What You Need to Know to Retire in Portugal

If you dream of retiring in Europe, Portugal is worthy of your consideration. It’s one of the most affordable European countries and many people speak English, especially in the main cities and on the coast. There are sunny beaches in the Algarve, wine in Porto and a historic metropolis in Lisbon. What’s more, in recent years the Portuguese government has eased residency requirements and taxes to make the country more appealing to tourists and expatriates. You may be eligible for up to 10 years of tax benefits, which can certainly help extend your retirement savings.

A financial advisor can help you decide if Portugal is a financial fit for your new home.

Cost of Living and Housing in Portugal

Portugal is an increasingly popular retirement destination in large part due to its low cost of living.

On average, the cost of living excluding rent is over 30% lower than in the U.S., according to Numbeo.com.¹ Even if your only income is the average Social Security retirement benefit of $2,071 per month, you could live comfortably in a small city.

However, this would require you to live a bit frugally if you want to reside in a major city like Lisbon. You could also get more bang for your buck if you live outside of a city.

Housing Costs

For housing, in particular, you can expect to pay under $1,050 for a one-bedroom apartment in the center of a big city like Lisbon. Living farther from the city center will save you as much as a few hundred dollars per month. Living out in the countryside can also save you money.

If you do plan to spend years in Portugal, it might even be worth buying your own home. You can find apartments both in and out of the city at a price where your mortgage would be similar to the cost of renting.

For a more comprehensive comparison, the table below breaks down basic utilities, apartment rentals and apartment purchase costs for Lisbon and Porto in Portugal, New York, New York, The Villages, Florida and Savannah, Georgia.

Monthly Cost of Living Comparison: Portugal vs. United States

Costs	Lisbon, Portugal²	Porto, Portugal³	New York, New York⁴	The Villages, Florida⁵	Savannah, Georgia⁶
Electricity, Heating, Cooling, Water and Garbage for 915 Sq. Ft. Apt.	$171	$159	$252	$142	$223
Rent Apt. 1 Bedroom City Center	$1,304	$1,097	$4,295	$1,425	$2,056
Rent Apt. 1 Bedroom Outside City Center	$978	$870	$2,855	$1,000	$1,422
Buy Apt. City Center per Sq. Ft.	$715	$485	$1,716	$251	$215
Buy Apt. Outside City Center per Sq. Ft.	$405	$364	$606	$251	$215

Source: Numbeo, July 2026.

Portugal Visas and Residence Permits

American retirees looking to settle in Portugal typically apply for the D7 Visa.⁷ This is designed for those with passive income like Social Security, pensions or rental earnings.

This visa allows residency if you provide proof of the following:

Sufficient funds
A Portuguese bank account
Private health insurance

After arriving in Portugal, retirees must apply for a residence permit through the Portuguese Immigration and Borders Service (SEF).⁸ This is initially valid for two years and renewable for three-year periods.

U.S. citizens seeking to apply for residency should visit a nearby consulate.⁹ You must complete an application and provide proof of your residency requirements. You will then go through a criminal background check.

After five years of legal residence, retirees can apply for permanent residency or Portuguese citizenship. However, they must first meet the applicable requirements for language proficiency and residency.

To maintain their residency status, retirees must demonstrate ties to Portugal and comply with financial and legal obligations.

Portugal Golden Visa Program

Wealthy non-European Union nationals and anyone outside of the European Free Trade Association can benefit from Portugal’s fast-track golden visa program. This program gives you fast-tracked citizenship in Portugal and free travel to all EU countries.

You can get a golden visa through one of several methods:¹⁰

Real estate investment: Purchase property worth at least €500,000 (or €400,000 in low-density areas).
Real estate renovation: Invest at least €350,000 in a property over 30 years old or in a designated urban renewal area (€280,000 in low-density regions).
Investment fund contribution: Invest €500,000 in a qualified Portuguese investment or venture capital fund.
Job creation: Create at least 10 jobs in Portugal (or 8 jobs in a low-density area).
Scientific or technological research: Invest €500,000 in research institutions.
Cultural heritage donation: Contribute €250,000 to preserving Portuguese arts and cultural heritage.

Many people have gone the real estate route and bought real estate in coastal cities. Portugal has since restricted the purchase of real estate in those cities as well as in Lisbon and Porto from qualifying for the golden visa program.

Access to Healthcare

The National Health Service in Portugal (Serviço Nacional de Saude) provides free healthcare to Portuguese citizens. Unfortunately, Americans aren’t eligible for this free healthcare until they’ve lived in the country for five years and have become permanent residents. (E.U. citizens have access right away.) So you must pay for any health or medical services you use.

As noted earlier, though, you should have health insurance before moving to Portugal anyway. One of the requirements for applying for residence as a retiree is proof that you already have health insurance. Once you live in the country, you can change to a Portuguese private health insurance plan, which tends to be cheaper than U.S. insurance.

In terms of cost, what you pay for private insurance will depend on your age. According to InternationalLiving.com, private insurance, which the middle class and upper-middle class tend to have, can cost as little as 30 euros a month. However, retirees in their 60s, 70s or older, may have trouble getting private coverage. In fact, MGEN is the only insurance company that covers people of all ages, according to International Living.

Taxes For Retirees in Portugal

Portugal typically taxes all income. This includes pension income and income from international sources. However, as mentioned earlier, the Portuguese government has taken steps to make the country a welcoming place for expatriates. This includes something called Non-Habitual Residence (NHR) status. NHR applies to people who have not been tax-paying residents of Portugal in the previous five years.

If you qualify, certain income may be exempt from Portuguese income tax for 10 years, such as:

Income from work
Investments
Capital gains
Pensions
Rental income.

Qualifying for NHR can save you a considerable chunk of change, so it is worth looking into. If you have specific questions about how to apply or whether you can apply at all, talk to an expert, such as a financial advisor who specializes in international tax law.

Bottom Line

Portugal offers the best of both worlds if you’re looking to retire abroad. It’s a beautiful, European destination that is a cheap country to retire.

This is why it has become one of the world’s most popular destinations for expats and retirees. A tax initiative specifically for foreigners could also allow you to save money on taxes for up to 10 years.¹¹

To retire in Portugal, you must apply for residency and submit proof of requirements. The process may take some time, but it is straightforward. The application requires you to provide a passport, proof of a regular income and proof of health insurance. You will also have to submit to a criminal background check. While this process may sound like a hassle, it will be worth it when you’re kicking back and enjoying your golden years in European style.

Tips to Help You Afford Retirement

As you start to plan for retirement, you should consider speaking with a financial advisor who can help prepare you for your golden years abroad. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, begin now.
For some people, the value of your Social Security benefit may be enough to cover your costs of living abroad. You can estimate your benefit amount with this Social Security calculator.
Whether you want to retire comfortably abroad or in the U.S., both an IRA or a 401(k) plan will offer you tax benefits and help you grow your retirement savings with compound interest.