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SmartAsset: How to Retire in Spain

If there’s nothing keeping you in the U.S., why not retire abroad? You have a ton of options from the standard destination of Mexico to a colder retirement in Iceland. Somewhere in between those is Spain, which offers both great mountain and beach experiences. But before you start packing your bags, check out what it takes to retire in Spain, including the costs and residency requirements. And if you need help strategizing your retirement abroad, consider enlisting the help of a financial advisor.

Average Cost to Retire in Spain

Spain is one of the top tourist destinations in the world. And with its diverse architecture, food and climate, many people are also making Spain a top retirement destination.

It’s possible to retire comfortably in Spain on about $25,000 a year. That breaks down to roughly $2,083 per month. Of course, it is possible to live in Spain on less — $20,000, for instance. This amount would make more sense if you decide to live farther from big cities and lead a more minimalist lifestyle.

Luckily for retirees, Spain has low property taxes. There are some instances where you will need to file a Spanish income tax return. This is the case if you reside in Spain for more than six months of the year and your income is above $24,000, you receive rental income of more than about $1,100 or capital gains or savings income of more than $1,700. The income tax still applies when your income comes largely from U.S. accounts.

Those thinking of moving to Spain in retirement should be aware that the country does have a sales tax that can be quite steep. Known as the IVA (Impuesto sobre el Valor Añadido), it is essentially the equivalent of the VAT (Value Added Tax). Beware, the listed price for an item typically included that tax.

American citizens will also have to file a U.S. tax return. However, due to a tax treaty between Spain and the U.S., you can avoid double taxation. It may be beneficial for you to work with a financial advisor before and during retirement to help with unique situations like this. For instance, an advisor can help you figure out your tax burden and file your taxes properly. SmartAsset can pair you with up to three advisors who serve your area with our financial advisor matching tool.

How to Retire in Spain: Housing and Healthcare

SmartAsset: How to Retire in Spain

Numbeo.com says that the cost of living excluding rent is almost 27% lower in Spain than in the U.S. Housing costs will vary depending on where you settle down. A one-bedroom apartment rental in a city centre could cost you less than half than what you would pay in the U.S. The average in Spain is nearly $710, whereas in the U.S. is almost $1,375. Prices, however, drop for one-bedrooms outside of city centers. In Spain, rent averages under $545. And in the U.S., rent is almost $1,115.

When you compare specific cities in both countries, the average rent for a one-bedroom apartment in New York could be three times more expensive than Madrid. The average for a one-bedroom in the centre of New York costs just over $3,270, whereas the equivalent in Madrid is just under $1,035. A one-bedroom outside of the city centre in Madrid falls to less than $775. And if you settle in a smaller city like the port of A Coruña in northwest Spain, rent for a one-bedroom in the city centre is under $680, and outside of the city centre it averages under $500.

As for healthcare, you have a few options, all of which are still better than what the U.S. can offer most citizens. If you’re a resident of Spain, you can take advantage of the country’s comprehensive public healthcare program. As an expat retiree, you can qualify for public healthcare if you are a resident, an employee or self-employed worker in Spain who pays into Social Security or a state pensioner. The same goes if you are recently divorced or separated from a partner who is registered with Social Security. You can also choose to enroll in private insurance to avoid the potential long wait times for public services. Private healthcare in Spain may cost around $200 a month for full coverage.

How to Retire in Spain: Residency

For temporary residency in Spain, you’ll want to get yourself a long-stay visa, or visado nacional. This will allow you to live full-time in the country and provides way more benefits than a tourist visa. A long-stay visa allows you to work, study, retire or live in the country for an indefinite amount of time. You’ll need to live in Spain at least six months out of the year to maintain your visa. You must also renew the visa annually.

Since you’re probably looking for a relaxing retirement in Spain that doesn’t include clocking in and out, you can instead apply for a residence visa, or visado residencia. This visa does not permit you to work in the country. You will need to prove that you have the means to support yourself and any dependents while you live in Spain without working. You can do this by providing evidence of a certain minimum monthly income like pensions and investment statements. Typically, you’ll need to prove you’ll have at least roughly $2,500 and $532 per dependent coming in each month.

To get your visa process started, visit your local Spanish embassy or consulate. Each application can cost around $200 in fees.

Bottom Line

SmartAsset: How to Retire in Spain

Spain offers a ton of great cities to settle down in during your golden years, no matter whether you want a more Mediterranean, mountainous or urban retirement. Wherever you end up, don’t forget to get your residency and tax affairs in order. Also be sure you’re saving enough now to avoid any hiccups in the future. Finally, to ensure you have a comfortable and fun retirement in Spain, don’t forget to learn Spanish! That way you can really participate in your new community.

Tips for Retirement

  • A financial advisor can help you create a financial plan for you retirement needs and goals in Spain. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
  • Retiring abroad sounds idyllic, but there’s a lot of planning that goes into it. Of course, you’ll have to figure out your visas and tax bills. But beware: it’s really easy to overlook bank fees. If you’re keeping your U.S. bank accounts, double check your bank’s foreign ATM and transaction fees. These fees can typically run around $2.50 per ATM withdrawal or 3% per foreign transaction. While this may not seem drastic, living abroad will allow these charges to pile up and take an unnecessary chunk out of your funds each year.

Photo credit: ©iStock.com/Morsa Images, ©iStock.com/wundervisuals, ©iStock.com/Luxian

Lauren Perez, CEPF® Lauren Perez writes on a variety of personal finance topics for SmartAsset, with a special expertise in savings, banking and credit cards. She is a Certified Educator in Personal Finance® (CEPF®) and a member of the Society for Advancing Business Editing and Writing. Lauren has a degree in English from the University of Rochester where she focused on Language, Media and Communications. She is originally from Los Angeles. While prone to the occasional shopping spree, Lauren has been aware of the importance of money management and savings since she was young. Lauren loves being able to make credit card and retirement account recommendations to friends and family based on the hours of research she completes at SmartAsset.
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