How to retire in Portugal: A complete guide for US citizens

More and more US retirees are choosing Portugal - and for good reason. It's a chance for a fresh start with a lower cost of living and a better quality of life. Known for its mild weather, delicious food, stunning scenery, and rich culture, Portugal offers a relaxed and energetic lifestyle.

Best of all? It's more affordable than many other European countries and has health system that provides universal access to high-quality care. No wonder it's become such a popular retirement destination.

Whether you dream of the sun-drenched beaches of the Algarve or the historic streets of Lisbon, there's a place in Portugal to suit your style. In this guide, we'll cover everything you need to know - visa requirements and the best places to live.

Why retire in Portugal?

Choosing the perfect place to retire in Portugal is one of the most exciting steps in your move. While Lisbon and Porto are popular choices, there are many other incredible cities and regions to explore. Each offers its charm, lifestyle, and benefits.

1. The Algarve
   If you're dreaming of coastal living, the Algarve is a top choice. Located in the south, this region is famous for its sunny weather, stunning beaches, and laid-back vibe.
2. Lisbon
   For those who love an urban lifestyle, Lisbon is the perfect choice. As the capital of Portugal, it's a vibrant mix of modern life and rich history. You'll find excellent healthcare, endless cultural activities, and a thriving international community.
3. Porto
   Smaller and more affordable than Lisbon, Porto is a gem in northern Portugal. Known for its riverside views, historic charm, and world-class wine, Porto offers a blend of authenticity and modernity.
4. Cascais
   Just 30 minutes from Lisbon, Cascais is a picturesque coastal town with an upmarket feel. It's renowned for its natural beauty, luxury homes, and easy access to Lisbon's amenities.
5. Silver Coast
   Are you looking for something truly unique? You can have a balance of authentic Portuguese living, beautiful beaches, affordability, and strategic location between Lisbon and Porto.

Wherever you settle in Portugal, the country's affordable cost of living, excellent healthcare, and welcoming culture make it a fantastic choice for a fulfilling retirement.

How to qualify to retire in Portugal

There are a few key requirements you'll need to meet before you move. Here's what US citizens need to know:

1. Valid passport
Make sure your US passport is valid for at least six months beyond your intended stay in Portugal.

2. Proof of sufficient funds
Portugal requires you to prove that you can support yourself financially during your retirement. This could mean:

• Proof of passive income (such as pensions or investments).
• Proving that you have enough money in the bank to cover your living expenses.

3. A clean criminal record
You'll need to provide a criminal record check showing no serious offenses, both from the US and any other countries you've lived in recently.

4. Health Insurance
Although Portugal has an excellent public health system (SNS), most expats will need private health insurance when they first arrive. This will cover you until you're eligible for public healthcare.

5. Residency requirements
To maintain your residency, you'll usually need to spend at least 183 days a year in Portugal. The exact requirement depends on the type of visa you have.

Portugal retirement visa for US nationals

Portugal offers several visa options, with the Golden Visa and the D7 Passive Income Visa being the most popular. Let's take a look at both and their requirements.

Golden Visa

The Golden Visa has become a popular option for retirees looking to settle in Portugal. While it was originally created to attract foreign investment, it's now a top choice for those with significant financial resources. This visa offers a quick route to residency and even the possibility of citizenship in the future.

Key benefits:

• Once approved, you can obtain residency.
• Travel freely throughout the Schengen area, which covers most of Europe.
• You can bring your spouse, children, and even dependent parents with you
• After five years of residency, you can apply for Portuguese citizenship.

To qualify for the Golden Visa, US citizens must meet certain investment requirements, including one or more of the following options:

• Venture capital funds: Capital transfers of €500,000 or more into qualifying venture capital funds that have no connection to real estate.
• Job creation: Creating at least 10 full-time jobs in Portugal.
• Scientific research: Capital transfers of €500,000 or more for investment in research activities at public or private scientific research institutions.
• Cultural and artistic support: A minimum capital transfer of €250,000 toward artistic production, or the preservation and recovery of national cultural heritage.
• Business creation: Investment of €500,000 or more to establish a commercial company within Portugal, with the obligation of creating five permanent jobs.

D7 Visa

The D7 visa, also known as the passive income visa, is perfect for retirees and people who have a steady income but don't want to make big investments. If you rely on income from things like pensions, social security, rental properties, or dividends, this visa could be the right choice for you.

Key benefits:

• Unlike the Golden Visa, the D7 doesn't require a large investment.
• The D7 visa allows you to apply for residency and later citizenship - without a large financial commitment.
• Once you're a resident under the D7 visa, you can take advantage of Portugal's public healthcare system.

 

To qualify for the D7 visa, US retirees must show that they have a minimum monthly income. The exact amount depends on how many people are in your family, but here's a general idea:

• 1st adult (applicant): 100% of the current minimum wage (€870) = €10,440/year;
• 2nd or more adults: 50% of the current minimum wage (€435) = €5,220/year;
• Children and young people under 18 years old and adult children in charge: 30% of the current minimum wage (€261) = €3,132/year.

These figures are subject to change, so check the latest requirements. Income can come from pensions, social security, rental income, or investments.

To apply for a D7 visa, you'll need to provide

• Proof of income
• Proof of accommodation in Portugal
• A clean criminal record check

Once approved, you'll receive a residence permit that can be renewed. After a few years, you could even qualify for permanent residency or citizenship.

Getting an NIF and a bank account in Portugal

Once you've decided to retire in Portugal, there are a few important steps you need to take. First, you'll need to obtain your Número de Identificação Fiscal (NIF), which is your Portuguese tax number. You'll also need to open a local bank account. This will help you manage your finances, pay bills, and handle everyday expenses while living in Portugal.

Getting a Número de Identificação Fiscal (NIF)

The NIF (Número de Identificação Fiscal) is an important part of life in Portugal. It's like a Social Security Number (SSN) in the US, and you'll need it for a lot of things - like signing a lease, opening a bank account, or filing your taxes. Here's what you need to know:

How to get your NIF:

1. To get an NIF, you'll need a valid passport (or other form of ID), proof of your address in Portugal (such as a utility bill or rental agreement), and a document proving your residency status (such as a visa or residence card).
2. You can apply for the NIF at the Serviço de Finanças (Tax Office), which can be found in most towns and cities. You can also hire a service provider or tax consultant to help you for a fee (PortugalTaxes is the local partner from TFX and can offer such a service)
3. If you're a non-resident, you must appoint a tax representative (usually a lawyer or accountant) to apply on your behalf. For residents, the process is straightforward and is often done in person at the tax office. You'll usually receive your NIF on the same day or within a few days.

Opening a Portuguese bank account

If you are retiring in Portugal, opening a local bank account is a must. It will simplify your day-to-day transactions, help you pay your bills in euros and will be essential for receiving pension payments or transferring money.

To open an account, you will need:

• Your NIF;
• an identity document (passport or residence card);
• proof of address (utility bill or rental agreement);
• proof of income (e.g. pension statement or payslip).

Some banks may also request a reference from your previous bank or an employment contract if you plan to work in Portugal.

You can open an account at most major banks in Portugal, such as Millennium BCP, Santander, CGD, or Banco BPI. Many banks offer accounts specifically for expats, and some even have English-speaking staff to help you.

Renting vs. buying property

There are several important factors to consider before deciding whether to buy or rent a property in Portugal. Let's break down the pros and cons of each option:

Renting a property:

• Renting gives you the freedom to move around without a long-term commitment. This is especially useful if you are new to Portugal and want to explore different regions or neighborhoods before settling in.
• Renting usually involves less initial outlay than buying. 
• As the tenant, the landlord is responsible for most repairs and maintenance. 

Buying a property:

• Buying property in Portugal can be a good long-term investment, especially in places like Lisbon, Porto, or the Algarve where property values are expected to rise over time.
• Owning your own home gives you a sense of stability. You won't have to worry about fluctuating rents or that the landlord might sell the property.
   

Which option is best for you?

If you're just starting in Portugal and aren't sure where you want to live in the long term, renting is a safer option. This will give you time to get used to the local culture, laws, and lifestyle without the risk and commitment of owning a property.

If, however, you've already found the perfect place and want to stay here for the long term, the choice is obvious. Just don't forget to factor in all the costs, including property taxes and ongoing maintenance.

Cost of living in Portugal

The cost of living in Portugal is quite affordable compared to other Western European countries. For a comfortable lifestyle, the average monthly expenditure for a single retiree is typically between €1,500 and €3,000. Here's a breakdown of common expenses:

• Housing. Rent for a one-bedroom apartment in Lisbon or Porto typically ranges from €1200 to €1,700 per month. In smaller towns or rural areas, rent can be much cheaper, often between €800-€1200.
• Utilities. Monthly utility bills are usually between €150-€300, depending on the size of the property and how much you use it.
• Food and eating out. Expect to spend between €300 and €400 on groceries. Eating out in a local restaurant will usually cost around €10-€20 per meal.
• Healthcare. While public healthcare in Portugal is affordable and subsidized, many expats opt for private health insurance. This can cost between €50 and €150 per month, depending on the plan.

Tax considerations for US citizens retiring to Portugal

Double tax treaties

As a US citizen retiring in Portugal, it is important to understand how your income will be taxed. Fortunately, the Double Taxation Agreement (DTA) between the US and Portugal prevents double taxation by determining where your income is taxed - either in Portugal or in the US.

How the DTA works:

• Tax residents pay tax on worldwide income. Americans keep filing a US tax return reporting also worldwide income 
• Pensions and Social Security. US private pensions and Social Security are generally taxed both in the US and in Portugal, but the DTA allows tax credits or exemptions to avoid double taxation.
• Government Pensions. The DTA allows that, in most cases, US Government pensions are exempt from taxation in Portugal.
• Investment income. Dividends, rental income, and capital gains may be taxed in both countries, but the DTA offers credits.

It’s important to get professional help from a tax expert in both jurisdictions to mitigate a possible Double Taxation.

Portuguese tax rates

Portugal has a progressive tax system (13%-48%).

Reporting requirements to the IRS

Even if you live in Portugal, as a U.S. citizen you are still required to file an annual tax return with the Internal Revenue Service (IRS). Here's what you need to know about the filing requirements:

1.  Foreign earned income exclusion (FEIE)
If you earn income while living in Portugal, you can claim the foreign-earned income exclusion. This will allow you to exclude up to $130,000 of foreign-earned income from US taxes (for 2025). Note, however, that the FEIE only applies to earned income - such as wages earned at work - and not to passive income such as pension or rental income.

2.  Foreign Bank Account Reporting (FBAR)
If you have financial accounts in Portugal (or any other country) and the total balance of those accounts exceeds $10,000 at any time during the year, you must file a Foreign Bank Account Reporting (FBAR). This statement must be filed annually with the Financial Crimes Enforcement Network (FinCEN).

3. Filing US taxes
You are still required to file a U.S. tax return annually and report all of your worldwide income, including:

• US pension;
• social security;
• foreign income from sources such as investments or rental property.

Tax residence in Portugal

When you retire to Portugal, one of the most important things you'll need to find out is your tax domicile. This determines how and where you're taxed. 

In Portugal, the tax year follows the calendar year and you will be considered a tax resident if you meet at least one of the following criteria:

• Spending more than 183 days in Portugal in a 12-month period.
• Having a permanent home in Portugal.

Once you qualify as a tax resident, you'll be subject to Portuguese tax rules, which may include some special benefits for pensioners.

Healthcare for retirees in Portugal

Portugal's healthcare system is one of the key benefits for retirees considering relocating to the country. 

It offers universal coverage through the Serviço Nacional de Saúde (SNS), the public health service, as well as a robust private healthcare sector.

Public Health Service or Serviço Nacional de Saúde (SNS)

All legal residents of Portugal, including retired people, are entitled to public healthcare through the SNS, regardless of nationality. Once you have established tax residence, you can access these services.

The SNS provides a wide range of medical care, including general consultations, hospitalization, specialist appointments, surgery, and emergency care. It also covers preventive care such as vaccinations and check-ups.

Healthcare under the SNS is heavily subsidized by the Portuguese government, making it extremely affordable compared to the US.
 

NOTE! 

Although costs are low, patients are usually required to pay small fees, called “taxa moderadora”, for various services:

• Doctor's consultation: Approximately €10-20.
• Hospitalization and surgery: Depending on the service, hospital admission and treatment fees can also range from €10 to €50, with exceptions for specific cases.

If you are a resident and have your NIF and proof of address, you can register at your local Centro de Saúde (health center). 

Once you've registered, you'll receive a health card (Cartão de Utente), which gives you access to public health services.

Private healthcare

Portugal has a well-developed private healthcare sector, offering quality care in modern, private hospitals and clinics.

Many expatriates choose private healthcare to avoid longer waiting times in the public system and to have more flexibility in choosing healthcare providers and treatment times.

Private healthcare is more expensive than the public system. For example, a private doctor's consultation can cost between €50 and €150, and surgery or hospitalization can be much more expensive, depending on the complexity of the procedure and the private facility.

Many expatriates choose to take out private health insurance to cover these costs. Premiums typically range from €50 to €150 per month, depending on the level of cover, age, and health.

One of the biggest advantages of private healthcare is quick access to medical services. Private hospitals and clinics can offer same-day consultations and faster appointments for surgery or specialist treatment.

Steps to a successful retirement in Portugal

This article was revised on 14 Jan 2025 by Pedro Gaudencio from Portugal Taxes