Spain or Portugal for Retirement: Which is Better?

In recent years, Portugal and Spain have become popular retirement destinations. It’s easy to see why — both countries boast rich cultures, natural beauty, great weather, and dedicated retirement visas. But when it comes to deciding on Spain or Portugal for retirement, which option should US expats choose as their home country?

To help you decide, we’ve put together a high-level guide to retirement in the two different countries. Read on for side-by-side comparisons of both Spain and Portugal, taking into account factors like the high quality of life, cost of living, residency options, tax implications, and more.

Retiring in Spain as an American

Lifestyle and culture

Expats flock to Spain for its sunny weather, relaxed pace of life, and safety. Popular pastimes include going out for tapas, exploring beach towns and historical villages, cheering for the local fútbol team, and playing pádel (a sport similar to pickleball).

You can find large expat communities in several different areas in Spain. While a rising cost of living has caused some tension between expats and locals in certain areas, Spanish people are generally known for their friendliness and warmth. Bureaucracy and language barriers may pose some challenges for expats, but many find that the pros outweigh the cons.

Language and integration

Spain has one of the lower levels of English proficiency in Western Europe, with a 2023 report estimating that just 14.7% of Spanish residents say they speak English well. While the number of English speakers is higher in large cities and tourist hotspots, learning at least a basic level of Spanish will likely make daily life easier for expats. 

The good news is that Spanish classes are one of the best ways to meet other expats, and there’s no shortage of language schools throughout the country.  Language exchanges with native Spanish speakers, meanwhile, can be a great way to connect with locals who want to improve their English.

Other ways of getting to know people might include:

• Moving to a retirement community
• Joining expat Facebook groups or Internations
• Volunteering
• Joining a local club or association for Americans

Spain’s cost of living for US Expats

Spain has a relatively affordable cost of living compared to the US — 37.7% lower, by some estimates. According to Expatistan, you can get by on as little as €1,822 ($1,904) per month as an individual or €3,463 (~$3,617) per month as a family of four. 

That said, the cost of living varies depending on location and lifestyle, with higher costs in large cities like Barcelona and Madrid and tourist destinations like Ibiza and San Sebastián. Rural areas, small towns, and mid-size cities are usually significantly more affordable.

Below are country-wide averages for some common expenses in Spain:

• 1 BR apartment rent: €940 (~$982) in city centers; €746 (~$779) outside 
• 3 BR apartment rent: €1,592 (~$1,663) in city center; €1,205 (~$1,259) outside
• Basic utilities: €114.34 (~$119.46)
• Gym membership: €38.15 (~$39.86) 
• Mid-range, 3-course meal for 2: €45 (~$47.01)

Residency and visas for Americans retiring in Spain 

Spain’s most popular visa for retirees is the non-lucrative visa. Investors may be interested in Spain’s golden visa, while remote workers may want to consider the digital nomad visa.

The main requirement for the non-lucrative visa is to earn at least 400% of Spain’s Public Income Indicator for Multiple Effects (IPREM) in passive income per month. Currently, this is equal to:

• €2,400 (~$2,507) per month/€28,800 (~$30,089) per year — or the equivalent in savings for the duration of your visa
  • To bring family members with you, you must earn an additional 100% IPREM, currently equal to €600 (~$627) per month/€7,200 (~$7,521) per year 

After applying for the non-lucrative visa, you’ll typically hear back within three months or so. That said, gathering all of the required documentation can take time, so plan accordingly.

Upon approval, the visa lasts for one year. Afterward, you can extend it for two more years if you continue to meet the qualifications. When that period ends, you can extend the visa once more for an additional two years. After five years of living in Spain total, you can apply for permanent residency. Five years after that, you can apply for citizenship.

Tax implications for US expats living in Spain

Those who spend over 183 days in Spain, maintain financial interests in Spain, or live in Spain with a Spanish spouse or dependent children qualify as Spanish tax residents. As such, they are subject to Spanish taxes on their worldwide income — including foreign retirement income.

For tax residents, there are two main types of income tax rates:

• General income: 19% to 47%, depending on overall taxable income
• Savings income: 19% to 28%, depending on overall taxable income

General income applies to employment income, retirement income, and rental income while savings income applies to capital gains income, dividends, and interest income.

Non-tax residents, on the other hand, pay taxes only on their Spanish-sourced income at the following rates:

• General income, royalties: 24%
• Retirement income: 8% to 40%, depending on overall taxable income
• Capital gains, interest, & dividends: 19%

Tax benefits for retirees in Spain?

While retirement income is generally taxed at general rates (19% to 47%) for Spanish tax residents, US government pension income — including Social Security — is usually taxable only by the US.

Since annuity income falls under the more favorable savings income rate, expats living in Spain may benefit from structuring retirement withdrawals as annuities. Taking lump-sum payments from 401(k) and IRAs, meanwhile, may qualify for a 40% tax reduction if it meets the conditions necessary to classify it as a capital payment.

Taking advantage of both of these tax strategies is complex, however, and requires assistance from a Spanish tax professional — ideally, one who specializes in working with expats.

Spain’s healthcare

Spain has a great healthcare system that’s significantly more affordable than that of the US. In 2023, it was named #26 on the Legatum Institute’s ranking of global health systems.

The public healthcare system (aka el Sistema Nacional de Salud, or SNS) provides low-cost, high-quality coverage to Spanish taxpayers. Quality can vary somewhat by location, with more modern facilities and extensive treatment options generally found in bigger cities and more affluent areas. Wait times can also sometimes be long, especially for specialists.

As a result, many expats choose to supplement their SNS coverage with private insurance. Premiums vary according to factors like your age and general health but can cost as little as $56 per month. Popular private insurers in Spain include Sanitas, MAPFRE, and Adeslas.

Real estate and housing for expats retiring in Spain

Unlike some foreign countries, Spain currently has no restrictions on foreigners owning property. In January 2025, however, Spanish President Pedro Sánchez proposed a 100% tax on home purchases by non-EU nationals who aren’t tax residents of Spain in response to a nationwide housing affordability crisis.

That said, it is (so far) just a proposal, with no concrete bill drafted to turn it into law. Moreover, many legal experts question the feasibility of implementing such a tax.

Expats can browse popular Spanish real estate websites like Idealista and Fotocasa or choose to work directly with a real estate agent. Alternatively, you can work with a real estate firm. International firms (e.g. Sotheby’s, Engel & Völkers, RE/MAX) often have English-speaking agents.

Real estate prices in Spain have increased in recent years, but are still generally lower than in the US. The average price per square meter for an apartment is:

• €3,705 (~$3,879) in city centers
• €2,285 (~$2,392) outside of city centers

Some of the hottest destinations for retirees in Spain include:

• Costa del Sol: A stretch of Andalusian coastline known for its stunning beaches, friendly locals, flamenco dancing, and fresh seafood
• Madrid: The bustling, cosmopolitan capital city of Spain, where culture (think: fine art museums, theaters, Michelin-starred restaurants) abounds
• Valencia: A relaxed but thriving seaside city home to paella, lively festivals, and a charming historical quarter

Retiring in Portugal as a US Citizen

Lifestyle and cultural differences

Portugal offers many of the same benefits as Spain: great weather, beaches, large expat communities… of course, there are still some differences. According to the 2024 Global Peace Index, Portugal is the seventh-safest country in the world — making it even more secure than Spain (#23). Both countries significantly outrank the US (#132). 

A few other differences:

• Due to its Mediterranean coastline, Spain has warmer waters than Portugal
• Spain’s economy and job market are generally stronger than Portugal’s
• Some consider the Portuguese to be more reserved than their Spanish neighbors

And of course, Portugal has its own distinct culture and vibe. Compared to Spain, the Portuguese speak português instead of castellano; nosh on pasteis de nata (custard tarts) and bacalhau à brás (flaked salted cod with scrambled egg) instead of tapas; listen to fado instead of flamenco music; and have Manueline vs. Moorish architecture.

Language & integration

Portugal has a significantly higher level of English proficiency than Spain, with 59.6% of residents speaking the language (vs. just shy of 15% in Spain). As a result, Americans living in Portugal who don’t know Portuguese are likely to encounter much less of a language barrier than Americans living in Spain who don’t know Spanish.

Still, learning Portuguese can better prepare newly arrived Americans to befriend locals, navigate everyday tasks, and integrate into their local community. Just as in Spain, language schools, language exchanges, online groups for expats, and expat clubs and associations can help American expats in Portugal feel at home more quickly.

Portugal’s cost of living

By some estimates, Portugal’s cost of living is about 38.8% lower than that of the US, making it even more affordable than Spain (albeit just by a hair). Expats in Portugal can get by on as little as €1,712 (~$1,790) per month as an individual or €3,204 (~$3,349) as a family of four.

Again, the same caveats apply in Portugal as in Spain with prices varying according to your lifestyle and location. Lisbon and beachside communities like El Algarve are among the most expensive places in Portugal, with small towns and rural areas being significantly cheaper. 

Below are country-wide averages for some common expenses in Portugal:

• 1 BR apartment: €940 (~$982) in city center; €746 (~$779) outside
• 3 BR apartment: €1,592 (~$1,663) in city center; €1,205 (~$1,260) outside
• Utilities: €114 (~$120)
• Gym membership: € 38.15 (~$39.89)
• Mid-range, 3-course meal for 2: €45 (~$47.05)

Residency and visas for Americans retiring in Portugal 

Portugal’s go-to retiree visa is the D7 visa. Like Spain’s non-lucrative visa, this visa is for those who earn enough in passive income — or have enough in savings — to financially support themselves. Portugal also offers a golden visa and a digital nomad visa.

The minimum income requirements for Portugal’s D7 visa are significantly lower than the ones for Spain’s non-lucrative visa. D7 visa applicants only need to bring in:

• €870 (~$910) per month/€9,120 (~$10,916) per year, or the equivalent in savings for the duration of your visa
• Bringing a spouse requires an extra €435 (~$455) per month in income, while bringing a child requires an additional €261 (~$273)

Once granted, the D7 visa lasts one year and can be extended for two years at a time. After five years of legal residence, US expats can apply to become Portuguese citizens, provided they take and pass the naturalization exam. Portugal’s D7 visa usually takes about four months to process but again, putting your application together takes some time in itself.

Tax implications of US citizens living in Portugal

The Portuguese government defines tax residents as anyone who:

• Stays in Portugal for over 183 days per year (consecutive or not) within a 12-month period starting or ending in the fiscal year, OR
• Maintains a habitual residence in Portugal at any time within a 12-month period starting or ending in the fiscal year

Just like in Spain, Portuguese tax residents pay taxes on their worldwide income, which includes foreign retirement income. Tax rates for residents vary from 13.25% to 48% in 2024, depending on overall income. 

Non-tax residents, however, pay taxes only on Portuguese-sourced income at flat rates (usually 28% for passive income).

Tax benefits for retirees in Portugal?

Like Spain, Americans living in Portugal are not subject to taxes on income from public US pensions or US Social Security payments.

Previously, Portugal had a tax regime called Non-Habitual Residency (NHR) which offered great tax benefits for new residents. In 2024, however, the government closed the program to new applicants. In 2025, Portugal plans to launch an NHR 2.0 regime, but it could actually raise taxes on retirement income from 48% to 50%.

Healthcare in Portugal 

Portugal also offers high-quality, affordable healthcare. At #40 on the aforementioned 2023 Legatum Institute ranking of global health systems, it ranked slightly lower than Spain (#26) but significantly higher than the US (#69).

Portugal’s public healthcare system is called the Serviço Nacional de Saúde, or SNS (just like Spain’s). All residents have access to low-cost care through the SNS, although those with D7 visas must purchase private insurance until they receive their residence card. Again, healthcare quality is usually best in urban and affluent areas.

Besides being mandatory for the D7 visa application, private healthcare generally offers policyholders access to more modern facilities and shorter wait times. Monthly premiums can be as low as €20 (~$20.93) to €50 (~$52.33) depending on your age and health. Some of Portugal’s most prominent private insurers include Multicare, Tranquilidade, and MGEN.

Portugal’s real estate & housing for expats

Like Spain, Portugal has no restrictions on foreigners owning housing. Real estate prices have dramatically increased in recent years after an influx in foreign investors. Still, prices are much lower than in the US and on par with those in Spain.

The average price per square meter for an apartment in Portugal is:

• €3,617 (~$3,787) in city centers
• €2,642 (~$2,765) outside of city centers

Idealista is also a popular real estate website in Portugal, as are Casa Sapo and Imovirtual. Again, there are many international real estate firms like RE/MAX, Century 21, and Keller Williams, all of which employ many English speakers.

Portugal’s top retirement destinations include:

• El Algarve: Known for its stunning coastlines and quaint villages, Portugal’s southernmost region is the go-to destination for retirees  
• Lisbon: Portugal’s capital boasts colorful architecture, delicious cuisine, and historic neighborhoods
• Madeira: Located northwest of Morocco, this volcanic island has a pleasant climate year-round and an exquisite namesake wine

Spain vs. Portugal for retirement: a breakdown

	Spain	Portugal
Retirement visa income requirement	€2,400 (~$2,507) per month	€870 (~$910) per month
Top destinations	Costa del Sol, Madrid, Valencia	El Algarve, Lisbon, Madeira
Monthly cost of living: Individuals	€1,822 ($1,904)	€1,712 (~$1,790)
Monthly cost of living: Family of 4	€3,463 (~$3,617)	€3,204 (~$3,349
Tax rates on US retirement income: Residents	19% to 47%	13.25% to 48%
Tax rates on US retirement income: Non-residents	Exempt	Exempt
Global safety ranking	#23	#7
Global healthcare ranking	#26	#40

US tax implications of retiring in Spain or Portugal

Whether you plan on moving to Portugal or moving to Spain, you’ll still be subject to US tax and reporting obligations. This is due to the US’s citizenship-based tax system, which requires all citizens and permanent residents who earn above a certain threshold to file, and potentially pay, US taxes.

Whether you retire in Portugal vs. Spain (or any other country), you’ll likely have to file a US tax return for the 2024 tax year by June 16, 2025. However, you can request an extension until October 15, 2025 by filing Form 4868. Regardless, you must make an estimated payment by April 15, 2025.

While the US has tax treaties with both Spain and Portugal, they realistically provide few benefits to Americans abroad thanks to tricky clauses. Fortunately, Americans living overseas can claim many of the same tax breaks as they would in the US. There are even a few expat-specific tax breaks.

In high-tax countries, the Foreign Tax Credit (FTC) can be particularly valuable in helping expats avoid double taxation. The FTC offers dollar-for-dollar US tax credits on any foreign income tax credits you’ve paid. In countries with higher tax rates than the US, like Spain and Portugal, this often not only eliminates your US tax bill but also gives you excess credits to use on future ones.

Keep in mind, moving abroad may trigger or change your reporting obligations. Expats commonly have to file the Foreign Bank Account Report (FBAR) and Form 8938.

Frequently Asked Questions