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The Work is done, it´s time for the fun!!!

The Work is done, it´s time for the fun!!!

All those years of hard work are rapidly coming to an end and it’s time to retire, you want to retire to the sunshine but where to choose? Spain or Portugal?

We’ve done the hard work for you and compared the cost of living for retirees in both countries; you may be surprised at how big some of the differences are!

 

Let’s imagine, you’re retiring at 62 yrs old, you have savings of £250,000 for the purchase of your house, and a monthly income of £2,500. Let’s see what the best option is!

 

This is the best house you could get for you money in Costa Del Sol. It’s a 3 bedroom, semi detached townhouse, near a golf course. It is in a residential area near Manilva, Malaga and has sea views and a garage. It will cost you ( including 15% buying costs )  £247,840 leaving you  £2,160 of your savings.

 

spainhouse

 

In comparison :

spain02

 

This is the one we found in the Algarve. It’s a 3 bedroom villa on a gated complex in the central Algarve close to Armaçao de Pera. It has 2 pools on the complex and sea views and is near golf courses. It will cost you (including 6% buying costs ) £197,812 leaving you £52,188 of your savings.

 

That’s the house sorted, now what about living costs? The easiest way to compare the cost of living between the 2 countries is to make a list of things we buy, facilities we need and services we use and show them side by side, so that is what you will find below.

 

 

 

Item/Service

Spain

Prices in Euros

Portugal

Prices in Euros

Basic Restaurant Meal per Head

10.00

7.00

3 course dinner, good restaurant

40.00

30.00

Draught Beer

2.00

1.50

Coffee

1.56

1.12

Milk

0.79

0.61

Bread

0.93

1.01

Eggs x12

1.59

1.74

Water 1.5ltr

0.54

0.53

Potatoes

0.89

0.76

Oranges

1.21

1.01

Good Quality Wine

4.00

3.50

Bus Ticket

1.50

1.50

Taxi Fare

3.00 + 1.00 per km

3.00 + 0.50 per km

Petrol per Ltr

1.45

1.55

Cinema Ticket

8.00

6.00

Average Monthly Bills

 

Electric/heating/water/waste

114.12

86.84

Car Tax

92.00

55.00

Monthly Payment for Healthcare

18.00

n/a

Total cost in Euros

302.58

203.17

Total Cost in Pounds Sterling

252.11

169.28

 

 

So as you can see, the cost of living in both countries is considerably lower than the UK, however, Portugal is a third cheaper again than Spain leaving you plenty left over to enjoy that celebrity lifestyle you’ve been dreaming of!

 

Of course to live in either country you need to have money and, again, the tax situation regarding pensions differs greatly between the 2 countries. As a retired expat in Portugal your pensions are exempt from taxes if you make your yearly tax declaration there. If you have income from any source from the UK it is advisable to complete the dual taxation paperwork as there is a tax treaty between the UK and Portugal so you will not pay tax in both countries. As a Spanish resident you will need to do your tax declaration in Spain every year and pensions are taxable at rates of between 24% and 43%.

And finally, what is the situation when you need your house no longer? Firstly let’s look at funeral arrangements. In both countries you can choose to pay for your funeral in advance. This is advisable especially in Spain as, until the money is paid, the Funeral Director will not start the procedures. Funerals in Spain cost, on average, around £3,000 and in Portugal around £2,000. The thing to watch for however is the Inheritance Tax. Whilst it has been abolished in Portugal, on a property of the value used in our example it would be 25.5% in Spain and, if you are a married couple, you must make sure that both names are on the title deeds or, if the husband dies, title on the property will pass directly to the next male in line and not the wife.

 

So there you have it, an up to date, comprehensive comparison of retirement to both Spain and Portugal. I hope we have helped you to make your decision. I have to go now; I need to book my one way flight to the Algarve…..!

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