From bustling, cosmopolitan cities like Lisbon and Porto to sun-soaked beach towns like Costa Nova and Peniche to the verdant Douro Valley and Pico Island wine regions, Portugal is full of exciting destinations to live in and visit. And fortunately for Americans, the cost of living in Portugal is a fraction of what it is in the US — making it no surprise that more and more Americans are choosing to retire in Portugal.
Of course, there’s a lot of research to do and angles to consider before deciding to retire abroad. Read on to learn all about taxes, the cost of living, and healthcare in Portugal for expats.
Benefits of retiring in Portugal
Some of the things Portugal is most known for include:
A variety of picturesque cities, towns, and villages
Delicious food, like pastéis de nata (custard tarts), piri-piri chicken, and tons of fresh seafood
World-famous Port and Madeira wines
A rich culture, from fado music to azulejo tile art
Combine that with the affordable cost of living, high quality of life, and excellent healthcare system, and Portugal is a wonderful place to retire.
Related: The 7 Best Places to Retire Outside the United States
Best places to retire in Portugal
Some of the more popular places for Americans to retire in Portugal include:
Lisbon: The capital city, known for its colonial architecture, historic neighborhoods, scenic hilltop vistas, and bustling markets
Madeira: An island chain known for its signature Madeira wine, mild weather, natural landscapes, and hiking trails
Alentejo: A rural region known for its rolling hills, relaxed pace of life, sprawling villas, and olive groves
The Algarve: The southernmost region in Portugal, known for its sandy beaches, fishing villages, golf courses, and thriving expat community
Porto: The second-largest city, known for its signature Port wine, Baroque architecture, São João festival, and indulgent cuisine
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Yes, there are a number of different retirement communities and villages in Portugal, ranging from retirement homes, assisted living facilities, retirement villages, and more — many of which are concentrated in the Algarve.
Retirement in Portugal for US citizens does require a long-term stay visa. The most popular Portugal retirement visa for US citizens is the D7 visa,1 geared toward non-EU residents who have enough savings or passive income to sustain themselves financially in Portugal.
The Portugal retirement visa income requirement is €760 (~$840) per month in passive income for individuals, or 12 months’ worth of savings (€9,120, or ~$10,080 ). Applicants must also show proof of accommodation in Portugal and stay in the country for over 183 consecutive days per calendar year.
Previously, Portugal also offered the Golden Visa, geared toward investors; however, they recently shut the program down, citing rising housing costs.2
How long does it take to get a visa to live in Portugal?
The processing time for Portugal’s retirement visa is about four months. You’ll also need time to gather and complete the required documents:
As long as you meet all of the qualifications for Portugal’s D7 retirement visa and submit a complete and accurate application, it’s fairly easy to obtain.
Healthcare in Portugal for US expats
Many retirees wonder: Is healthcare free in Portugal? For citizens and permanent residents, it is effectively free (besides the taxes that fund the system).
However, holders of Portugal’s retirement visa aren’t entitled to Portugal’s healthcare system right away. After staying in the country for five years, however, they can apply for permanent residency — which, if granted, would allow them access.
The good news is that private healthcare for expats in Portugal is generally high-quality and more affordable than it is in the US. The cost of private healthcare in Portugal is typically between €20 and €50 per month,3 but it may be more depending on factors like your age and pre-existing conditions.
How much does it cost to retire in Portugal?
In smaller towns, the cost of living in Portugal for retirees is often about €1,400 to €1,800 (~$1,500 to $2,000) per month.4 In bigger cities, you’ll likely spend between €1,800 and €3,200 (~$2,000 to $3,500) per month.5 Of course, that estimate can vary greatly depending on your lifestyle.
What currency is used in Portugal?
As part of the European Union, Portugal uses the same currency as all other EU members: the euro.
What is the average income in Portugal?
A report by the publisher ECO6 found that the average salary in Portugal for 2021 was below €22,000 (~$24,300).
Retiring in Portugal on Social Security: Considerations
The average income in Portugal is actually lower than the average yearly Social Security benefit for 65-year-old Americans in 2023 ($30,708).7 Coming out to $2,559 a month, you could theoretically live off of Social Security alone in Portugal, although it would likely be pretty tight. Keep in mind, too, that some receive less in Social Security benefits than others, and benefits are often still taxable.
If you pad those Social Security payments out with some savings, however, you can live quite comfortably in Portugal.
Do Americans pay tax in Portugal?
Americans living in Portugal on the D7 retirement visa are subject to taxes by both the Portuguese and US governments, but don’t worry — that doesn’t necessarily mean you’ll be taxed on the same income twice.
Portuguese taxes
Holders of the D7 visa are granted certain tax advantages by the Portuguese government. As part of the Non-Habitual Resident (NHR) tax scheme, D7 visa holders pay just a 20% tax on Portuguese-sourced income and a 10% tax on foreign-sourced income (which would include foreign retirement and social security payments).8
Considering that typical Portuguese income tax rates reach up to 48%, this can lead to significant savings through residency under the D7 visa. What’s more, the NHR tax scheme lasts for a full ten years — so even if you’re granted permanent residence in Portugal after five years of living there, you can continue to benefit from NHR status for five additional years.
Read more: Taxes In Portugal for US Expats: Everything You Need To Know
US taxes
All US citizens and permanent residents — even those living abroad — are subject to taxation on their worldwide income, as long as they meet the minimum income thresholds. There are tax breaks that can offer relief for expat retirees, however, such as:
The Foreign Tax Credit: The Foreign Tax Credit allows US expats to essentially subtract what they have paid in income taxes to a foreign government from what they owe to the US government (though as with all things US-tax related, it’s not quite that simple)
The Foreign Housing Exclusion: Expats who meet either the Physical Presence Test or the Bona Fide Residence Test can use the Foreign Housing Exclusion to write off qualifying housing expenses like rent, utilities, property insurance, and more
Keep in mind, too, that:
Withdrawals from post-tax retirement accounts, like Roth IRAs and Roth 401(k)s, are tax-free
Only up to 85% of your social security payments are subject to taxation
Retire in Portugal with confidence by partnering with Bright!Tax.
We're pleased to offer our US clients residing in Portugal access to US and Portuguese tax prep services – simply note this in your message when getting started, and we'll take it from there.
As part of the Non-Habitual Resident (NHR) tax scheme, D7 visa holders pay just a 20% tax on Portuguese-sourced income and a 10% tax on foreign-sourced income (which would include foreign retirement and social security payments).
As part of the Non-Habitual Resident (NHR) tax scheme, D7 visa holders pay just a 20% tax on Portuguese-sourced income and a 10% tax on foreign-sourced income (which would include foreign retirement and social security payments).
If you registered as a non-habitual resident before 31 March 2020, your foreign source pension income is generally tax-free. If you are registered from April 2020 onwards, your foreign pension income is generally taxed at 10%.
The non-habitual tax resident regime (NHR) allows residents to benefit from a discounted flat income tax rate, instead of the regular rates that climb up to 48%. The NHR status is available to anyone who was not a tax resident in Portugal in the last five years.
Generally, people who are not U.S. citizens may receive U.S. Social Security benefits while outside the U.S. only if they meet certain requirements. However, under the agreement, you can receive benefits as long as you reside in Portugal regardless of your nationality.
Can Americans retire in Portugal? In order retire in Portugal as an American, you need to apply for Portuguese residency. The process is simple, but may take some time. To apply you need to provide your passport, proof of income, proof of health insurance, and pass a criminal background check.
How much money do you need to retire in Portugal? Depending on location and lifestyle, the cost of living in Lisbon can range from $2,000–$3,500 per month. Outside of the bigger cities, you can expect to spend less.
Health Insurance in Portugal is affordable and averages somewhere between €40 and €100 per month, depending on multiple factors like age and pre-existing conditions. To visit a private Doctor in Portugal, you would typically pay around €50 to €100 per appointment. With insurance you can pay only a fraction of that.
Security. As mentioned before, one thing that contributes to the overall quality of life in any particular country is safety. While both countries are considered generally safe, Portugal is by far safer than Spain.
Some Americans also opt to retire in Portugal since the pace of life and affordable living costs are big draws. Portugal, recognized as one of the top 5 countries for expatriates in 2021, boasts an impressive satisfaction rate among individuals who have relocated there.
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.
Overall, Portugal's combination of warm weather, affordable cost of living, high quality of life, welcoming culture, and attractive visa and residency programs make it an ideal destination for Americans looking to live and work abroad.
You are not required to pay U.S. income taxes on your Portuguese-source income. This is because the United States and Portugal have a bilateral tax treaty.
Foreigners in Portugal who are classified as non-residents are subject to a flat income tax rate of 25 percent on all their earnings. This means that if you earned €50,000 in Portugal during 2022, you would owe €12,500 in taxes, equivalent to 25 percent of your income.
How much tax will I pay? As a non-resident of Portugal you will pay tax at a rate of 28%, but only on 35% of the total rental income because the remaining 65% is deemed to be expenses in running the business. This means you are paying an effective tax rate of less than 10%.
If you leave the U.S., we will stop your benefits the month after the sixth calendar month in a row that you are outside the country. You can make visits to the United States for specific periods of time, depending on how long you've been outside, to continue receiving your benefits.
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.
If you earned Social Security benefits, you can visit or live in most foreign countries and still receive payments. Look up the country on the SSA Payments Abroad Screening Tool to be sure you can receive your payments.
How Much Money Do You Need to Retire in Portugal? Portugal offers arguably the lowest cost of living in Western Europe. a couple can live comfortably in Portugal's interior for about $1,700 a month. The budget for larger cities such as Lisbon is about $2,100 or $2,200 a month.
Greece and Malta are some of the easiest and best places to retire in Europe, as they have large English-speaking communities. Other European destinations that are also suitable for retirement are Portugal, Spain, and Turkey.
In which area of Portugal do most expats reside? Expats tend to flock to Portugal's bigger cities – particularly Lisbon and Porto. Both of these cities are renowned for their rich history, vibrant culture, and fairly relaxed lifestyle.
Portugal is actually considered one of the most affordable countries in Western Europe and is an average of 50 percent cheaper than living in the United States.
As an American, you need to get a Portuguese residence permit if you're planning to stay there for longer than three months. If you reside in Portugal with a proper residence permit for five years, you can then apply for permanent residency or Portuguese citizenship.
There are a number of different ways for Americans to get a Portuguese visa, through work, marriage, or the Golden Visa investment program. After five years, you can apply for permanent residency and Portuguese citizenship, provided you meet all the requirements under Portuguese nationality law.
Yes, Portugal does have state-provided healthcare, which is free for all citizens and legal residents in Portugal. Even though medical care is mainly free, you may have to pay some fees when visiting emergency rooms, your family doctor, or requesting ambulance services.
Please note: Portugal does not offer free medical treatment to visitors, and under European Union rules non-EU citizens are required to have travel medical insurance covering emergency medical, hospitalization, and repatriation (including the case of death).
Medicare does not usually cover care that you receive outside the United States. However, it may be beneficial to enroll in Parts A and B if you live abroad on a temporary basis, or travel back to the U.S. frequently. Most people qualify for premium-free Part A, meaning you will pay nothing for coverage.
The country offers a unique blend of incredible cuisine, beautiful landscapes, and a laid-back lifestyle. With its warm climate, affordable cost of living, and welcoming culture, Portugal is an attractive option for those seeking to escape the stresses of everyday life.
The Algarve is the most popular choice for expats and tourists alike. It too, has some stunning beaches and coastlines, with some beautiful rock formations to marvel at. The weather is always a few degrees warmer than Lisbon which makes it a popular place for retirees.
The most common investment is purchasing a property in Portugal worth at least €500,000. The residence permit you receive when applying for a Golden Visa is initially valid for one year. You can also apply for renewal, and you will get a permit that lasts for two years.
Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer.
According to Numbeo, Portugal's Health Care System Index is 71.29 compared to 57.48 in Greece. High-quality healthcare coupled with tax incentives and benefits makes the quality of life desirable. Another added value for retirees in Portugal is the legal security that Residence Permits offer.
As we mentioned, as a tax resident you pay taxes on ALL incomes you generate worldwide. This includes pensions collected both in Spain and outside Spain. So you would still declare and pay taxes on pensions coming from abroad.
Portugal offers fantastic tax benefits for expats. Expats are exempt from paying text for the first ten years of residence, and then tax is paid at a flat 20% rate on your Portuguese income. The Non-Habitual Tax Resident Regime is one of the main draws for expats to Spain, allowing them to focus on their savings.
You can live comfortably with an estimated €1,300-€1,500 (US$1,500-1,700) per month in small towns or €1,700 ($2,200) in larger urban areas such as Lisbon or Porto. Groceries, eating out, rent, utilities, and health care are especially affordable in Portugal.
Yes, an American can live in Portugal. You can get residency in Portugal in six basic ways: Marriage, family reunification, study, work, investment, or retirement. For any of these, you need to apply for a visa, then apply for residency with the Portuguese government.
If a foreign employer employs you, you will generally NOT be required to pay into US Social Security. If you are self-employed, you will generally be required to pay a self-employment tax, which covers the Social Security and Medicare taxes you would generally split with a US employer.
The main places American expats live in Portugal are Lisbon, Cascais, Porto, Algarve, and Coimbra. Lisbon: Lisbon is Portugal's capital city and offers a vibrant cultural scene, a bustling nightlife, and easy access to the rest of Europe.
For the best places to retire in Portugal consider Lisbon and Porto if you are looking for a good life in the city. Cascais is an excellent location a short 30-minute drive from Lisbon. Consider the Algarve for a relaxed retirement with plenty of beaches and golf courses.
Introduction: My name is Barbera Armstrong, I am a lovely, delightful, cooperative, funny, enchanting, vivacious, tender person who loves writing and wants to share my knowledge and understanding with you.
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