Retiring in Portugal: All You Need To Know

Portugal has long been a retirement hotspot. With so many advantages of retiring in Portugal, it doesn’t take long to figure out why – sun, sea, and beautiful landscapes; friendly locals, a vibrant culture, historic cities, and a killer food scene. Portugal certainly catches the eye. 

Indeed, Goldcrest is here to guide you through the buying process of property in Portugal, to discover the perfect location for you, and help you to find your dream home. With years of experience, our aim is to make the process as hassle-free as possible, so that, before you know it, you will be perched on your sun-drenched balcony, or perhaps by the pool, with a cold glass of vinho verde (green wine) in hand. Book a call here to kickstart the process and speak with a Goldcrest advisor. 

In this article, we’ll cover the aspects of what makes Portugal a paradise to retire to. Following this, we’ll provide you with some of the most desirable locations to look for a property and run over practicalities that you should know, such as healthcare in Portugal.

 

Considering retiring in Portugal?

There are many reasons to choose Portugal as the country for you to retire in. Portugal ranks as the third safest county in the world in the 2020 Global Peace Index, trailing only Iceland and New Zealand. With a stable socio-economic and political environment, you should be at ease in the country. The Portuguese are amongst the friendliest people in the world, according to an Expat Insider Survey conducted by InterNations.

Healthcare in Portugal is also very good, with 225 hospitals in the country. With English now widely spoken in healthcare facilities, the National Health Service has improved leaps and bounds over the last few years with modern, well-equipped units.

Alongside good healthcare, the Non-Habitual Residence (NHR) tax scheme provides another practical benefit of moving to Portugal. If structured correctly, you will be able to live with significant tax benefits for ten years. For retirees, this is a godsend as retirees are able to live off their pensions income and dividends from investments. 

With an average of over 300 sunny days a year, even the winters can feel like Spring (consider Madeira, where you are living in eternal summer) and you should always have your sunglasses close at hand. This makes it easy to stay active, and with many desirable locations to choose from, you will be spoilt for choice. The delicious wines and top cuisine are the cherries on top. Indeed, it is not difficult to see why Portugal regularly tops the charts when it comes to the best countries to retire to. 

 

Retiring in Portugal – most desirable locations

There are many beautiful locations in Portugal. Each will have its own traditions, cultures, foods, and individual quirks. Finding the perfect location for you is one of the first things that you should consider when buying in Portugal. There are many expats in Portugal – particularly in Lisbon, Porto, and the Algarve, so you should be able to find a good community of English speakers to be part of if you so desire.

Are you after glorious sun filled days, spent relaxing on the beach? Or is a quiet, historic town more to your liking, where you can roam the quaint cobbled streets? Or would you rather fill your days in a renovated farmhouse in the depths of the Portuguese countryside, with rolling hills visible through your windows? Portugal has some remarkable regions, it is about asking yourself what exactly am I looking for? 

Here, we provide some of the most desirable locations. However, with countless potential areas to consider, you can book a call here to speak with an experienced Goldcrest advisor to determine the best location for you. 

 

The Algarve

The Algarve was ranked as the best country to live in or have a second home post-COVID-19 by Forbes. Indeed, the incredible coastline, pristine beaches, and quaint white-washed towns are truly special. 

The Algarve is diverse in itself. If you are looking for luxury properties, consider the central Algarve, where the likes of Vilamoura and Portimão will provide buyers with incredible properties with waterfront views. 

Those looking to stay active, and lovers of nature and watersports, should set their sights on Lagos in the west, whereas those looking for peace and tranquility, in the most “authentic” part of southern Portugal should consider Tavira, a picturesque, quaint, history-filled haven. 

An overview of the various regions in the Algarve, including the price ranges, can be found here. 

 

Lisbon and Cascais

It would feel incomplete to provide a rundown of the most desirable locations in Portugal, and not mention the magical capital, Lisbon. The city of the seven hills has a rich history, beautiful architecture, and some of the best cuisine in the country. Simply head to Praça do Comércio and marvel at the stunning views – the vast river with boats bobbing along, and the San Francisco-styled Ponte 25 de Abril bridge in the distance.

While Lisbon is unquestionably special, it is the capital. While there is always something going on, some new restaurant to try, and it is easy to find your favorite local haunts, it can be busy and may not be the best option if you are looking to relax in a quieter spot – for this consider Tavira in the Algarve, the Silver Coast, Alentejo, or the north, which remains relatively undiscovered. 

Not far from Lisbon, you have Cascais. A short 30-minute drive by car, this little seaside town has everything you could want, including luxury restaurants, beaches, and a permanent holiday vibe. If you are looking to retire and would like to be close to the capital and the airport, then Cascais could be the perfect place for you. You can see our article on Cascais here. 

 

Porto

For history lovers, Porto is a welcome option. Less busy (and cheaper) than Lisbon, Porto boasts an incredible cuisine, charming cobbled streets, and the Douro River is simply fabulous, with the wine houses on the opposite side of the river. 

You have many places where you will find beautiful properties to retire to if you would like to live outside the city. Take Vila Nova de Gaia, on the opposite side, where you can fully appreciate the views of Porto, and where you have spectacular beaches, up-and-coming restaurants, and some peace and quiet. 

Elsewhere, just 20-minutes away from Porto by the coast, you have Foz do Douro. This is a coastal neighborhood, where the River Douro meets the Atlantic Ocean. The area has a long promenade where you can go for long walks and breathe in the tang of salt in the air. The properties here are spacious and many have sweeping views of the ocean. Foz do Douro is an excellent location if you want the perks of city life, but also the benefits of the ocean. 

 

The North

Elsewhere in the North of Portugal, there are other, quieter areas that can provide you with a relaxed lifestyle in a quaint, historic city. The towns of Braga, Guimaraes, and Ponte de Lima, each have their own unique traditions and cultures. If you are looking for a country house, the surrounding countryside is relatively undiscovered. You should be able to find a lovely villa or renovated farm, at a very affordable price – indeed, the north of Portugal is where you will find some of the most wallet-friendly properties.

 

The Silver Coast

While the Algarve is a favorite with retirees, if you are looking for something quieter, less-tourist heavy, and perhaps where you will find a better sense of the true “authentic” Portugal, then consider the Silver Coast. While Nazaré and Ericeira may be better suited to surfers, Peniche would make a pleasant place to retire, a picturesque town where life has not seemed to change for decades, and where the friendly locals bring a sense of community to the town.

Coimbra, close by, would also be a great location if you are looking for a historic city to live in. As a university town, there are several cutting-edge restaurants, bringing a relaxed atmosphere to the city. 

The Silver Coast is an excellent location to be an expat in Portugal. You can see our article on the Silver Coast here for options to buy real estate in the region. 

 

The Alentejo

Considered the “breadbasket” of Portugal, the Alentejo is where most of the produce is grown in Portugal and where fabulous Alentejo wines come to life. This region is where the Portuguese tend to go on holiday, instead of heading to the tourist-heavy Algarve. Here, you can get to the very heart of Portugal, and should be able to find a renovated farm, or even a vineyard for sale if you would like to put your lifelong ambition to become a wine producer to the test. 

For those looking to move to Portugal for tranquility, sunshine, and some of the best food and wine that you will ever taste, the Alentejo is the spot for you. 

 

Madeira

The autonomous island of Madeira has killer views from almost any location on the island. Funchal, the cosmopolitan capital, may surprise you. Its luxury restaurants, sleek shopping amenities, and five-star hotels may seem out of place on a small island. Indeed, with a steady flow of tourists all year round, and increasing numbers of foreign investments, Madeira has all the amenities that you could possibly need. 

Madeira real estate is really coming into its own. With breathtaking landscapes, top-quality food, and many activities to live an active life, Madeira comes highly recommended as a retirement destination. There are also many expats here, so you should be able to easily blend into the community. You can delve more into Madeira real estate here. 

 

Practical information about retiring in Portugal

Moving to another country can be a hassle, and there are several things that you will need to consider. Here is some practical information about retiring in Portugal – in essence, a few things that are good to know about settling here. 

 

Retirement laws and retirement tax in Portugal

Portugal’s retirement laws went through some important modifications in 2019 to make the country more attractive to foreigners. The choice was made following the non-habitual taxpayer (NHR) system, which enables foreign residents moving to Portugal to take advantage of a lower fixed income tax rate. NHR status is available to anyone who has not been a Portuguese tax resident for the previous five years, as opposed to the rate that generally rises to 48%. NHR applicants must complete certain requirements to be accepted into the program.

Portugal requires all taxpayers to report and pay tax on their international income. If you spend more than 183 days in Portugal during the tax year, you are regarded as a tax resident and, therefore, must file an annual tax return stating your income.

Any international income earned by an NHR resident is exempt from taxation in Portugal for ten years, including salaries, investment returns, business revenues, capital gains, rental income, and pensions. During this time, they are also exempt from wealth tax. Any income earned in Portugal will be subject to a flat tax of 20% rather than reaching the 48% tax bracket.

Portugal has double taxation agreements with every EU member and the majority of non-EU nations, prohibiting double taxes.

 

Pensions, moving retirement funds, and social security contributions to Portugal

The retirement age in Portugal is 66 years and five months as of 2022 for both men and women if they have paid into social security for at least 15 years while working in Portugal. They are eligible to qualify for a public pension based on their retirement contributions, and private corporate pensions are also common.

Donations can be easily transferred from any EU country where an EU citizen works. Donations received will be applied toward Portugal’s state pension. For non-EU citizens, it is recommended to inquire about the possibility of a transfer to Portugal with the National Pension Service in the country of work. A few non-EU nations and Portugal have formed cooperative tax and social security arrangements.

Those who live in Portugal are all subject to income tax and, therefore, pension payments received from other countries may be subject to tax in Portugal. However, by employing offshore pension plans or non-residential status (NHR), these taxes can be totally or mostly avoided.

 

Retiring in Portugal – Healthcare

The National Health Service (Serviço Nacional de Saúde) (SNS) in Portugal is excellent. They have been implementing personalized care programs for patients. If you are resident in Portugal, you will have access to the national health service and will need to only pay minimum costs for treatment. Note that for X-rays, scans, and other tests, you will need to pay an additional fee. Private healthcare is also an option and is becoming increasingly popular with expats in Portugal.

If you are retiring to Portugal, rest assured that the Integrated Medical Emergency System offers very quick response times.

The national healthcare system provides fundamental health, accident, and disease needs. Portugal has high-quality healthcare: the country is ranked 24th in the Health Care Index 2021, published by Numbeo, indicating that its healthcare system is among the greatest in the world. Both public and private hospitals are contemporary and well-equipped, and many medical professionals in both institutions speak English. Instead, facilities may be limited to small health centers in rural and suburban areas.

In Portuguese pharmacies, prescription drugs can be given out right away. With a few exceptions, the price of many generic medications ranges from 10% to 25% less than what they would be in the United States.

Having private health insurance in Portugal allows you to schedule an appointment, receive a consultation in less than 30 minutes, speak with a specialist if you’d like, and, if necessary, have a patient’s important parts repaired right away. Additionally, all medical, dental, and pharmaceutical services are significantly less expensive in this country than in the United States.

You can read more about healthcare in Portugal to get everything that you will need to know about healthcare in Portugal.

EU citizens

Retirees from the European Union in Portugal have access to free medical care through the SNS. The SNS, which requires Form S1, formerly known as Form E121, provides free medical care to EU retirees in Portugal. The pension center in the retiree’s native country issues this form.

Portugal considers the SNS’s delivery of healthcare to be wholly satisfactory. Nevertheless, some retired EU nationals also choose extra private health insurance.

Non-EU citizens / US citizens

The right to free medical treatment is available to pensioners in Portugal who are not EU nationals, as well as retirees from the United States, once they become residents. Following this, they receive paid medical services for the first five years of their residence.

In Portugal, proof of health insurance is required before applying for residency. You can change from an international plan to a private Portuguese health insurance plan after you relocate here. In general, they are less expensive than their US counterparts.

Private insurance requirements and cost

In Portugal, private insurance is typically relatively affordable. Depending on your age and the scope of your coverage, this could cost between €20 and €50 ($22-55) every month. Accordingly, the cost of a basic plan ranges from €400 ($440) a year to €1,000 ($1,100) annually for a more comprehensive package. On the opposite end of the price range, prices might increase by several hundred euros each month. Most insurance providers, including Médis, Tranquilidade, and Millennium Bank Medisade/Multicare, will not provide coverage for people who are older than 55 y.o. All people under the age of 75 can get insurance through Medis. Additionally, if you already have a policy, it won’t be canceled.

 

Travel in Portugal

While traveling by car is probably the easiest way to get around the country, Portugal has excellent transport links from the north to the south that are both efficient and cheap – both trains, buses, and the metro are each convenient to use – just excuse the times when the buses are running slightly late.

 

Non-Habitual Residence (NHR) scheme

The NHR scheme allows individuals to live with significant tax benefits for up to ten years. In order to qualify, applicants must:

• Have the right to reside in Portugal
• Not having been a Portuguese tax resident in the five years prior to taking up residence in Portugal

Note that to maintain residency in Portugal, the individual must have a place of abode in Portugal on the 31st of December of that year. The property needs to be intended to be used as a habitual home.

 

Inheritance implications for retirees in Portugal

Portugal does not impose an inheritance tax on real estate, however, there is a 10% flat-rate stamp fee. Unless otherwise specified, spouses, descendants, and parents are not subject to this payment. The process of inheritance also involves a little administrative cost.

Any succession process must follow the rules of the nation where the deceased person resided, according to the Portuguese Civic Code. US inheritance law will be in effect if you retire from the US to Portugal. If the other spouses are Portugal permanent residents, Portuguese law may yet be applicable if both spouses are foreign nationals. By mentioning it in the will, this can be prevented. Make sure you create a thorough will that has been approved by a lawyer. Having separate wills in Portugal and the place of origin may be even better for retirees from the US, UK, Australia, and Canada.

 

Housing and cost of living

Portugal is thought of as being generally inexpensive. Despite rising costs during the last five years, Numbeo estimates that Portugal’s cost of living is around 40% cheaper than that of the United States. However, the country  is still inexpensive in comparison to other Western European nations.

The cost of living depends greatly on lifestyle choices. On average, couples can live comfortably on as little as €2,000 per month; half of the budget will be spent on housing. For example, the monthly rent for an unfurnished, moderately priced one-bedroom apartment plus water, electricity, and gas (but not for the car) plus basic groceries for couples plus internet, phone lines, and cable TV package plus basic leisure activities (such as dining out and seeing a movie once or twice a week) equals about €1,750 for a couple.

You would spend over €2000 a month as a couple if you upgrade your lifestyle owning a car.

You should set away at least three months’ worth of living expenses as insurance if you retire on a pension or income that is not in euros, such as dollars or pounds. You will be protected from unforeseen fluctuations in the exchange rate of the euro to your currency.

 

Retirement property and cost of real estate in Portugal

Your home’s price is determined by its location, style, and proportions. A home in Lisbon will undoubtedly cost more than a home in a suburban or rural region, whether you rent or buy it. Portugal’s real estate costs are, however, less expensive than the norm in Europe. That is why many foreigners choose to own real estate in Portugal instead of renting, which is generally the case. 

If you decide to spend a part of the year in Portugal and rent out your home while you are away, you may possibly earn a good return on your investment. The tourist scene is still booming and short term rentals are highly sought after in hot spot locations.

Buying a property in Lisbon or Algarve

In a nation like Portugal, buying your real estate is a good decision. Although real estate costs have increased across much of the nation over the last five years, they remain very low when compared to the rest of Europe. By purchasing your Portuguese real estate, you can reduce your long-term foreign currency risk by removing housing expenses from your monthly retirement budget.

A square meter in the middle of Lisbon might cost between €3,000 and €10,000, or between €300 and €1,000 per square foot. There is a lot of variety for such a small city, primarily based on age, type, location, size, and facilities. When moving from Lisbon to the suburbs, this price decreases considerably

In the Algarve, a square meter costs between €1,000 and €5,000, or between €100 and €500 for a square foot. Once more, it depends on your preferences for your home.

Renting a property in Lisbon or Algarve

The top end is a luxurious apartment in a desirable neighborhood, while the lower end is a comfortable location. The following would be the typical property rents in Lisbon and the Algarve:

• Rental apartment in Lisbon: from €800 to €2,000 per month;
• The rental single-family unit in Algarve: from €550 to €1,000 per month.

 

Retiring in Portugal – lifestyle

It is very easy to move to Portugal and live an active lifestyle. With the Portuguese climate – 300-days of sunny days per year, mild temperatures in the winter months, and even the winter sun encouraging you to go outside – you can easily live a very active lifestyle. 

There are many watersport activities that you can try. For those that prefer to keep their feet on dry land, the golf courses in Portugal are some of the finest in the world. Activities range from yoga to cooking classes, and everything in between. 

The cuisine of Portugal is also generally very healthy, despite the Portuguese sweet tooth and love of pastries – try the famous pastel de nata or bola de berlim and you should see why. The cuisine has a strong focus on fresh fish, salads, and fruits. Indeed, it is very easy to keep up a healthy, and active, lifestyle.