Portugal (the Algarve region) is deemed to be one of the best retirement locations in the world. In fact, they’re consistently ranked as one of the top five places to retire.
This piqued my interest into digging deeper about what is attracting retirees to Portugal.
The 8 amazing advantages of retiring in Portugal include:
My first exposure to Portugal was back in the spring of 1985. My adventure of a lifetime backpacking through Europe for six months.
I fell in love with the Algarve region spending an entire month! The locals were friendly, the climate warm and for a budget conscious traveler, incredible value.
Lots has changed since back then. I’ve gotten older and, hopefully, somewhat wiser. The area has grown and developed from sleepy little fishing villages to a bustling tourist region.
Yet, the character hasn’t changed. Every time I re-visit this beautiful area, I re-fall in love. But, why is it considered the best place to retire?
Portugal, Ranked as The Best Place to Retire
Obviously, I’m biased based on my previous experiences. Having stated that, my wife and I are wondering if we should retire to Portugal.
As discussed in our post, the pros and cons of downsizing, we still have lots of work to do before making this a reality. More importantly, the industry experts agree Portugal is a great place to retire.
Both CNN and Forbes rate this as one of the best countries when retiring abroad. This is further reinforced with the 2020 Annual Global Retirement Index.
Why Two Americans Retired in Portugal
The You Tube video below, from Our Rich Journey, shares ten reasons why these two Americans retired in Portugal. I found it interesting and informative.
1. A Mediterranean Climate With 300 Days of Sun
Portugal enjoys a Mediterranean climate with moderate winters and warm summers. The Algarve region is one of the warmest places in Europe with around 300 days of sun per year. One of the sunniest places in all of Europe.
The Algarve region is greatly influenced by the Mediterranean. Temperatures during the summer rarely exceed 84°F (29°C) with refreshing sea breezes. Typically dry, as opposed to the winter months which have more rainfall.
For myself, I have no desire to survive bone numbing winters or sweltering heat. Having such a moderate climate has great appeal, making it another of the advantages of retiring in Portugal.
Other Climatic Considerations
Like every other place on earth, climate change will be a major factor to consider. Global warming is already increasing extreme weather occurrences. For instance, California has experienced repeated droughts and out-of-control wild fires.
At the other extreme, the eastern seaboard has been battered by hurricanes and torrential downpours. Never before have we seen so many devastating tropical storms.
These have led to flooding, power outages and loss of life across many southern states.
Climate change might very well worsen areas already prone to natural disasters. As gorgeous as Panama is (another highly rated country to retire), I’m not sure I’d be comfortable living next to an active volcano.
Whether it be hurricanes, tornados, earthquakes or other calamities; I’d prefer to live somewhere these are rare occurrences. I’m not so naïve as to suggest Portugal will be unaffected; however, less so than other areas.
In fact, based on weather patterns to date, the Algarve might be one of the safer places. At least, in my opinion, which we all know is somewhat skewed.
2. Affordable Cost of Living
Who isn’t concerned about rising costs and making ends meet in retirement? In fact, loads of people haven’t saved enough and are faced with a dwindling quality of life. This is one of the reasons so many contemplate living abroad.
It was a pleasant surprise to learn it costs less than half to live in Portugal. The following table was compiled from various sources like Nation Master and BLS contrasting the cost of living between the US and Portugal.
Portugal offers one of the lowest costs of living in western Europe. According to International Living Global Index, this is on par with Costa Rica. A couple can live comfortably on around $2,200 per month.
3. Low Taxes
Of particular interest is the non-habitual residency (NHR) tax regime. Initially created in 2009, it offered lucrative tax breaks to attract skilled professionals, high net worth individuals and foreign pensioners.
The double taxation agreements (DTAs) allow most countries to tax on income derived from within their country. As this gets messy, the majority of countries don’t tax those living abroad.
In addition, attempting to tax people living outside the country would negatively impact foreign investment. Portugal’s NHR program was highly successful attracting over 10,000 new residents. In effect, the country became a tax haven for retirees.
This in turn created considerable international pressure from governments with eroding tax bases. As of March 2020, revisions were made to the Portuguese policy.
All pension income from private or government entities (including Social Security) are now taxed at 10%. Other income from investments, capital gains and real estate remain exempt.
4. Top Rated Health Care System
Decent and affordable healthcare is a priority. This is where Portugal shines, with a universal healthcare system ranked 12th out of 190 UN member countries.
As a testament to their healthcare system, Portugal is a COVID-19 success story with 86.4% of their population vaccinated. This is according to CNN Health which also reveals the U.S. languishing at 56% vaccination rate.
What Can You Expect to Pay?
A couple can expect to pay around $115.00 a month for basic healthcare insurance. This works out to be a paltry $1,380.00 per year. The American couple in the video identify paying $1,500.00 a year for a family of four.
The table below further breaks down the cost of various medical procedures.
For further information, Expatica provides an excellent resource on Portugal’s healthcare system
5. Safe With a Low Crime Rate
Portugal ranks 3rd on the 2020 Global Peace Index behind Iceland and New Zealand! It has been in the top 5 since 2016 and remains the safest country in Europe. In comparison, the US rates 121st.
The Portugal News reported the lowest crime rates ever in 2020. The minister stated general crime fell around 11% over the past year. The greatest threat is from petty crime such as pickpocketing, particularly in the larger cities.
One of the reasons for this amazing statistic is how stable the political climate is. And, the police presence is very obvious especially in busy or crowded cities. They usually travel in pairs or threes.
Also, not a lot of Portuguese own firearms. The only ones that do are hunters or sportsmen. Before purchasing a gun, they must first obtain a police permit allowing them ownership.
However, even with all these positive facts, it’s in your best interest to be aware of your surroundings so you don’t get taken advantage of. As stated, the biggest threat comes from robbery, purse snatching or being scammed.
For example, don’t take too much to the beach. Leaving valuables unattended is just inviting someone to steal them. Wear a money belt when going out or using public transport keeping money, credit cards and passports in it.
Common sense goes a long way to making your life in Portugal enjoyable and not trying or traumatic.
6. The Portuguese Are Welcoming and Friendly
The World Population Review revealed Portugal to be the friendliest country in the world to foreign residents. Further surveys reveal over a third of people (36%) say they felt at home right away as compared to an international average of 19%.
According to InterNations:
The Portuguese are a warm, open and hospitable people. With such a diverse population of different languages and customs, they’re used to accepting and integrating with foreigners.
English is the second most spoken language and taught in the schools. It's recommended to learn some Portuguese. It’s a sign of respect for them you took the time to learn their language.
They’re also very patient, so don’t worry if you aren’t perfect. They have a tendency to be more formal expecting a handshake or kiss on both cheeks when greeted. As a people, they’ve got a great respect for traditions because of their long history.
They’re proud of their country and want others to feel welcome. In this respect, they go out of their way to be helpful. The Portuguese love to talk and might ask lots of questions and even invite you over for dinner.
Family and friends are very important to them. There’s a small town feel in this country because they know their neighbors and shop keepers.
7. Laid-Back Lifestyle
Their lifestyle is much more laid-back than our North America frantic pace. The Portuguese are not in a rush, plain and simple.
This can be frustrating until we calm down and embrace this slower pace. In fact, timeliness doesn't appear to be their strong suit.
Getting together for coffee appears to be a national pastime. When you’re meeting someone, often, they’ll be 10 or 15 minutes late. There’s not the emphasis on punctuality like in North America.
Another cultural difference is their greater focus on people and relationships as opposed to material possessions. One might say their orientation is one of “carpe diem” or “living life to the fullest”.
From my perspective, this leads to a happier and more fulfilling life. Even at work, they stop and take a real break and lunch away from their office or desk.
This is their time to chat and connect with friends or family even if it’s the middle of the day. Western cultures have a tendency to sit at their desk and work through breaks and lunch hours.
8. Ease of Entry
If you’re thinking Portugal might be worth a visit, you can stay for up to 90 days. Even as a winter get away, the Algarve is sure to delight. The Portuguese government encourages tourism and, by extension, those wishing to move to their country.
In fact, they’ve made the process as simple and painless as possible. They make it easier than almost any other country. And, it's the last of eight advantages of retiring in Portugal.
The only drawback is getting to Portugal. Our post, pros and cons of retiring in Costa Rica, expresses it's only about a 3 to 4 hour flight get to Costa Rica. A transatlantic flight plus connections could take you two to three times longer.
Visa / Residency Permit
You will need to apply for a visa through a Portuguese embassy. The application process should begin at least a month prior to your planned departure. You'll need to meet the following requirements:
Once your application is processed, you’ll be granted a temporary visa. After an interview with Portuguese border and immigration, this will become a valid one-year residency permit.
This can be renewed annually and after five years become a permanent one. The processing fee is 84 € or about $98 USD.
For more detailed information, see Visa Guide.
Closing Thoughts on Advantages of Retiring in Portugal
After visiting the Algarve region several times, I know how beautiful and welcoming the area is to tourists. What I didn’t realize was this might be one of the best places for retirees.
Living expenses are about half, they have a superior healthcare system and are the 3rd safest country in the world. Of course, being sunny with a temperate climate makes this area even more appealing.