each with its unique charm. Some popular retirement areas include:
Algarve
Recently rated by Forbes as one of the best places to retire in Europe, Algarve is home to many English-speaking retirees. It offers sunny weather, beautiful beaches, and a large expat community.
Cascais and Estoril
Just a half-hour from Lisbon, these oceanfront towns offer a quieter lifestyle while remaining close to the city’s amenities.
Lisbon
The vibrant capital of Portugal, Lisbon is filled with lively neighborhoods and diverse communities, making it a great place for retirees looking for a dynamic city experience.
Porto
The second-largest city in Portugal, Porto offers a more traditional Portuguese atmosphere. However, it has a wetter climate than other regions.
Tips for Retiring in Portugal
Consider working with an advisor to help with financial planning and tax implications when moving abroad. A comfortable retirement in Portugal is possible with a monthly income between $1,500 and $2,000, which is often covered by Social Security benefits alone.
Key Takeaways
- Portugal is an excellent destination for retirement due to its affordability, pleasant climate, and welcoming culture.
- A retired couple can live comfortably in Portugal on $1,500 to $2,000 per month.
- Recent tax law changes make it an attractive option for foreigners, allowing significant tax savings for up to 10 years.
- It’s essential to budget for initial costs like deposits, legal fees, and other expenses.
- Maintain an emergency fund for unexpected situations.
- The country offers safe drinking water, delicious food, affordable wine, and efficient public transport.
- English is widely spoken, but learning Portuguese is beneficial.
By considering these factors, retirees can make the most of their time in Portugal, enjoying a high quality of life in this beautiful European country.
Contact our Portugal Specialist for more information: Joe@TrusstCompanies.com
**Disclaimer:** The information provided on this page is sourced from getgoldenvisa.com and is for informational purposes only. Trusst Companies makes no representations or warranties regarding the accuracy, completeness, or reliability of the information. Readers are encouraged to verify the details independently and seek local professional advice as needed.
