Moving to Portugal for FIRE: How To Retire Early Abroad

After launching our blog, I noticed a significant trend: Portugal appears to be a hub for the Financial Independence Retire Early (FIRE) movement. Our analytics reveal a high number of visits from Portugal, and Google Trends from last year confirms this finding. There is a strong interest in personal finance, budgeting and investing among the Portuguese audience. Many are drawn to this beautiful country by the promise: “Quem não poupa um tostão, não terá um milhão” (He who doesn’t save a penny, will never have a million). The affordability of everyday expenses, combined with a lower cost of living, draws many to Portugal with the intention of saving a lot of pennies, to generate millions.

In this post, we will explore several key factors that make Portugal particularly appealing for those pursuing financial independence and early retirement. From the lower cost of living and favorable tax incentives to the high quality of life and supportive expat communities, we will discover why Portugal is the perfect place to achieve your early retirement goals. We will also take a look at real-life examples and the possible impact on FIRE for a family moving to Portugal. Maybe we should have stayed there directly after our honeymoon in Portugal in 2017. But why is it one of the best places for reaching financial independence? Let’s check.

Geo-Arbitrage

Geographic arbitrage involves relocating to a foreign country with a lower cost of living while maintaining or increasing your income, thereby maximizing your savings and investment potential. There are several locations you could consider, like Costa Rica or Mexico City in latin america. We will focus on Portugal in Europe today.

Portugal offers a relatively low cost of living compared to many other Western European countries making it an ideal destination for this strategy. It also offers a high quality of life through superb healthcare, high quality education, supporting expat community and a lot of financial advantages.

High Quality of Life

Portugal offers a high quality of life, which is a major draw for those planning to retire early abroad. Several factors contribute to this high quality of life:

Excellent Healthcare

Portugal’s combination of high-quality, accessible, and affordable healthcare is a significant draw for those pursuing financial independence and early retirement. The comprehensive public system, supplemented by an extensive private healthcare network, ensures that retirees can enjoy peace of mind regarding their health without the financial burden often associated with top-tier medical care. This makes Portugal an ideal destination for a healthy and fulfilling retirement. Here are some detailed aspects of the healthcare system that make it stand out:

Public Healthcare System (Serviço Nacional de Saúde – SNS)

The public healthcare system (Serviço Nacional de Saúde – SNS) offers comprehensive medical services to residents at a low cost, funded primarily through taxation. This system is accessible to all legal residents, including expats, with primary care centers, hospitals, and specialized medical facilities widely available across the country. The cost of healthcare services under the SNS is minimal for residents. Doctor visits, emergency services, and surgeries are provided at a fraction of the cost compared to the United States and many Western European countries.

For example, a general practitioner visit might cost around €5, and emergency care is often free of charge. Portugal ranks high globally for the quality of its healthcare. The country has well-trained medical professionals, modern facilities, and a focus on preventive care. Portugal’s healthcare outcomes, such as a better life expectancy and extremely low infant mortality rates, are on par with or better than many more expensive healthcare systems. Prescription medications are subsidized, significantly reducing out-of-pocket expenses for patients. This makes managing chronic conditions more affordable for retirees.

Private Healthcare System

For those who prefer or require private healthcare, Portugal offers an extensive network of private hospitals and clinics. Private healthcare providers typically offer faster access to specialists and elective procedures, reducing wait times compared to the public system. Private hospitals and clinics in Portugal are known for their excellent facilities, advanced medical technologies, and high standards of patient care.

Private health insurance plans in Portugal are relatively affordable compared to other Western countries. These plans cover a wide range of services, including specialist consultations, surgeries, dental care, and even alternative therapies. Private insurance allows patients to choose their doctors and healthcare providers, offering greater flexibility and personalized care.

Dental Care

Dental services in Portugal are predominantly provided by private practitioners. Dental care costs in Portugal are lower than in many other Western countries. Routine check-ups, cleanings, fillings, and even more complex procedures like implants and orthodontics are more affordable, making it easier for retirees to maintain good oral health. Dental practitioners in Portugal are well-trained, and the clinics are equipped with modern technology, ensuring high-quality dental care. An example: The cost of braces in Portugal ranges from €500 to €2.000 (for insured individuals), compared to €5.500 in Germany.

Specialized Medical Services

Portugal offers specialized medical services that cater to various health needs. With a growing retiree population, Portugal has developed robust geriatric care services. These include specialized clinics, home care services, and facilities focused on elderly care. The country has numerous rehabilitation centers for physical therapy, post-surgical recovery, and chronic condition management. These services are essential for maintaining mobility and quality of life in retirement. Portugal provides accessible mental health services through both the public and private sectors. This includes counseling, psychiatric care, and support for managing stress and mental health conditions, contributing to overall well-being.

Health Tourism

Portugal is also emerging as a destination for health tourism, attracting individuals seeking high-quality and affordable medical treatments. Portugal is known for its reputable cosmetic and reconstructive surgery clinics, offering procedures at competitive prices. The country boasts numerous wellness retreats and spa resorts that focus on holistic health, offering treatments ranging from detox programs to yoga retreats.

High-Quality Education

For families considering moving to Portugal, the country offers excellent educational opportunities. There are numerous international schools that provide high-quality education at a lower cost of living compared to other Western European countries. This makes Portugal a viable option for families seeking both financial independence and a good education for their children.

International Schools

Portugal is home to numerous international schools that provide high-quality education in various languages, including English, French, German, and Spanish. These schools follow international curricula, such as the International Baccalaureate (IB), British, American, and French systems, ensuring that children receive an education that is globally recognized and respected. The presence of these schools in major cities like Lisbon, Porto, and the Algarve makes Portugal a viable option for expatriate families who want their children to continue their education seamlessly. These schools often boast excellent facilities, small class sizes, and a wide range of extracurricular activities, providing a well-rounded education. Examples are “The British School of Lisbon” or the “Deutsche Schule Lissabon” as the German equivalent. They often start with kindergarden. School costs range around 8.000 up to 17.000 per year.

Public Schools

Portugal’s public education system is also highly regarded. Public schools in Portugal are free for residents and provide education from primary to secondary levels. The curriculum is rigorous, focusing on core subjects such as mathematics, science, languages, and humanities. Public schools follow the national curriculum set by the Ministry of Education, ensuring a standardized and high-quality education across the country. While the primary language of instruction is Portuguese, many public schools are beginning to offer bilingual programs to cater to the growing expatriate community. This makes it easier for expatriate children to integrate and learn the local language while receiving a quality education.

Private Schools

In addition to public and international schools, Portugal has a wide array of private schools that offer high standards of education. These schools are often more affordable compared to private schools in other Western European countries. Private schools in Portugal offer a variety of curricula, including national and international programs, giving parents the flexibility to choose the best fit for their children’s educational needs. Among these are schools that follow the Montessori principles, providing an alternative educational approach focused on self-directed learning, hands-on activities, and collaborative play.

These Montessori schools, alongside other private institutions, emphasize academic excellence, extracurricular activities, and personalized attention, ensuring that students receive a comprehensive and enriching education. For example: The Hypha International School nestled in the beautiful Sintra-Cascais National Park follows the Cambridge Curriculum while bringing in the best practices from Reggio Emilia, Montessori, and Forest School. Costs are around 11.000 per year. You can use the platform world-schools.com to do your further research. 

Higher Education

Portugal’s higher education institutions are renowned for their quality and affordability. The country has a mix of public and private universities and polytechnic institutes that offer a wide range of undergraduate and postgraduate programs. Public universities in Portugal charge relatively low tuition fees compared to other Western countries, making higher education accessible to a broader population. Universities like the University of Lisbon, University of Porto, and University of Coimbra are among the oldest and most prestigious in Europe, attracting students from around the world.

These institutions offer programs taught in English, particularly at the postgraduate level, catering to international students and expatriates. Portugal also has strong research and development sectors, providing opportunities for students to engage in cutting-edge research and innovation. Tuition fees at ULisboa (Universidade de Lisboa) for Bachelor’s and Master’s programs range around 1.000 to 1.500 Euro per academic year for local students/citizens or EU/EEA students.

Extracurricular Activities and Sports

Education in Portugal goes beyond academics, with a strong emphasis on extracurricular activities and sports. Schools, both public and private, offer a wide range of activities, including music, arts, drama, and various sports, ensuring that students develop holistically. Portugal’s favorable climate allows for year-round outdoor sports and activities, such as soccer, tennis, swimming, and sailing. These opportunities promote physical health, teamwork, and personal development, contributing to a well-rounded education.

Special Needs Education

Portugal is committed to inclusive education, providing support and resources for students with special needs. Schools are equipped with specialized staff and facilities to ensure that all students receive the education and support they need. The country’s policies on inclusive education aim to integrate students with special needs into mainstream education settings, fostering an environment of acceptance and diversity.

Vibrant Culture, Community and Pleasant Climate

Rich Historical Heritage

Portugal’s history is deeply rooted in exploration and maritime achievements. The country’s historic sites, such as the Belem Tower and Jeronimos Monastery in Lisbon, reflect its significant past. Museums across the country, like the Calouste Gulbenkian Museum and the National Museum of Ancient Art, showcase Portugal’s rich art and cultural heritage. Historic towns such as Sintra and Óbidos offer a glimpse into Portugal’s medieval history with their well-preserved castles and charming cobblestone streets.

Diverse Architectural Styles

Portugal’s architecture is a blend of various styles, reflecting its diverse cultural influences. The country is known for its Manueline architecture, characterized by ornate, maritime-inspired details. The Gothic monasteries, Baroque churches, and Moorish castles scattered across the country provide a visual feast for history and architecture enthusiasts. Modern architecture also thrives, with contemporary designs by renowned architects like Álvaro Siza Vieira adding to the country’s dynamic cityscapes.

Vibrant Festivals

Portugal’s festivals are an integral part of its cultural identity, offering vibrant celebrations throughout the year. The Lisbon Carnival, with its colorful parades and lively music, is a highlight of the city’s cultural calendar. The Festa de São João in Porto, marked by fireworks and street parties, showcases the country’s festive spirit. Religious festivals, such as the Festas dos Santos Populares, celebrate the patron saints with traditional music, dancing, and food. These festivals provide a deep connection to Portuguese traditions and offer a unique experience for residents and visitors alike.

Exquisite Cuisine

Portuguese cuisine is renowned for its fresh ingredients and flavorful dishes. The country’s culinary delights include seafood, such as bacalhau (salted cod) and grilled sardines, which are staples of the Portuguese diet. Pastel de nata, a delicious custard tart, is a must-try for anyone visiting Portugal. Local markets and restaurants offer a variety of traditional dishes, providing an authentic taste of Portuguese culture. The country’s wine regions, particularly the Douro Valley, produce world-famous wines, including Port and Vinho Verde, enhancing the culinary experience.

Welcoming Expat Community

Expats in Portugal find it easy to integrate into the local community due to the friendly and welcoming nature of the Portuguese people. The expat community is diverse, with significant numbers from countries like the UK, France, Germany, and the United States. Cities like Lisbon, Porto, and the Algarve have well-established expat networks that provide support and resources for newcomers. These networks often organize social events, language classes, and cultural tours, making it easier for expats to settle in and connect with others. These communities are invaluable for newcomers and enhance the attractiveness of Portugal for those pursuing the FIRE lifestyle.

Multicultural Environment

Portugal’s diverse expat community contributes to the vibrant social scene. International residents bring their cultures and traditions, enriching the local culture and fostering a multicultural environment. Language exchange groups, international schools, and expat clubs provide platforms for cultural exchange and community building. This multiculturalism is evident in the variety of restaurants, festivals, and events that celebrate different cultures, adding to the vibrancy of Portuguese life. You can also see this in the fact that English is almost established as a second language, especially in cities.

Natural Beauty and Outdoor Activities

The natural beauty of Portugal offers endless recreational opportunities. The country’s coastline provides stunning beaches for relaxation and water sports. The Algarve, with its golden sands and clear waters, is a popular destination for sun-seekers. Inland, the scenic landscapes of the Douro Valley and the Peneda-Gerês National Park offer opportunities for hiking, cycling, and exploring nature. These outdoor activities promote a healthy and active lifestyle, which is essential for a fulfilling retirement.

Social and Community Life

Community life in Portugal is centered around communal activities. Local markets, cafes, and public squares are gathering places where people come together to socialize and enjoy everyday life. The café culture is strong in Portugal, with locals and expats alike spending time in cafes, enjoying coffee, pastries, and conversations. This social atmosphere fosters a sense of belonging and community.

Pleasant Climate

Portugal boasts a mild and pleasant climate, with good weather, long, warm summers and short, mild winters. The coastal areas, in particular, enjoy a Mediterranean climate, making it an ideal location for outdoor activities year-round. The sunny weather and beautiful landscapes contribute to an active and healthy lifestyle, which is important for maintaining overall well-being in retirement. The average temperature in the winter months fluctuates between 8-18 degrees Celsius. On sunny days, it often gets warmer than 20 degrees – in winter! This is very mild compared to other European countries such as Germany or Eastern Europe.

Recreational Opportunities

With its beautiful coastlines, mountains, and countryside, Portugal offers a wide range of recreational activities. Whether it’s surfing in Nazaré, hiking in the Peneda-Gerês National Park, or exploring the vineyards of the Douro Valley, there’s always something to do. The country’s natural beauty and outdoor activities promote a healthy and active lifestyle, which is essential for a fulfilling retirement. Imagine early retirement while relaxing on the beach with the whole family.

By considering these factors, it’s clear why Portugal is a top choice for those seeking a high quality of life in retirement. The combination of excellent healthcare, pleasant climate, affordable living, vibrant culture, recreational opportunities, and high-quality education makes it an ideal destination for achieving financial independence and enjoying a fulfilling retirement.

Safety

Portugal is consistently ranked as one of the safest countries in the world, providing peace of mind for residents. The country boasts low crime rates, particularly in comparison to other Western European nations. Violent crime is rare, and the majority of criminal activity involves petty theft, which is more common in tourist areas. The Portuguese police force is known for its efficiency and presence, further enhancing the sense of security.

Additionally, the local communities are friendly and welcoming, contributing to a safe and supportive environment. For retirees and families, this high level of safety is a significant advantage, making Portugal an ideal place to live. The combination of a peaceful society, effective law enforcement, and a strong sense of community ensures that residents can enjoy their daily lives without undue concern for their personal safety. Portugal is in the top 10 safest countries in the world! Portugal is considered being the 7th safest country in the world and 5th in Europe (Global Peace Index Report 2024).

Real Estate Investments

Real estate investments in Portugal were particularly attractive for investors in the past decade. With property prices still relatively low compared to other Western European countries, investing in real estate here can provide substantial returns. The demand for rental properties is rising, fueled by both a growing expat community and an increasing number of tourists.

Popular areas like Lisbon, Porto, and the Algarve offer diverse options from city apartments to coastal villas. For instance, house prices range around 500.000 Euro (3+ bedrooms, 2+ bathrooms, 250+ square meters). Apartment prices range around 200.000 Euro (2+ rooms, 1+ bathroom, 60+ square meters). Investments into a rental property in these regions not only promise good rental yields but also potential for capital appreciation. Additionally, the Golden Visa program incentivizes real estate investment by offering a pathway to residency for non-EU citizens who invest in property, further boosting the market’s appeal.

Tax Advantages

Portugal offers a plethora of tax advantages, making it a prime destination for those pursuing financial independence and early retirement. Here are two examples.

Tax Advantages for Stocks and Funds

One of the standout attractions is Portugal’s favorable tax policies for foreign residents, particularly under the Non-Habitual Resident (NHR) scheme. This program offers significant tax breaks, making it financially advantageous for retirees and those seeking financial independence. Under the NHR scheme, foreign income, including dividends, interest, and pensions, can be tax-exempt or subject to reduced rates for a period of ten years. This includes tax advantages for stocks or funds, allowing investors to maximize their returns. Such tax incentives are a major draw for those aiming to achieve financial independence, as they enable more efficient growth of investment portfolios.

In contrast, Germany imposes standard tax rates up to 45% on foreign income and a flat rate of 26.375% on dividends and interest. These tax savings in Portugal can increase disposable income and investment returns, accelerating the path to financial independence.

Crypto Regulations

For the more venturesome within the community Portugal might also stand out for its favorable cryptocurrency regulations. The country does not tax cryptocurrency transactions, which is a significant advantage for investors looking to include digital assets in their portfolios. This regulatory environment provides more flexibility and growth potential for crypto investments, attracting a tech-savvy and forward-thinking demographic to Portugal.

Residency Programs

If you’re from the Eurozone you just need an official registration to migrate to Portugal. But Portugal has made it significantly easier for non-EU citizens to relocate and establish residency. This streamlined process is a major draw for individuals from countries like the United States and Canada who are seeking long-term or permanent residency as part of their Financial Independence Retire Early (FIRE) plan. Here are several ways Portugal facilitates this:

Golden Visa Program

The Golden Visa program is one of the most popular residency schemes in Portugal. It offers a pathway to residency for non-EU citizens through various types of investments, such as:

• Real Estate Investment: Purchasing real estate worth at least €500,000 (€400,000 in low-density areas) qualifies an individual for the Golden Visa.
• Capital Transfer: Transferring at least €1 million into a Portuguese bank account or approved investment.
• Business Investment: Creating at least 10 new jobs in Portugal or investing €350,000 in a Portuguese company.
• Scientific and Technological Research: Investing €350,000 in scientific research or technology.

The Golden Visa allows holders to live and work in Portugal, travel freely within the Schengen Area, and apply for permanent residency and citizenship after five years, provided they meet the residency requirements.

D7 Visa (Passive Income Visa)

The D7 Visa is designed for retirees or individuals with a stable passive income. To qualify, applicants must demonstrate that they have sufficient financial means to support themselves in Portugal without needing to work. This can include:

• Pension Income: Proof of receiving a pension that meets the minimum income requirement.
• Rental Income: Income from rental properties.
• Investment Income: Dividends, interest, or other investment returns.
• Savings: A substantial amount of savings in a bank account.

Applicants need to show a minimum income of around 8.460,- EUR per year for the main applicant, plus 50% for a spouse and 30% for each dependent child. For example, a family of 4 needs a monthly passive income of around 1.500 (18.000 per year). That translates to a FIRE portfolio of around 450.000 – following the 4 % rule which we explore in the article A Unique Guide How To Retire Early With Kids The Fastest Way.

As part of the D-7 visa application, you need to purchase private health insurance. A family of 4 can pay as little as 150 Euro per month (!) for healthcare. That is incomparable cheap to many other European countries. The D7 Visa allows for residency and the possibility to apply for permanent residency and citizenship after five years.

Digital Nomad Visa

Portugal has also introduced a visa tailored for digital nomads and remote workers. This visa is ideal for individuals who can work remotely for companies outside Portugal. You can do it like Kristin Wilson, Host of “Badass digital nomads” and go overseas mentor for international living and work remotely while enjoying the benefits of Portugal’s lifestyle, contributing to your financial independence goals. To qualify, applicants must:

• Provide Proof of Remote Work: A contract with an employer outside Portugal, or proof of freelance work.
• Meet Income Requirements: Show a minimum monthly income of at least €1,200.

The Digital Nomad Visa allows holders to reside in Portugal for up to one year, with the possibility of renewal. It also provides the opportunity to apply for permanent residency after five years.

Entrepreneur Visa (Startup Visa)

Portugal encourages entrepreneurship through its Startup Visa program. This visa is designed for entrepreneurs who want to establish or expand their business in Portugal. To qualify, applicants must:

• Have a Solid Business Plan: Demonstrate that their business idea is innovative and has the potential to create jobs in Portugal.
• Show Financial Capacity: Prove that they have the financial means to support themselves and invest in their business.
• Obtain Endorsement: Get their business plan endorsed by a certified incubator or accelerator in Portugal.

The Startup Visa offers residency and the potential for permanent residency and citizenship after five years.

Family Reunification

Portugal also has family reunification policies that allow family members of a resident to join them in Portugal. This process is relatively straightforward and includes:

• Spouse and Children: Immediate family members like spouses and dependent children can join the resident.
• Parents and In-Laws: In some cases, elderly parents and in-laws can also be included.

By offering these various visa options and streamlined residency processes, Portugal makes it easier for non-EU citizens to relocate and enjoy the benefits of living in a beautiful and affordable country. These residency programs are particularly attractive to those pursuing financial independence and early retirement, as they provide flexible and accessible pathways to long-term or permanent residency, allowing individuals to fully integrate into Portuguese life and culture.

Real-Life Costs Comparison: Portugal vs. Germany

To illustrate the advantages of Portugal’s tax policies and living costs, let’s compare it with Germany. As we live here we can tell first-hand how family life really is. This comparison highlights how geographic arbitrage can significantly impact your journey to financial independence.

Investments

Costs Of Living

The following table depicts an example snapshot of the daily expenses a normal middle-class family might encounter in Portugal versus Germany, illustrating the generally lower cost of living in Portugal.

Can We Retire Earlier If Moving To Portugal?

Let’s create a forecast comparing the potential improvement of the FIRE date for a typical middle-class family considering the costs of living in Portugal and Germany. We’ll use the numbers from the tables before to illustrate the potential savings and how these savings can impact the timeline to achieve financial independence.

Assumptions for the forecast:

1. Annual income stays at: €60.000, after taxes
2. Investment return: 10% annually
3. Target FIRE number: calculated based on expenses, see down below
4. Actual portfolio value: 100.000

I know, the income staying at 60.000 EUR might seem like a stretch. But let me explain. Maintaining an annual income of 60.000 EUR while moving from Germany to Portugal can be achieved through several strategies, particularly for those with remote work capabilities. Many professionals might be able to continue their current jobs remotely by negotiating remote work agreements with their existing employers. Freelancers and consultants can leverage platforms like Upwork, Freelance, and Fiverr to find clients and projects globally, ensuring a steady income stream.

Additionally, securing a remote job through platforms like We Work Remotely and Remote can help maintain the desired income level. Instaffo an online recruiting company (based in Germany) for talented tech, sales, and marketing people. It directly matches potential employers and employees by certain criteria (including above-average salaries). FlexJobs is a platform to find 100 % remote jobs across the globe and was featured by the Wall Street Journal, CNBC, CNN, USA Today to just name a few. Jobgether is a young platform (“born” during Covid times) that provides only jobs where one is free to choose where, when and how to work.

Another approach is teaching or tutoring online via platforms like VIPKid, iTalki, or Teachable. Lastly, starting an online business or offering digital products and services can provide significant income opportunities while enjoying the benefits of living in Portugal.

Annual Expenses Comparison

Savings Calculation

Forecast: Time to Reach FIRE Number

By moving to Portugal and taking advantage of the lower cost of living, this middle-class family could achieve financial independence approximately 9 years earlier than they would in Germany. This significant improvement in the FIRE date is primarily due to the substantial differences in annual living expenses and the resulting higher savings rate in Portugal. The monthly contribution in Portugal would be €1.500 higher compared to Germany (€2.563 vs €1.063).

Conclusion

Portugal’s combination of a lower cost of living, favorable tax incentives, high quality of life, supportive expat communities, and various investment opportunities make it a prime destination for those pursuing financial independence and early retirement. With all these factors, many find themselves saying, “Quem não poupa um tostão, não terá um milhão” (He who doesn’t save a penny, will never have a million), embracing Portugal as the perfect place to achieve their FIRE goals.

As we bid farewell, I hope I’ve been able to shed some light on the vibrant culture and welcoming community of Portugal, helping you see why it’s an ideal destination for achieving financial independence and early retirement. Embracing a new country can be an exciting journey, and every step you take towards integrating into Portugal’s rich cultural tapestry brings you closer to a fulfilling and enriched life.

Remember, choosing the right place to retire is a journey, and Portugal offers a blend of history, culture, and affordability that makes this journey worthwhile. Best of luck on your relocation adventure, and feel free to share your experiences and tips in the comments below! Stay safe and keep exploring, friends!

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