In 2011, at age 41, I took early retirement from my six-figure career in law. My wife retired with me four years after I left her job as a nurse.
When he retired in 2015, our portfolio of high-yield stocks and mutual funds was paying approximately $130,000 a year in dividends, which covered most of our living expenses in Washington, DC
That year, we took a family vacation in Lisbon, Portugal, with our daughter, who is now 16 years old. We immediately fell in love with the city.
That’s when it dawned on us: Why not leave the United States and spend our retired lives in Lisbon?
Wasting no time, our family of three packed up our belongings and booked one-way tickets to Portugal. The plan was to rent out our house in the US, reduce our living expenses while living in Lisbon, and then reinvest those savings in more dividend-paying stocks to increase our passive income.
We have been living here for about six years and we are nowhere near ready to leave. This is what we spend per month and why we love living in Portugal:
Portugal is considered one of the cheapest countries live in Western Europe.
On average, compared to life in the US, we have reduced our expenses by 50%. We are lucky enough to own our 1,300 square foot two-bedroom, one-bathroom apartment, which we bought in 2015 for just over €500,000 without a mortgage.
Our favorite Portuguese bargain: Multiple bags of fresh fruits and vegetables. A warm loaf of bread from Gleba Bakery, made with their own homegrown heirloom wheat, is just $4 and worth every penny.
One of our biggest monthly expenses is dining out at restaurants. A typical lunch at Mercado de Campo de Ourique, a gourmet food market, can cost around $16 per person. A glass of wine is $4 extra.
Here is a breakdown of our monthly expenses:
- Medical insurance (for the whole family): $258
- Groceries: $407
- Household Basics: $250
- Transportation (gasoline, car insurance, public transportation): $250
- Housing (property taxes, insurance, maintenance): $430
- Water and electricity: $175
- Telephone and internet: $80
- Going out to eat (10 to 12 meals a month): $600
European taxes tend to be very high, but unlike countries such as France and Italy, Portugal does not impose wealth, inheritance, or estate taxes (although there is a 10% “stamp duty” on Portuguese assets inherited or donated outside the family).
As an expatriate, you are considered a Portuguese taxpayer if you reside more than 183 days in a single calendar year in Portugal or, subject to certain conditions, if you have a permanent residence available for your personal use in Portugal.
And thanks to the non-habitual resident tax regime, foreigners can benefit from a tax exemption (or a reduced tax rate) on most foreign-source income for 10 years.
As US citizens, we are always responsible for US income taxes, but we save on state and local income taxes. Also, our property tax bill in Portugal is a fraction of what we pay in the US.
In addition to Portugal’s national health services coverage, which offers free or subsidized health services to all legal residents of Portugal, my family’s private health insurance through Multicare is comprehensive and affordable.
Our premium is $258 per month, but our plan has a $0 deductible and $16 copays for doctor visits at a private hospital. I once had an overnight visit to the ER that involved multiple tests and consultations; our insurance covered the full cost and I didn’t pay anything other than my copay.
Prescription drug prices also tend to be considerably lower in Portugal than in the US. A generic prescription that would normally cost me $600 a month at home is only $21 in Portugal, for the brand name drug.
Portugal is the fourth safest country in the world, according to the Global Peace Index 2021that considers in its methodology terrorism, violent crimes and political instability, among other factors.
And Portugal News reported that 2020 had the lower crime rates in Portugal since the country began reporting its crime data in 1989.
Beyond the statistics, my family and I feel very safe in every corner of Lisbon practically at all hours. Locals even claim tables at the Mercado by leaving their bags unattended on a chair while they go grocery shopping.
When we first moved here, my wife noticed there are no “cat calls” and she never felt harassed walking down the street. The Portuguese tend to value good manners. “Bem educado” means “educated” in Portuguese, which is high praise.
That said, pickpockets are a real threat in congested tourist areas, so always be on your guard when traveling by tram.
Temperatures in Lisbon range from an average high of 82 degrees Fahrenheit in July to an average low of 47 degrees Fahrenheit in January, which compares favorably with the sweltering heat and snow drifts typical of Washington, DC
In Lisbon, we rarely use air conditioning in the summer. The thick stone of the walls of our apartment helps to moderate the interior temperature. And we never bother with hats or gloves in the winter.
Living abroad has completely changed our perspective and priorities in life. We substantially simplified our belongings when we moved to Portugal. Now we focus much more on how we spend our time.
I try to incorporate downtime into my day and spend a lot of time in nature. Some of my happiest moments are when I am strolling along the seashore at Guincho beach or walking through eucalyptus forests in the hills of Sintra and Colares.
I also take every opportunity to travel with my family. Backpacking around Europe is what our daughter likes most about living in Portugal. She treasures every moment, whether it’s attending a math competition in Geneva or taking a family trip to Seville for the weekend.
alex trias he is a retired lawyer. He, his wife and his daughter have lived in Portugal since 2015. He is the author of the “Investment Pancake” series on SearchingAlfa.com and has published nearly 500 articles on tax planning, investing, early retirement, and where to find the best eats in Lisbon.
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