How Much Money Do You Need to Retire in Iceland?

With its vast lava fields, volcanoes and geothermal springs, Iceland’s dramatic landscape is nothing short of legendary. From a financial perspective, Iceland’s recent history is as dramatic as its scenery. During the 2008 financial crisis, which lasted until 2011, Iceland’s three largest banks collapsed within the span of just three days. The house-of-cards effect that followed seemed inevitable. The stock market crashed. With stocks devalued by 95%, most Icelandic businesses soon went bankrupt, and the retirement savings of many Icelanders were threatened when pensions and mutual funds took a massive hit. (For more information, see Iceland’s Near Collapse: What Can We Learn?)

While many other European countries were slow to bounce back from the global financial crisis, Iceland proved to be a poster child for economic recovery. In the wake of its dramatic turnaround, Iceland is far more financially stable than it was just a few years ago.

That doesn't mean Iceland is cheap, but it may be more affordable than you assume. If you’re thinking of retiring in Iceland, here’s how much major expenditures – housing, food, utilities, health care and transport – might cost you. The numbers below are based on 2018 estimates from Numbeo, a crowd-sourced database of global consumer prices.

Surprisingly, rents in Reykjavík, the capital of Iceland, are only slightly higher than the country's average. Figure on spending about $1,600 for a one-bedroom apartment in the center of Reykjavík, while properties outside of the city center average about $300 less a month. The average monthly rent for a one-bedroom apartment in one of the country's city centers is around $1,525, while a three-bedroom apartment averages about $2,370 a month. (For more places to move, see Top Places to Retire to in Iceland.)

Compared to other northern European countries, utilities are fairly affordable – even though Icelandic winters beg you to crank up the heat. Expect to pay about $100 per month for heating, electricity, water and garbage for an average one- or two-bedroom apartment.

If anything might motivate you to kick a Big Mac-a-day habit, it could be the prices at an Icelandic McDonald’s. Expect to pay upward of $13 for a combo meal. At a midrange restaurant, a couple will pay around $95 for a three-course meal, which may seem expensive if you’re moving from Akron, Ohio, though not if you hail from Amsterdam.

Fortunately, eating at home can be much more affordable. Fresh produce and bread are reasonably priced, though meats and dairy products can quickly make your grocery bill soar. Expect to pay about $11 for a pound of beef round and nearly $5 for a gallon of milk – especially if they’re imported. 

With a healthy population, low infant mortality and admirable rates of longevity, Iceland gets high marks for its comprehensive public health system. In fact, it has one of the longest life expectancies in Europe at 82.5 years. While employed expatriates are eligible for virtually free public health services after six months, it’s a bit trickier for retirees. Unlike many countries, such as the United Kingdom and Spain, which offer a choice of public hospitals as well as private hospitals favored by expatriates, all of Iceland’s hospitals are public. 

Do you plan to become a citizen? After seven years of residence, you can apply; a change to the law in 2003 means it’s legal to hold dual citizenship, so you won’t have to give up your native passport. All citizens are eligible for public health care through the Ministry of Health. While private insurance is uncommon, it’s advisable to take out a policy when you arrive – or make sure your American insurance extends abroad. (For more, see: Is My Health Insurance Good Abroad?). Otherwise, the normally worst-case scenario of paying out-of-pocket is hardly dire: A daytime doctor’s visit costs less than $50, according to Expatistan. 

It probably won’t surprise you that your gas bill will double upon moving to Iceland: A gallon costs more than $6.50. That is, if you choose to buy a car. If you live in Reykjavík, forgoing the car is both easy and affordable thanks to the city’s swift, well-maintained bus system, which offers good connections to Keflavík International Airport. The cost of monthly passes (about $103) and one-way tickets ($3.86) is comparable to London’s bus system.

Unlike most European countries, the rugged topography and vast unpopulated areas mean that Iceland has not developed a wide-reaching, comprehensive rail system. To travel long distances, plan on flying. Air Iceland offers good regional connections: Expect to pay about $100 to $200 for a round-trip fare from Reykjavík to the capital of North Iceland, Akureyri.

Unless you’re swimming in cash, retiring comfortably in Iceland will require a solid economic strategy. For instance, you should buy your jeans and athletic shoes back home in the States. Though purchasing a pair of Levi's 501s and a pair of Nike running shoes would hardly be considered a shopping spree in the United States, in Iceland, the total will set you back almost $300. Another pricey item: leather shoes. Better to shop for them while on vacation in Spain or Portugal, both famous for affordable, well-made footwear. In an Icelandic store, a decent pair of men’s leather shoes is nearly $200.

For more information on retirement outside the U.S., check out Plan Your Retirement Abroad.