Can I Retire In Portugal With $200,000 of Savings?

According to the global expat website, Expat Arrivals, “The reasonable cost of living in Portugal has attracted expats from all over the world…..the country is increasingly appealing to more Northern Europeans and Britons who have spied a fine opportunity to stretch their euros and pounds on Portugal’s sun-soaked shores.” Now, you can add to that the Americans who also want to stretch their already strong dollars on those same shores.

Live and Invest Overseas gives Portugal’s Algarve area a B+ in the cost-of-living category of its Annual Retire Overseas Index. (It gets A+ overall.) Live and Invest Overseas founding publisher Kathleen Peddicord thinks this is Portugal’s moment: She says that because Portugal hasn’t yet recovered from the 2008 downturn, the real estate market is still “depressed and undervalued” – in other words, there are bargains to be had for folks without huge savings or pensions.

According to one Lisbonite, “Portugal is a good place for everyone to retire given that it is cheaper, has great food (in terms of nutritional value and taste) and a better climate than most other countries in Western Europe, or the USA and Canada. It is mild to hot but lacks the humidity that, in my opinion, makes the weather in Florida terrible.”

[Prices have been converted from euros at the late October 2017 exchange rate of one euro to US$1.16.]

In order to figure out whether the $200,000 in savings will be enough to retire to Portugal, let’s take a look at the annual cost of living in the Algarve area of Portugal, as calculated by the Retire Overseas Index from Live and Invest Overseas. (The Algarve in the south of the country is particularly popular with expats – at least 100,000 retirees live in that region alone – many of whom are British.) According to the index, rent for an unfurnished, mid-range, one-bedroom apartment; basic groceries for a couple; electricity; water; gas for cooking or heating (not transportation); cable, Internet and telephone (often bundled); entertainment (“eating out twice a week at a local watering hole and two trips to the movies every month), comes to a total of $1,438 per month for a couple.

Writing in US News and World Report, Peddicord says that the cost of living in Portugal is “among the lowest in Western Europe, on average 30% lower than in any other country of the region. A retired couple could live here comfortably but modestly on a budget of as little as $1,500 per month. With a budget of $2,000 per month or more, you could enjoy a fully appointed lifestyle in the heart of the Old World.”

So, if we take Peddicord’s $1,500-a-month figure and apply it to your hypothetical $200,000 savings, you can retire in Portugal for about 11 years on your savings alone.

Chances are, though, you are not going to want to use up your $200,000 in savings to live in Portugal (you want it for the anticipated and unanticipated expenses, for emergencies and for extra travel and fun). If you will be receiving a Social Security check, you won’t have to. In 2017, the average Social Security check for a single person is $1,369; for a couple $2,260. That will make it easy enough for you to get by without decimating your savings account.

And, if you do as Peddicord advises, and set yourself up to do a little work on the side – ”something that connects you to what you like to do” – you will even be able to put some money into savings each month.

With property in Portugal so inexpensive at the moment, you may want to consider buying an apartment with some of your savings and then, with no mortgage, there will be minimal monthly housing costs. That would bring your monthly expenses, using the Retirement Index figure of $600 per month for rent, to just over $800. According to Glynna Prentice, a senior editor of International Living, which also publishes an annual retirement abroad index, you can buy a two-bedroom apartment for under $106,000 in some of the smaller towns in the interior of the country; in Lisbon you can buy one that’s a 10- to 15-minute bus ride from the town center for about $50,000 more.

The best advice for saving money while living in Portugal (or just about anywhere in the world) is to do what the locals do. Shop where they shop, go to the restaurants they go to, avoid tourist-y spots and travel the way they travel.

Because Portugal is a coastal country, seafood is abundant and fresh. Take advantage of that and substitute fish for more expensive meat and poultry. Don’t spend your money on bottled water: As one American living in Lisbon told us: “No one here pays for bottled water – the tap water in Portugal tastes great.” And avoid American fast food: “I paid $50 for three small pizzas from Pizza Hut when I was lazy one Sunday,” the same person said.

Use public transportation and try to avoid owning a car. Gasoline is expensive in Portugal, and Expat Arrivals warns that “some [people] find themselves paying thousands of euros for a rust-bucket on its last legs.” If you want to travel around Portugal or to other European destinations by car, you can always rent one.

Your savings and your Social Security (and/or pension) will go surprisingly far when retiring in Portugal and will let you live comfortably if you plan well. Your expenses will be significantly less than they would be in the United States. Live and Invest Overseas’ retirement index says it best: “To achieve this kind of budget slash in the U.S., you’d likely have to move to an undesirable neighborhood”; in Portugal the low cost still buys a “safe, high-quality life.”