Retire in Italy: full guide (2024)

FAQs

How much money do you need to retire comfortably in Italy? ›

If you have savings of at least €175,000 ($200,000) and a steady source of income from social security, a pension or investments of around €1,750 ($2,000) to €2,300 ($2,650), you can afford to retire here comfortably.

Many experts maintain that retirement income should be about 80% of a couple's final pre-retirement annual earnings. Fidelity Investments recommends that you should save 10 times your annual income by age 67.

How Benefits Can Be Paid. If you have Social Security credits in both the United States and Italy, you may be eligible for benefits from one or both countries. If you meet all the basic requirements under one country's system, you will get a regular benefit from that country.

In conclusion, Italy does tax retirement income, including US social security benefits, but there are tax treaties and agreements in place to avoid double taxation. As a retiree in Italy, you may also be subject to Italian social security contributions if you work or have income in Italy.

While a visa is unnecessary if you're merely visiting Italy from the U.S., you'll need to apply for one in order to gain permanent residency. You will also have to provide proof of sufficient retirement funds with which you can support yourself.

What is the 7 percent rule? The 7 percent rule is a retirement planning guideline that suggests you can comfortably withdraw 7 percent of your retirement savings annually without running out of money.

The 4% rule suggests that a $1.5 million portfolio will provide for at least 30 years approximately $60,000 a year before taxes for you to live on in retirement. If you take more than this from your nest egg, it may run short; if you take less or your investments earn more, it may provide somewhat more income.

Retiring at 40 with $2 million is possible, though it is a lofty goal, especially if you don't have a large inheritance or some other windfall. But it can be done if your income is high sufficient and if you are aggressive with your savings strategy.

In case you are a resident in Italy

As a general rule, American pensions are taxed in Italy. However, there are few exemptions as explained by the double taxation treaty with US.

How long can you live in Italy as a US citizen? ›

Americans who intend to stay in Italy for less than 90 days don't need to worry about visas. However, if you plan to go for an extended period, you'll have to apply for a long-stay visa. This is a crucial step because you can't apply for an Italian residence permit without this long-stay visa.

The easiest and simplest way to “move to Italy” as an American is by utilizing the Uniform Schengen Visa, which allows US citizens to stay in the Schengen Area of Europe for 90 days in a 180 day period. And United States citizens don't have to do anything extra to get this type C visa.

Con: The cost of living can get quite high in the main cities. The high cost of living is a common problem associated with living in major cities throughout Italy. Many people who are moving to the country have no idea how much it'll cost them, and they can be caught off guard by some unexpected expenses.

To acquire the full amount, you need to maximize your working life and begin collecting your check until age 70. Another way to maximize your check is by asking for a raise every two or three years. Moving companies throughout your career is another way to prove your worth, and generate more money.

You must have worked and paid Social Security taxes in five of the last 10 years. • If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.

In order to be among the lucky ones who can enjoy promising tax breaks, certain requirements must be met: first, the 7% flat tax applies to nonresident, foreign pensioners, regardless of whether they are foreigners or Italians residing abroad.

The new double taxation agreement allows the United States to tax US branches of Italian companies. The new treaty also allows Italy to tax a foreign company on a dividends equivalent amount. The agreement also changes the way pensions and other benefits are taxed.

Key Takeaways. The United States is one of the few countries that taxes its citizens on their worldwide income. This means that Americans who retire overseas still have tax obligations. If you're retiring abroad, there's a good chance you'll be subject to taxation by the United States and your new home country.

Italy has many great places for expats to live, and some popular options include Florence, Rome, and Milan. Florence is perfect for those who love art and history, while Rome has a lot of ancient history and cultural heritage. Milan is known for being a hub of fashion, design, and business.

Moreover, Italy has now decided to raise the work permit quota for foreign unskilled workers and startup visa applicants from third countries to 82,705 spots for the year 2023. The quota raise will permit about 7,000 more third-country nationals to apply for Italian work permits this year compared to 2022.

Can you live in Italy with an American passport? ›

Americans must have an entrance visa which should be obtained at an Italian consulate before coming to Italy, in order to remain in Italy more than three months and gain resident status. This procedure will take several weeks to complete so it is advisable to apply well in advance of the departure date.

The 90/10 investing strategy for retirement savings involves allocating 90% of one's investment capital in low-cost S&P 500 index funds and the remaining 10% in short-term government bonds. The 90/10 investing rule is a suggested benchmark that investors can easily modify to reflect their tolerance to investment risk.

The mistake most people make is assuming they must be out of debt before they start investing. In doing so, they miss out on the number one key to success in investing: TIME. The 70/30 Rule is simple: Live on 70% of your income, save 20%, and give 10% to your Church, or favorite charity.

The Rule of 95 is an alternative full benefit retirement eligibility date to allow members to retire earlier than their schedule-based eligibility date. Under the Rule of 95, members can retire when their age plus their years of service equal 95 provided that they are at least 62 years old.

The historical S&P average annualized returns have been 9.2%. So investing $1,000,000 in the stock market will get you the equivalent of $96,352 in interest in a year. This is enough to live on for most people.

Yes, for some people, $2 million should be more than enough to retire. For others, $2 million may not even scratch the surface. The answer depends on your personal situation and there are lot of challenges you'll face. As of 2023, it seems the number of obstacles to a successful retirement continues to grow.

Yes, it is possible to retire with $1 million at the age of 65. But whether that amount is enough for your own retirement will depend on factors that include your Social Security benefits, your investment strategy and your personal expenses.

Additionally, statistics show that the top 2% of the United States population has a net worth of about $2.4 million. On the other hand, the top 5% wealthiest Americans have a net worth of just over $1 million. Therefore, about 2% of the population possesses enough wealth to meet the current definition of being rich.

Assuming an annual withdrawal rate of 4%, which is a commonly recommended safe withdrawal rate, a $2 million portfolio could potentially provide an annual income of $80,000. This means that if an individual spends $80,000 per year, their portfolio could potentially last for around 25 years.

Living off the interest of $3 million is possible when you diversify your portfolio and pick the right investments. Here are six common investments and expected income for each year: Savings and money market accounts. Savings accounts are one of the most liquid places to hold your money besides a checking account.

Do US citizens pay taxes in Italy? ›

US expats in Italy need to be aware of two different national tax systems. First, virtually all US citizens are required to file an annual US Federal tax return, regardless of whether they live in the United States or Italy. Second, by living in Italy, American expats also can be subject to Italy taxation.

7% flat tax requirements

In order to qualify for the 7% flat tax regime for pensioners, you must receive a private or public pension, it doesn't matter whether you are a citizen of Italy or not, but you must receive a foreign sourced pension.

In order to retire to Italy, a foreign citizen must comply with a few requirements. Among these, the foreign citizen must be retired and have a minimum annual income of EUR 31,000. For married couples seeking to retire in Italy, the minimum amount necessary is EUR 38,000.

According to the 2022 Global Peace Index, Portugal stands sixth globally. Portugal has a warm climate and a much lower cost of living than the US, which makes it one of the easiest countries to immigrate to from the US. Portugal is well known for its beautiful beaches, rich culture and history, and vibrant cities.

It's the primary reason many people first consider moving overseas. In general, the COL in Italy can be 30% to 70% lower than the cost of living in the U.S., depending on where in Italy you want to live, and how you want to live.

Other pros to making Italy your new home is that you'll be able to eat fresh and wholesome food every day, have access to a topnotch education system, good public transport, gorgeous scenery, and a rich culture and history. Essentially you'll be living where many Americans only dream of having their ideal vacation!

Lazio, which includes Italy's capital Rome, is home to some 2,800 Americans, making it the most popular region among US nationals.

In general, Italians respect Americans and always welcome them as friends. They adore the curiosity of American tourists in regard to experiencing Italian culture, and they love the way that Americans enjoy their food.

The Italian ex-pat community is very welcoming and inclusive, which makes it a great place for foreigners to live. Most Italians are happy to have foreigners from other countries and love meeting people from different places.

Is it better to retire in Italy or Portugal? ›

Firstly, the Global Peace Index 2021 ranks Portugal as the fourth-safest country to live in, while Italy is ranked at thirty-two. Of course, this doesn't mean Italy is completely unsafe, but an environment where you don't have to worry about your safety is an added benefit for older people.

Located to the east of Rome, Abruzzo is arguably the cheapest and the best region to live in Italy. It has great mountains, fantastic scenery, good food, lovely Italian people and plenty of expats. This region is often compared to Tuscany. Like Tuscany, Abruzzo has medieval villages and towns dotted atop rolling hills.

To receive SSI, one must meet two eligibility requirements. One must either be over the age of sixty-five, blind and/or disabled. Additionally, they must have a limited income and resources as the program is need-based and aims to assist beneficiaries to cover basic costs for food and shelter.

As Long as Possible, Wait

Your Social Security benefits will be permanently reduced by up to 30% if you claim "early," at age 62. However, waiting until 70 years old has the opposite effect. Your monthly benefits will receive an additional 8% "bonus" for each year you delay claiming benefits past full retirement age.

Social Security benefits may or may not be taxed after 62, depending in large part on other income earned. Those only receiving Social Security benefits do not have to pay federal income taxes.

That's why there is a special rule that applies to earnings for 1 year, usually the first year of retirement. Under this rule, you can get a full Social Security check for any whole month you're retired, regardless of your yearly earnings.

If you choose to retire at 62, your Social Security benefit could be about 25-30% lower than if you wait until your full retirement age, which varies depending on your birth year. On the flip side, you'll be receiving benefits for a longer period.

According to the Social Security Administration (SSA), the average monthly retirement benefit for Security Security recipients is $1,781.63 as of February.

So how much does it cost to live in Italy? To answer this question, let's take a quick look at the average basic living expenses in Italy per month. Based on this, we can say that the average cost of living in Italy per month is around €1,600 (US$1,730).

Living Wage Individual in Italy averaged 893.75 EUR/Month from 2015 until 2018, reaching an all time high of 950.00 EUR/Month in 2017 and a record low of 825.00 EUR/Month in 2015. Italy Living Wage Individual - values, historical data and charts - was last updated on June of 2023.

Where do most American expats live in Italy? ›

Some of the most popular cities for English-speaking expats include Rome, Milan, Florence, and Turin.

Americans who intend to stay in Italy for less than 90 days don't need to worry about visas. However, if you plan to go for an extended period, you'll have to apply for a long-stay visa. This is a crucial step because you can't apply for an Italian residence permit without this long-stay visa.

US expats in Italy need to be aware of two different national tax systems. First, virtually all US citizens are required to file an annual US Federal tax return, regardless of whether they live in the United States or Italy. Second, by living in Italy, American expats also can be subject to Italy taxation.

All legal residents, both Italians and foreigners, have the right to public healthcare. These services are usually free-of-charge or subject to a symbolic cost and are provided by the Servizio Sanitario Nazionale (SSN).

Italy's Median Household Income Highlights in 2021

Italy's median household income hit (PPP) $35,189 in 2021, an increase of 1.0% over the previous year.

Other pros to making Italy your new home is that you'll be able to eat fresh and wholesome food every day, have access to a topnotch education system, good public transport, gorgeous scenery, and a rich culture and history. Essentially you'll be living where many Americans only dream of having their ideal vacation!

According to Salary Explorer, the average gross salary for Italy as of March 2023 is around €43,800 per year or €3,650 a month. If this sounds high, it's because this number includes various benefits, such as housing stipends, travel expenses, vacation allowance, etc.

Investors and their family members with residence permits in Italy may visit the Schengen countries without a visa and stay up to 90 days out of 180 days.