According to recent data on the website of the USA Social Security Administration, around 1.4 million American retirees receive Social Security payments abroad, and a great deal of them opt to live in Portugal. In 2019, 9,319 American retirees collected Social Security checks in Portugal, according to another data on the government’s site.
Why so many? Well, the country’s low cost of living, mild climate, affordable healthcare costs, and favorable tax regulations play a crucial role in its desirability. Furthermore, the 2020 Global Peace Index states that Portugal ranks the third most peaceful country globally while the US ranked at 121 due to the recent political turmoil there. Portugal also ranked as the second safest in Europe, beaten only by Iceland.
Finally, Portugal also ranks ninth in the Societal Safety and Security domain worldwide.
Why Retire in Portugal?
Retiring in Portugal has many advantages, especially for US citizens. The most prevalent advantage being the cost of living, especially when it comes to healthcare.
According to Numbeo, Portugal’s cost of living is nearly 30% lower than the US, making it an attractive country to US expats. Additionally, around 9% of US expats claim that they move abroad to have a better life quality. Considering how expensive healthcare is in the United States, they are quite right to choose Portugal.
Education also tends to be unbearably expensive in the US, with 43 million adults currently being in debt to student loans and a whopping $1.5 trillion owed in total. While education in Portugal is quite affordable, with public universities costing a meager €872 annually and public schools costing an average annual tuition of €3000.
Furthermore, according to the 2020 report of the EY(Ernst & Young) Attractiveness Survey, Portugal maintains its position as one of the world’s most attractive countries.
The report suggests that the number of Foreign Direct Investment (FDI) projects reached up to 158 in 2019. This means that it doubled the number in the year 2018. Besides, the country “rose to 8th place among the most attractive economies in the European Union for foreign investors, more than doubling its share of projects (from 1.2% to 2.5%)”. The survey also demonstrates that the USA was the largest investor in Portugal in 2019, with 26 projects.
Tax Benefits for US Retirees in Portugal
The Non-Habitual Resident (NHR) Program in Portugal helps beneficiaries get reduced tax treatments on some incomes for ten years, and exemption on almost all foreign incomes.
Additionally, when you qualify for the NHR status, your income from your pensions, investments, rental income, and capital gains will be exempt from the Portuguese income tax. So, this type of tax treatment makes Portugal a more attractive country for retirees.
Many American retirees choose to live in Portugal by either applying for residency or applying for the Golden Visa Program, considering the:
- Favorable tax treatments
- Low cost of living, and
- Safety and favorable healthcare conditions.
COVID-19 Effects in Portugal
COVID-19 has undoubtedly affected the whole world in some way or another.
However, as Miguel Farinha from EY stated:
“There is no doubt that 2020’s pandemic crisis will affect Portugal, but past years’ work and results will be key to ensure that Portugal’s attractiveness for investors stays high, as it is linked to structural “assets” that are leading FDI trends around the world.”
Despite the pandemic, in Portugal, although the estimated GDP rate for 2020 is -9.8% following COVID-19, Lisbon is likely to see a strong price growth (5%+) in 2021. According to Knight Frank, Lisbon is actually already one of only four cities in the world which are expected to see prime price growth in 2020. It even goes further and states that “In Lisbon, Portugal’s handling of the crisis combined with strengthening demand and limited prime supply, will underpin price growth.” Considering the favorable situation in Lisbon, that means that this is an opportune time to apply for the Golden Visa program in Portugal by investing in real estate in such an economically stable and safe country.
