Retire Earlier
Retire in Portugal! What if I told you that you could retire earlier than you ever thought, even if you ARE part of the FIRE movement (Financial Independence, Retire Early)?
What if I told you that you could live very comfortably, in a sunny climate that’s near perfect, even by the beach & ocean if you like. Eat healthy-fresh food, drink some of the best-most underrated wines, beers, ports and brandies in the world. All for less than €1000 euros per month?
And what if I also told you that you’d be living in a first world, European country with good roads, safe-drinkable tap water, wonderful, almost-free healthcare (better than the UK or USA) and that it was the fourth safest country in the world?
Would it be of interest to you if I told you, you could live in this country with potentially very low taxes (10%) for the first 10 years you lived there?
So if you have income from investments or a reasonable pension. You all are set!
Would you believe me?
Well you would be wrong not to, because it’s all true!
You see, Portugal really does have all of the above to offer, plus a lot more. I retired in Portugal about 4 years ago and never looked back since.
If I knew how inexpensive it was to live here, I could have retired ten to fifteen years before I did.
So if you’re on your FIRE journey, it may not be as far away as you thought.
Remember the rule of thumb in FIRE is you need 25 times your annual expenses to become classed as “Financially Independent”? Well, do the math!
If you’re investing correctly in a balanced portfolio of mixed assets, or Peer to Peer lending, you may not even need that much to retire in Portugal.
I’m Mark, and in my lastP2P Lending Portfolio Update Post I said I would write an article on Portugal, so here it is!
Cost of Living in Portugal
Food
The cost of living in Portugal is one of the lowest in Europe.
It has to be because you see, the average wage here is €925 per month (2019 figures), the minimum wage is around €650 per month. So if you have €1000 per month to live on, you’re actually doing quite well!
To give you a few examples, my partner and I spend around €350 per month for both of us on wonderful, fresh foodwe eat at home.
We are not frugal with that number, we eat anything we want, fresh fish, seafood, chicken, beef, pork, cheese, nuts, fresh vegetables and fruit which we buy from the local market which is open every day of the week.
Eating Out – Retire in Portugal
There are so many wonderful restaurants in Portugal, and most are very reasonably priced.
For example, we go out 3 or 4 times a week for either lunch or dinner.
Lunch with a glass or two of wine each, we will come out with a bill of around 15 euros.
For a nice dinner, 2 or 3 course, we will typically pay between 23-30 euros including food and drinks for both of us.
To break that down a little, at our local restaurant, a pork steak with veggies or chips (fries for US folks) costs €7.00 per plate. Beer or Wine – €1.00 per glass or €3 for 1 liter of wine. Soup to start – €2.00. Dessert – €2.00.
No tips are expected but I always tip one or two euros.
This was the bill from our dinner tonight.
To explain, a “DOSE” here on the Silver Cost of Portugal is actually 2 meals, so 1/2 DOSE is 1 meal (I have no idea where that came from).
We decided to forgo the the 3 course meal here and go for an extra serving of ribs (who wouldn’t?)
The picture shows just 1 serving, there were 3 times this amount.
The first 3 items on the bill are the salad, bread, olives and butter (yes, they charge for these items in most European countries, believe it or not).
I don’t remember but I think maybe some of the wine got knocked over because 1.5 liters seems to be quite a lot for 2 people. 🙄
Considerations
Eating out in the Portuguese restaurants is generally lower cost, unless you eat right by the beach or in a big city like Lisbon or Porto, or in a big tourist area like The Algarve where it can be double or triple the price. Foreign food restaurants like Italian or French can also be more expensive (but not always).
Housing
Renting or Purchasing a house in Portugal is relativity inexpensive, depending on where you live.
The Algarve and big cities are more expensive, but most areas central and north are not.
For example, last year my good friends Clyde and Terri (American Expats) who decided to retire in Portugal got this nice 2 bedroom apartment for €350 per month, just up the road from my house.
My House
And as far as purchasing costs if you retire in Portugal. My 5 bedroom, 352 sq meter (approx 3,800 sq feet) house was just above €250k
The taxes on my house are €264 per YEAR. Even better, for the first 5 years there are no taxes at all, as the government gives new house buyers in Portugal the first 5 years for free to encourage buyers to buy.
Home insurance for my house covering €500,000 (double what I paid) rebuilding costs with zero deductible is €321 per year. That includes €30,000 of internal stuff like furniture and appliances. My electricity runs around €50 per month and water around €20.
Considerations
Houses in Portugal (especially the older houses) are not built the same way houses in the UK or USA are built. Although they are generally built with a concrete frame and then the walls with brick, the bricks are what they call “air bricks” which are not solid clay, so they do not have the insulation properties that solid bricks have.
Also for some reason Portuguese builders don’t insulate the houses as you would expect if you were living in other countries. So if you rent or purchase a property in Portugal, make sure it is insulated properly or budget for installing insulation. Also make sure it has adequate heating. Although the weather is generally very reasonable here, in winter it can feel very cold inside an unheated, uninsulated house.
If you would like to explore housing for yourself, you can do so at Idealista (has setting for English if you don’t speak Portuguese) or CustoJusto
Transport
Some of the things that ARE expensive in Portugal are cars.
If you need a car to get around, it’s generally going to cost you 50% more than it would cost in say the UK, France, Germany or the USA. New cars here are taxed very heavily (except electric vehicles).
When I first saw the prices of used cars, I freaked out! But I came to realize that indeed they are expensive, and this is because for some strange reason, cars don’t depreciate as fast in Portugal.
I really have no idea why, but one theory is because wages are so low here, financing and leasing companies offer much longer loan periods.
For example, it’s possible to get a 12 year LEASE (not loan) on a car.
Loans can be up to 20 years!
Anyway, I worry less about it now. My car (Volvo Cross Country) is still worth almost what I paid for it 4 years ago!
Try saying the same in the USA or UK 🙂
When you first become resident in Portugal, it is possible to import a car tax free, if you’re coming from inside the EU this can be beneficial (make sure to read the T&C’s though as there are some stipulations such as you have to have owned it for at least 6 months prior and it has to have more than 6000 kilometers on it). Even from outside the EU it can be worth it, however getting the car to conform to EU standards can be expensive, so make sure you do your research.
Toll Roads
Something else is the toll roads. These are expensive too.
You don’t have to use toll roads though if you retire in Portugal. You can always get to where you need to be using non-toll roads. It just takes longer.
I use the toll roads anyway because they are usually pretty empty and you can get where you’re going FAST!
And although there are speed limits (120kmh – 75 mph), there are never any police on them, and if there are they don’t bother you.
So everyone just goes at the speed they are comfortable with.
If you come to visit Portugal and you want to know about paying tolls, you can go here for options on how to pay. If you already went through tolls without paying (it can happen if you don’t plan as many are electronic with no attendant). You can go here to pay
Car insurance
Car insurance is fairly cheap in Portugal.
I pay €421 per year for full coverage with €200 deductible on my 6 year old Volvo.
Car tax is also not too bad and based on the emissions the car puts out as well as other things.
I paid €126 in vehicle tax this year.
Public Transport
If you can do without a car, then public transport is very good and fairly inexpensive.
Taxis are also not bad at all, even considering they are typically Mercedes or BMW.
Healthcare
According to the World Health Organization, Portugal ranks 12th in the world for healthcare.
That’s above the UK in 18th place, and well above the expensive USA in 37th place.
If you become a resident when you retire in Portugal, you get access to the (almost free) public healthcare system which is very good and based solely on residency (NOT what you’ve paid in).
Basically with this system, any doctor visit costs just €4.80 but most everything else is free.
Private Healthcare
We have private healthcare. Not because it’s any better really, although there is less waiting about to see a doctor in non-emergency situations.
It’s because it’s so cheap and we can afford it.
We don’t pay any taxes in Portugal, so we buy the private insurance to leave the public system for the Portuguese folks who do pay taxes.
However, my partner had the misfortune of needing to go to the emergency room in the middle of the night a few weeks ago (ER’s are part of the public health system here, not private).
She was sat in front of a specialist (this is after the GP referral visit) inside 20 minutes.
Better than many private doctors I’ve seen in some other countries.
Private Healthcare Cost
So, how much does private healthcare cost if you retire in Portugal?
I pay €48 euros per month for me, and the same for my partner.
For that I get €1.2 million worth of coverage per year, and €15 doctor visit co-pays.
My deductible is €500 for any hospitalization.
I can go to doctors not only in Portugal, but in other European countries where my insurance company operates as well.
To give you an idea of private healthcare costs without insurance, a night in hospital in Portugal costs about €200.
A doctor (GP) or specialist visit without insurance is around €60.
So with €1.2m in coverage, you’d have to be pretty darn sick to use that up in a year 🙂
Dentists are also fairly inexpensive here.
As I was writing this post in fact, one of my Portuguese friends (Fernando) called me to tell me his wife had broken her tooth.
She went to our local dentist here in town and she had to have an implant.
The cost was €60. Yes, you read that correctly, sixty euros, For an implant!
I had a friend who had an implant done in the USA and it cost almost $5000!
To be fair though, theprice of €60 is not the norm. I’ve heard of them costing a couple of hundred in the larger towns. Still not too bad though.
Safety
Portugal currently ranks as the 4th safest country in the world for 2019.
That’s not to say there is no crime here. It happens, but it is usually opportunistic crime like grab and go where someone is not paying attention to their phone or camera and it gets swiped.
Remember the average salary here is just €925 per month, so a juicy iPhone is a months wages!
Violent crime is very low though.
I have no problems at all with my partner walking home on her own at night from the local restaurant & bar while I play darts or pool with the locals until late.
I would not say the same in any of the other countries I have lived in.
Another thing Portugal is somewhat infamous for is in 2001 they decriminalized many drugs.
Instead of putting people in jail for having drugs, they instead spent the money on rehabilitation.
Would you believe it, the crime rate plummeted over the next few years?
The People
Portuguese people are some of the friendliest, kindest people I have ever come across.
They are used to having foreigners in their beautiful country, and are very welcoming to them.
I’ve tried to figure out why that would be and I think it’s because of the laid-back lifestyle here in Portugal.
The other thing is, since becoming a democracy very recently in 1974 (it was a dictatorship before), many of the young people left Portugal to find work as there was very little available in Portugal.
Even now with the low salaries, many of the young Portuguese leave for countries where they can earn more.
It’s interesting though because many of them seem to return when they retire. My friend Fernando lived in Canada for 30 years but returned back to retire in Portugal.
I think the Portuguese realize foreigners help to populate areas which have become abandoned or downtrodden.
They also bring in fresh money to the country whichhelps keep the economy going.
Family
Portuguese people are very family orientated.
To most Portuguese, family is everything.
You may be surprised to seein Portugal, many of the houses are HUGE!
You would think the opposite for a country with such low salaries, but it’s because there can be 2 or 3 generations of family living in the same house.
They love their families and enjoy the full-time interaction.
The government looks after families and children very well too as far as health services and schools.
Pregnant ladies, people with young children, old people and disabled people get to go to the front of the lines in shops, government buildings and many other places.
Schools
In general, Portuguese children are very well behaved.
You don’t see the “spoiled brat’ed’ness” you see in some other developed countries.
The schools here are said to be excellent on a public level, and the education is very good.
There are also many very good international private schools, and the price for them is fairly inexpensive.
Lisbon, Coimbra and Porto have some of the best collages and universities in Europe.
The University of Coimbra tops the list I’m told.
Football
Be aware if you retire in Portugal, the Portuguese people love their football (soccer).
So if you’re in a restaurant or bar when a game is on, prepare yourself for some shouting and screaming.
And if their teams lose, well, don’t even think about it🙁
The Language
Portuguese is a hard language to learn.
So many foreigners retire in Portugal with the “I’m going to learn Portuguese” motivation factor when they first arrive, but soon give it up when they find out it’s not that easy. It’s ok though because as in many European countries, the second language is English and many people speak it here.
Especially in the larger more touristy areas.
It’s good to learn at least some of the main words, greetings etc. If you end up living in a small village though, you’ll need to learn the language or life will be difficult.
Taxes
If you’re interested in retiring in a low tax environment, then Portugal could be the place for you!
Portugal has been trying to attract retirees, or basically anyone who will move here and spend their money whichis not earned in Portugal.
They need people here because, as I mentioned earlier, many of the young people have left.
Foreigners help the economy and it’s best if they live here, even after all the tourists leave. Because of this, Portugal had the great idea of bringing out the Non Habitual Residency tax law.
In basic form, in says most “passive” income (meaning from investments or pensions etc.) from outside of Portugal is taxed at a rate of 10% for the first 10 years of residency.
Google it for more info, there is lots of it out there.
I am not a tax adviser so please speak with one before making any decisions as it can be complicated. This is just my understanding of how it works and it does change, for example it used to be zero taxes buy it changed last year to 10%.
Considerations
Be aware that after the 10 years of NHR, Portugal does have some of the highest taxes in Europe, so do take that in to consideration, especially if you have a high income.
The weather
There are many different climates in Portugal, from the hot Algarve to theSerra da Estrela mountains where you can ski with very nice powder for a good part of the year.
Inland Portugal can get very hot in summer.
We almost moved to Tomar(where the Templar Knights lived if you ever saw the movie “TheDaVinciCode”)until we saw the 42 degrees Celsius (108 Fahrenheit)in August.
The north of Portugal gets colder and rainier than further south, but it is not as bad as say the U.K. or the U.S. Northeast cost.
West Central Portugal
We currently live in a small town of about 55,000 people about an hour north of Lisbon.
Our house is 15 minutes drive from the beach, 45 minutes to an hour from the capital city of Lisbon and closest international airport, and 7 minutes drive from the center of town.
We moved here because the weather is only a couple of degrees colder than the Algarve (where we lived for 2 years) in winter, but in summer it doesn’t get nearly as hot.
The low here in winter is about 5 degrees C (41 F), and the high in summer is in the low 30s C (high 80’s F).
The average from April to November is around 25 – 30 C (77 – 86 F).
Overall it’s very mild and comfortable.
On top of that my partner loves the town because it’s small enough to still be cute, but large enough to have some of the clothing and other shopping chains she likes🙄
Considerations
Be aware that closer to the ocean the humidity is often very high. In winter the humidity can make it feel much colder than it really is, and if you don’t heat and ventilate your home correctly, mold can occur, usually in closets or places where there is no moving air. In summer it has less effect but it’s still something to be aware of. If you require less humidity then look inland towards the Spanish boarder, but then you get to deal with cooler temperatures in winter, and it’s much hotter in Summer.
Gaining Residency
Difficult to Get Residency in Portugal?
So, it MUST be difficult to get residency when you retire in Portugal, right?
Wrong!
EU Citizens
If you’re an EU citizen, it’s obviously very easy. Takes just a couple of days after you register at the local Câmara Municipa (city offices) to get your residency certificate.
You don’t need to show income, criminal history or anything complicated.
Third Country Nationals
For third country nationals (that’s what they call anyone who is not an EU citizen), you have to be able to show you have an income of about €690 per month or more (minimum wage). And you have no serious criminal convictions.
If you don’t have the €690 income when you retire in Portugal, it is actually still possible to get residency here anyway.
If you start your own business and pay your taxes, it is possible to get residency, you’ll need a lawyer though, cost is around €600 for the whole process.
I know two young Ukrainian sisters who started their own hairdressing salon. They were able to receive residency, but it took them two years.
I’m not suggesting anyone does this but they came here on a 90 day visitors visa, extended it a few times while they were running their business, and then just did it without a visa for the rest of the time.
Because Portugal really needs people, SEF (the immigration service) overlook people who are here illegally providing they are paying their taxes, behaving, and working their way to legal residency.
It is also possible to receive residency by getting a job first, to come here legally, but it’s more difficult as you need to prove that the job was advertised and the employer couldn’t find a Portuguese person to fill the position.
It happens all the time though.
I have a friend from India who came here and did it that way.
Also there are a bunch of younger Americans and Canadians living and working here who did the same thing.
Official Reasons for Getting a Residence Visa for 3rd Country Nationals
A Residence Visa is a Portuguese visa for a four-month period in order to request a residence permit after arrival.
This is applied for at your local embassy and can be granted for any of the following reasons:
- employed work
- self-employment or entrepreneurial activities (starting your own business like the Ukrainian sisters did).
- scientific research or teaching
- study, student exchange, internship or voluntary service
- higher education mobility programmes (for students already residing in Portugal who want to further their studies)
- family reunion
- pensioners and people with income.
After you are issued a visa and you come to Portugal, you’ll then get a residency card.
What you need to become resident if you decide to retire in Portugal
If you’re an EU citizen, all you really need to do is come to Portugal, get a NIF, this is a number that is used to track finances, you’ll need one for opening bank accounts etc.
Find a place to live (you’ll need a long term rental contract or a property purchase agreement).
Then register at the local Câmara Municipa. That’s it.
For 3rd country citizens, it’s a bit more complicated as mentioned earlier.
You’ll need to contact the Portuguese embassy or consulate in your own country as they have to approve residency and issue a visa before you come to Portugal.
I have many friends here from the USA and Canada though who have done it, and it’s said to be a LOT easier than just about anywhere else in Europe.
Here is another website on the resource page (see Expatica) whichcan give you much more information on what is required.
The Not-So-Good Stuff about Portugal
Downsides
Everywhere has it’s downsides, and Portugal is no exception.
So, here are my gripes. They are just that though, gripes.
The good outweighs the gripes by at least 100:1.
Not Every One is Perfect
Of course not all Portuguese people are perfect.
There is the “gringo” factor here in some places, where you can get higher pricing for certain things if you’re aforeigner.
This happens pretty much everywhere in the world though.
So you’ll need to pay attention when you’re buying things if you don’t have a local with you until you learn the ropes.
Bureaucracy
If you decide to retire in Portugal, this is just something you’ll have to get used to. No way around it.
They just LOVE paperwork in Portugal! For anything and everything.
Something whichis simple in some countries can be a complete drama in Portugal.
Let’s take changing your address when you move house as an example.
In the UK or USA, you go on line, and change the address.
The DVLA in the UK might charge you £10 or so to change the address on your driving license. The DMV in the USA might charge you $6 to change the address on your driving license there.
But in Portugal, fist you have to have proof that you have changed your address.
Proof means a long term rental contract or purchase agreement. Or you have to get 2 Portuguese citizens to swear an affidavit that you live there.
You take this proof to the local Junta de Freguesia (civil parish offices) and they will issue you an official document that confirms you actually do live at this new address.
Then you have to take this document and go around all of the offices of the local utilities etc., take a ticket, wait in line, and pay a fortune to do it.
To give you an example, this is one that I can remember, to change the address on the title for your car will set you back €30!
You’ll need to go to the Finance Offices to change your NIF number address.
The Câmara Municipato change your Residency Permit address (different office to the certification document) or SEF to change your residency card if your a full resident. IMT to change your Driving License address.
Register office to get the title changed on your car.
EDP (Electric company) to get electricity switched on.
The Câmara Municipa again (different section) to get your water turned on.
Phone company (usually MEO or NOS) to get telephone, TV & Internet.
I’m sure there are some others I’m forgetting, but you get the picture.
You have to physically go to all of these places, take a number and wait in line.
It takes DAYS!
Driving
Don’t get me started here!
Indicators are optional extras in Portugal, and if they have them, most Portuguese don’t know how to use them, or don’t care to.
Then they either drive too slow, like 20km per hour (12 mph), or too fast like racing drivers. Nothing in the middle.
Portuguese folks love to sit 2″ from your back bumper. They don’t want to pass most of the time, it’s just the way some of them drive!
Look at the yellow van in the picture below.
If you decide to retire earlier in Portugal, please don’t do that!
And if you want a fun day out when you retire in Portugal, take a deck chair and set it by a roundabout, grab a beer and watch.
That’s all I’ll say about that 🙂
Laid-Back-Ness
Yes, that’s a word in Portugal!
On one side I love the relaxed way the Portuguese people look at life. Everything can wait, they never seem to be in a rush for anything.
It’s wonderful. UNTIL you want to get something done!
For example, I’ve been getting quotes on upgrading the heating system in my house (for the 4 months a year we actually need it).
It’s probably going to be about €6,000 worth of work by the time everything is done.
I’ve had 4 different companies come out to quote me.
So far I have received 1 quote back. Not a peep from the other 3 companies.
Just be patient you might say?
Well this was about 5 weeks ago!
I called one of them last week to ask about the quote. He said “please call me back in a couple more weeks and remind me, I’m busy now”!
He wants ME to remind HIM to quote me on business! 😮
Summary
As mentioned previously, overall, the the good outweighs the gripes by at least 100:1 in Portugal.
It takes a while to get into the lifestyle once you get here. But when you do, you’ll likely never want to leave.
I go back to the UK quite a bit, I just got back from the UK last week actually.
It seems just too busy now. Everybody rushing about. It’s still my home as I grew up there and I love it, but I couldn’t live there again full time after spending time in Portugal.
Everything seems SO expensive in the UK now too.
One thing you’ll notice in Portugal is you don’t see the “keeping up with the Jones’s” like you do in many other countries.
It doesn’t matter how big your house is, or what car you drive here. Honestly, no one cares, they really don’t.
So if you’re looking for a frugal or non-materialistic lifestyle, you’ll fit right in here.
If you want to come here and buy the most expensive car and house, you’ll impress no one but yourself. It’s your choice though of course.
If you’re interested in early retirement, you might also be interested how I invest. It’s not perfect (nothing is) but it’s worked for a long time.
If you’d like to know more about me (for some strange reason), my bio is here.
I hope you found this post interesting. Thank you for reading. Please feel free to comment if you have questions or suggestions or email me if you prefer. I love feedback!!
Portugal Resources Pages Include:
– Portuguese Property/Real Estate Websites
– Portuguese Craigslist/Gumtree Websites
– English Speaking Portuguese Expat FaceBook Groups
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