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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

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. The right advisor can help you figure out your tax burden and file your taxes properly. SmartAsset can pair you with an advisor in your area with our quick financial advisor matching service. That way, you can be comforted knowing your advisor is qualified to help manage your finances.

How to Retire in Spain: Housing and Healthcare

How to Retire in Spain

Your cost of housing will depend largely on where you decide to settle down. Settling down in a one-bedroom in a big city like Madrid can set you back about $900 in rent each month. Move outside of the city, however, and you’ll find rent prices that can reach as low as $450. Renting or buying a home in less popular cities will also help you save some money on housing. Because most retirees end up in Madrid, Barcelona, Valencia, San Sebastián, Alicante and Málaga, they encounter higher prices. Check out the other cities Spain has to offer if you’re trying to save.

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.

The Takeaway

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

  • 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.
  • Saving and planning for retirement isn’t always easy, especially if you’re handling all your statements and balances on your own. In that case, consider enlisting the help of a professional advisor. When looking for an advisor, be sure to ask each advisor these questions to get the best idea of what each one can offer.

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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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