Why Retire in Portugal?
Portugal is one of the best places to retire in the world. You can retire there as an ex-pat and enjoy your golden years in a beautiful area like along the coastline or in rural winery and farm homes while benefiting from the moderate climate. Portugal has much to offer whether you want to spend your retirement in a busy seaside city like Lisbon or escape to the quiet and tranquil Alentejo Region, which includes Comporta.
The Alentejo Region offers seaside villages and towns on the gorgeous beaches, as well as inland rural areas where you can find plenty of space to enjoy nature and the outdoors. Some people also enjoy retiring in Porto, Portugal, which is busy and bustling and is the second-largest city in Portugal on the Iberian Peninsula on the ocean.
Why Do People Retire in Portugal?
In 2009, Portugal made some changes to its tax laws, namely regarding retirement taxes. These changes made it much more enticing for people to want to consider retiring abroad in Portugal. While Algarve is an extremely popular retirement area in Portugal, with the tax law changes, Alentejo is quickly becoming equally popular.
Another of the benefits of retiring in Portugal as an ex-pat is that the cost of living is considered the lowest in the European Union, as well as the U.K., the U.S., Canada, and other such countries. Retirees can find a nice country cottage in a small country town and spend around $800 per month on living expenses.
Depending on the location, the cost of living averages around $1,500 per month in more popular towns and certain coastal areas and tops off around $2,400 in major cities like Porto or Lisbon and popular coastal cities.
Aside from the low cost of living, another of the benefits of retiring in Portugal is that consumer goods and food are also less compared to other countries. However, electricity can be more expensive in certain areas. To compensate for this, many homes have gas or liquid propane appliances, as well as outdoor wood-fired ovens.
What Is Required to Retire in Portugal?
If you are already a citizen of the European Union, nothing is needed. You just apply for a change of residency from your current EU country to Portugal. The application can be obtained from any Portuguese Immigration Service office.
For ex-pats, the process is different. First, the retiree and their family members that want to move to Portugal would need to apply for a temporary residence permit. They can do this at any Portuguese consular office in their current country.
They should obtain this permit before moving to Portugal. However, you can still vacation in Portugal while your residence permit application is pending.
When you submit the application for a temporary residence permit, make sure to bring your passport, proof of health insurance coverage, and proof of income. Portugal also requires applicants to submit to a criminal background check.
Once approved, the residence permit is valid for five years. When the permit is about to expire, then you can apply to become a permanent resident of Portugal and a citizen of the E.U. If you intend to work part-time, even though you are retired, you will also need to apply and obtain a work permit until you become a permanent resident.
Another option some retirees consider is what is called the Golden Visa scheme. This program is where non-E.U. citizens who want to retire in Portugal can obtain their residence permit, work permit, and permanent residence status by investing in Portugal. Some of the investment options include:
- Make a Portugal property investment of 500,000 Euros or more.
- Buy real estate in Portugal that is at least 350,000 Euros or more and that needs renovations. The property must be 31 years or older or be an approved property part of a regeneration program.
- Make various monetary capital investments in different industry segments and meet the minimum investment amount.
- Create a minimum of 10 new jobs for Portugal residents.
What Age Do People Retire in Portugal?
The minimum Portugal retirement age is 66 years and 5 months. However, some people choose to continue to work past the retirement age. Some retirees work part-time jobs once they receive their work permits. Others buy investment properties and collect rental income. Then there are people who enjoy spending their days on the beaches, shopping, and simply enjoying their retirement in Portugal.
Does Portugal Have a Pension Program?
Portugal, like other E.U. countries, has a retirement pension. Contributions must be made for at least 15 years to qualify. Pension contributions can be transferred from other E.U. countries to Portugal to be considered for a pension in Portugal.
If you are from a non-E.U. country, things are slightly different. You will continue to draw your pension benefits from your current country. It is essential to check with your government to find out what the process is for obtaining your pension payments while in Portugal.
Fortunately, Portugal has made agreements with several foreign countries to make it easier for retirees to retire to Portugal and transfer their pensions. You do need to keep in mind, Portugal does require taxes to be paid on all types of income, including social security and pension payments.
How to Transfer an International Pension to Portugal
The first thing you want to check is whether your country has an agreement with Portugal in place through what is called the QROPS (Qualifying Recognized Overseas Pension Scheme). If your country participates, then you should review the processes to decide if this is the best option.
Another option, in cases where your country does not participate with the QROPS, is to apply for the NHR (Non-Habitual Residency) program. This program allows you to receive lower tax rates and exemptions from certain taxes for 10 years.
What Health Insurance Options Are Available in Portugal?
Portugal, like other E.U. countries, has a national healthcare system that is free for all EU citizens and residents of Portugal. However, in recent years, fees are being charged for certain services. If you plan on retiring to Portugal from another E.U. country, all you need to do is transfer your healthcare certificate to Portugal.
Portugal also has an arrangement with the U.K. for healthcare coverage. U.K. residents retiring to Portugal should review the S1 form details and be aware that certain coverages provided by the NHS may not apply in Portugal, so there could be a co-payment or out-of-pocket expense for certain services.
Non-E.U. residents will need to obtain private insurance coverage for at least five years. Once they become permanent residents, then they, too, qualify for free national healthcare.
Buying Real Estate in Portugal
Non-residents can buy a holiday home in Portugal, as well as make Portugal property investments in residential and commercial rental properties. You are free to purchase property long before you retire or after you retire and want to move to Portugal.
Most retirees have already purchased vacation and holiday homes in Portugal long before retirement. The more time they spend enjoying their home in Portugal, the more they fall in love with Portugal. Ultimately, this is why so many retirees are retiring in Portugal.
Portugal offers a wide range of properties to buy, including beach homes, villas, country cottages, farm homes, wineries, waterfront homes, seaside homes, and land to build your dream home. Some people not only purchase a holiday home but also invest in commercial properties and vacation rentals for a source of income.
For further information and help buying real estate in Portugal, please feel free to contact Living Portugal Property at +351 92 777 176 today!