When you are gearing up to retire your thoughts are generally about how you want to retire and not so much where. The fortunate thing these days is that you can retire to just about anywhere you like as long as you fit certain criteria. One of the easiest countries to retire in is also one of the nicest. That is Portugal.
Portugal is attracting a lot of retirees for its low cost of living, excellent food, easy going people, and nice weather. There is a lot to do in Portugal and living is very easy. It’s an ideal antidote to living in the rate race for decades where you will want to unwind and enjoy your retirement. In this article, we will go over some of the important factors to understand so you can retire to Portugal.
1 – Health care
Portugal has an excellent healthcare system that is mainly funded by taxes. People pay into their system through their taxes for their entire adult life and the benefit is access to affordable health care. The only problem for you is that you can’t access this system since you haven’t been living there your whole life and contributing to their system.
This means that you have to buy your own private health insurance in Portugal. It is required that everybody be covered through either the public system or with private insurance. Since we already covered the fact that you can’t get into the public system you are forced to have your own private insurance.
The healthcare is professional and the quality is excellent in Portugal so your insurance will give you the same access to the doctors that everybody else uses and are happy with. The hospitals are modern and have all the same equipment that you would expect from any clinic or hospital back in the States.
To even get a permit to live in Portugal you have to have your own private insurance so it’s important to have this sorted out before you apply for the retirement visa.
2 – Taxes as a retiree
As an American, you are required to file your taxes every year even if you don’t live in the US anymore. If you are spending more than half of the year abroad then this is a requirement. It doesn’t mean that you have to pay taxes to the US, however. If you make under a certain amount then you won’t be paying but just filing.
You may be required to pay into the Portuguese system, however. There is the possibility of not paying for the first ten years that you are retired in Portugal. They have a tax status called the Non-Habitual Residence that applies to you if you hadn’t been a previous payer into the system in the last five years. This status will give you the ability to not pay taxes there for ten years after having acquired this status.
3 – How to get a visa and residence permit
If you aren’t a citizen of another EU country then you have to get a visa to stay longer than 90 days and will need a residence permit to live there. Luckily, Portugal has some very favorable immigration laws for retirees who wish to live there and collect their retirement money.
The process will start at your local consulate where you will go through the application to get the necessary paperwork to move there. The process is fairly straightforward but does depend on some factors such as your age and your retirement income. It’s important to talk to the consulate first and collect the required documents that they will tell you that they need to be able to process the application.
This requires proof of retirement income from your pension, investments, income from your property Airbnb management company, or other income that doesn’t come from working. You’ll also need to have proof of health insurance and submit to a criminal background check.
Once you get your paperwork sorted out then you wait for the application to be processed. Once it comes in then you are permitted to live in Portugal.
If you aren’t yet at the traditional retirement age then there is a Golden Visa that you can get if you are willing to invest 500,000 euros in real estate or into some scientific research.
4 – Have a budget
The cost of living in Portugal is low, but it does also depend on where you will be living and how you want to live. Since it is all relative you will need to make a budget to understand where you can afford to live based on your retirement income.
Make a budget in which your rent or mortgage is no more than 25% of your income and then research the areas where the number that results is about the average cost.