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Understanding the retiring in Portugal pros and cons is essential before making a long-term move. Portugal continues to attract retirees from around the world thanks to its mild climate, low crime rates, welcoming communities, and relaxed pace of life. For many, it offers a rare balance between affordability, quality healthcare, and everyday comfort.
Most retirees enter Portugal through the D7 Visa, also known as the Passive Income Visa. As of 2025, applicants must show a minimum passive income of €870 per month, making it one of the most accessible retirement visas in the EU.
However, there is one crucial update every retiree must understand. The NHR (Non-Habitual Resident) tax regime is no longer available for new applicants in 2025. This means that foreign pension income will now be taxed under Portugal’s standard progressive rates. The removal of this regime significantly impacts long-term financial planning for expats.
This guide breaks down the retiring in Portugal pros and cons, covering lifestyle, healthcare, residency options, and the new tax landscape so retirees can decide whether Portugal still aligns with their financial and personal goals.
(Article Updated December 2025)
Table of contents
Pros: The Unchanged Benefits of Retiring in Portugal
When weighing the retiring in Portugal pros and cons, it is clear that many of the country’s core lifestyle advantages remain unchanged. Despite recent tax reforms, Portugal continues to rank among Europe’s most attractive retirement destinations.
Below are the benefits that retirees consistently value most when considering long-term life in Portugal.
Exceptional Safety and Community
Portugal ranks among the safest countries in the world on the Global Peace Index, essential for peace of mind and a strong sense of stability. Locals are known for being warm and friendly, and the country hosts large, well-established expat communities. You will find American, British, and Canadian retirees dotted around the country, making integration feel smoother and more supported.
Affordable Cost of Living (Outside Major Cities)
When comparing the cost of living in Portugal with North America or the UK, the difference remains significant. Portugal is approximately 37% cheaper than the USA and 35% cheaper than the UK. As a result, retirees can enjoy a high-quality lifestyle on a modest budget.
A couple can live comfortably on a monthly budget of around $2,500–$3,000 outside Lisbon and Porto. This is largely due to lower rent, food, and healthcare costs.
Quality & Accessible Healthcare
Portugal’s public healthcare system (SNS) is reliable, modern, and very affordable for residents. While new arrivals must maintain private insurance until gaining full access, private healthcare remains a low-cost option by international standards. It usually costs €40–€100 per month. Many retirees choose to keep a private plan for faster appointments and a wider choice of English-speaking professionals.
Favorable Climate
With a Mediterranean climate and more than 300 days of sunshine per year, Portugal is ideal for retirees who prioritize outdoor living. For retirees who dream of coastal walks, days on the golf course, or trying out new cafés, the weather supports an active, healthy lifestyle year-round.
These strengths continue to solidify Portugal’s status as one of Europe’s most appealing retirement destinations, even as new tax rules reshape the financial equation.
Cons: Navigating the Challenges
While Portugal offers an extraordinary lifestyle for retirees, it also presents structural and financial realities that must be considered. The recent tax reforms have added another dimension to consider. Below are the key disadvantages of living in Portugal that matter most for retirees evaluating the long-term picture.
Taxation Post-NHR (Major Drawback)
This is the most significant change affecting retirees. With the end of the NHR regime for new applicants in 2025, foreign pension income is now taxed under Portugal’s standard progressive IRS rates, ranging from 14.5% to 48%.
This shift removes the previous zero-tax or flat-rate pension advantages and can noticeably impact annual retirement income, particularly for Americans, Canadians, and Europeans with sizeable pensions.
Bureaucracy and Slow Administrative Processes
Portugal is warm, peaceful, and friendly, but it’s not necessarily efficient. Whether it’s scheduling AIMA appointments, renewing residency, obtaining your NIF, or dealing with municipal offices, administrative processes are slow, manual, and often inconsistent. Many documents must be submitted in Portuguese, which can make the process feel overwhelming without legal assistance.
High Housing Costs in Major Hubs
Lisbon, Cascais, and even parts of Porto have become significantly more expensive due to tourism, digital nomads, and long-term expat demand.
Retirees should be prepared to pay €1,500–€2,000+ for a central one-bedroom apartment, which can strain even well-planned retirement budgets. More affordable options exist inland, but this comes at the cost of convenience and amenities.
Lack of Central Heating & Poor Insulation
One of the most common complaints from retirees is the unexpected cold during winter. Many older Portuguese homes lack central heating and proper insulation, leading to chilly indoor temperatures and higher utility bills from space heaters or AC units.
Language Barrier Outside Tourist Areas
While English is common in Lisbon, Porto, and the Algarve, life outside major expat zones requires at least basic Portuguese. Everyday tasks, from pharmacy visits to utility issues, are easier with some language knowledge. Integration is absolutely possible, but it requires effort for those settling in smaller or more traditional towns.
These challenges don’t outweigh the benefits for most retirees, but they are crucial for setting realistic expectations and planning your retirement transition effectively.
The D7 Visa: Financial Requirements for Retirees
Anyone researching the retiring in Portugal pros and cons will quickly discover that the D7 Visa is central to the decision-making process. In 2025, its financial requirements are clearly defined and based on Portugal’s national minimum wage.
Below is a straightforward breakdown of the income thresholds retirees must meet to qualify.
Minimum Income (The Baseline Requirement)
To apply for the D7 Visa in 2025, your passive income (pensions, dividends, rental income, royalties, or other non-salaried earnings) must meet or exceed the Portuguese minimum wage, which is:
- €870 per month, or
- €10,440 per year
This is the minimum amount required per adult applicant.
Savings Requirement (The Financial Buffer)
In addition to ongoing passive income, applicants must also show accessible savings equivalent to 12 months of the required income. For a single applicant, this means demonstrating at least €10,440 in savings
This serves as financial proof that you can support yourself upon arrival, even before local systems are in place.
Adding Dependents
If you are applying with family members, the income and savings requirements increase as follows:
- Spouse: Add 50% of the primary applicant’s requirement. This equals €5,220 extra per year in income & savings
- Children or Additional Dependents: Add 30% for each dependent. This equals €3,132 extra per year per child/dependent
Example (Couple + One Child):
- €10,440 (applicant)
- + €5,220 (spouse)
- + €3,132 (1 child)
- = €18,792/year required in passive income
The same total amount is required in savings.
Proof of Accommodation (Mandatory for Approval)
All D7 applicants must provide evidence of long-term housing in Portugal, typically through one of the following:
- A 12-month rental contract
- A property purchase deed
- A long-term lease agreement validated by local authorities
Short-term rentals (Airbnb, seasonal rentals, hotel stays) are not accepted.
With these updated 2025 requirements, the D7 remains one of the most accessible retirement visas in Europe, provided your income is passive and stable.
Want to learn more about the various residency options in Portugal? Learn more about visa options in Portugal for non-EU citizens.
Cost of Living Comparison: Portugal vs the USA
To fully understand the pros and cons of retiring in Portugal, you have to look beyond lifestyle and compare the actual numbers. For most American retirees, Portugal offers long-term savings, especially in the categories that matter most.
Rent
Housing is where retirees feel the biggest difference. On average, rent in Portugal is 50% to 54% lower than in the United States, even when comparing major cities.
- Lisbon remains far cheaper than cities like Los Angeles, Miami, or New York.
- Smaller Portuguese towns offer one-bedroom apartments for €500–€800, a fraction of U.S. equivalents.
Groceries
Groceries in Portugal are consistently cheaper than in the U.S, working out at roughly 39% lower. This is driven by:
- Local produce
- Lower reliance on processed foods
- Competitive supermarket pricing
A couple who spends $600–$800/month on groceries in the U.S. would probably spend €300–€450/month in Portugal.
Healthcare: A Fraction of U.S. Costs
This is one of the strongest advantages of living in Portugal. Private health insurance for expats typically ranges from €40 to €100 per month, depending on age and coverage.
For comparison:
- U.S. retirees often pay hundreds per month for private insurance
- Deductibles and copays are dramatically lower in Portugal
- Quality of care is high in both the public (SNS) and private sectors
Transportation
Portugal’s urban transport systems are clean, efficient, and cheap:
- Monthly metro/bus pass: €40–€42
- Senior discounts are widely available
- Many retirees live comfortably without a car
This is a major contrast to U.S. regions where car ownership is almost mandatory and expensive.
For retirees comparing living costs in Portugal vs. the USA, the savings across housing, healthcare, groceries, and transportation often total thousands of dollars per month, making Portugal one of the most financially compelling retirement destinations in the world.
Are you considering buying property in Portugal, rather than renting? Discover everything you need to know about purchasing your Portuguese property.
Need Legal Support For Your Relocation?
For many non-EU retirees, the D7 Visa remains a practical route to long-term residence and often plays a key role when weighing the retiring in Portugal pros and cons. Despite recent tax changes, Portugal continues to offer an appealing mix of affordability, healthcare access, and lifestyle stability, all without the need to work or make large investments.
A successful move still depends on careful preparation. Income planning, accommodation arrangements, and correct documentation are essential to meeting Portugal’s D7 Visa requirements and avoiding delays.
Those ready to take the next step can benefit from professional guidance throughout the process. Completing the form below is the first step towards planning a well-structured and confident retirement in Portugal.