When Amon and I were on the path to achieving financial independence, we had an important choice to make. We knew we wanted to settle down and retire early in one of two countries: Spain and Portugal. As you probably know by now, we chose Portugal, which is where we live today with our two daughters. We also spent some time living in Spain when we were younger.
So how did we come to that decision? Today I’m going to break down our decision-making process by comparing our experiences in Spain to those in Portugal based on different criteria, and why the latter appealed more to us as an early retirement destination. If you’re considering a similar move in the future, I hope our experiences can help you make the right decision for you.
When it comes to feeling welcomed by the locals, Portugal wins. Though people in Spain are definitely friendly, Portugal actually comes out on top as the most welcoming country in all of Europe! Moving from the US to Portugal (compared to the US >>> Spain) felt so easy, almost as if we were having our hands held throughout the relocation process.
Finding housing, opening a bank account, etc, was so straightforward even though we couldn’t speak Portuguese. Most information could be found in English, which helped enormously. This also leads me to our next criteria…
Once again, I have to choose Portugal, even though technically learning Spanish was easier for us than Portuguese! That’s because living in Portugal is much easier for foreigners who can’t speak/read the language at all, compared to living in Spain. Even in obscure rural areas, you can find English speakers, which unfortunately can’t be said for much of the Spanish countryside.
However, learning Portuguese is likely to be harder for US speakers than Spanish, since it’s so much easier to access Spanish classes and resources. This is something you should consider if learning the local language is important to you.
Overall, Spain is more culturally diverse than Portugal, which is something Amon and I really appreciate. In Spain, 90% of people are of Spanish descent, compared to Portugal where 95% of people are Portuguese. To some people, 90 to 95% probably doesn’t sound that diverse, and you’d be right.
But much of the foreign population lives in urban areas, so if you’re visiting a major city in either country you don’t feel like you’re only 5%+ of the population as much as you would in rural areas. If living in a more diverse place matters to you, a major city in Spain would be the best option.
The Visa Process
This one has to go to Portugal! When we arrived here our visa process was an absolute breeze. Every step was in English so there were no translation issues, the government asked zero follow-up questions, and overall we had no problems.
Getting a Spanish visa, however, was another story. It’s a complicated process, so much so that some people choose to hire locals to guide them through it because it’s too confusing to do alone. On the other hand, I’m positive pretty much anyone can get a Portuguese visa on their own.
For Amon and me, taxes are a big deal. As early retirees who live off our investments, tax incentives were one of the things we focused on when looking for a country to live in. In this category, Portugal is a clear winner.
Currently, both of us hold a D7 visa and are approved for non-habitual resident status. The NHR is a tax scheme that exempts us from being taxed on our investment income, including dividends, interest, and rental income. Needless to say, it’s an incredible incentive.
Spain has its own incentives. Specifically, the Beckham law (which came about when soccer player David Beckham moved to Spain for the sport). It allows people who come to Spain to work to be taxed at a flat rate of 24%, up until you earn $600,000. If you don’t fall under the law, you’re taxed progressively up to 45%. It’s not bad, but we definitely favored Portugal’s scheme.
Considering the global rankings for healthcare, both countries are pretty close. Spain ranks at number 6, and Portugal at 12. Although Spain is technically ranked higher, we chose Portugal for an important reason: language.
In Portugal, English is spoken throughout most hospitals. We’ve always been able to receive good treatment and understand exactly what treatment we are receiving. When we’ve visited hospitals in Spain however, there were times when no one around us could communicate in English. We chose Portugal because we felt more comfortable in the healthcare system, which matters to us.
Cost of Living
It may sound like a cop-out, but I honestly don’t think that one country is better than the other when it comes to living costs. When comparing how we lived in both countries, we spent pretty close to the same amount on daily things. You can go either way on this one.
If you don’t know already, Amon and I are parents to two daughters. A good education system was absolutely vital to us, and both Spain and Portugal had plenty of good international schools. Although Spain has far more (it’s a bigger country), and they are more spread out than Portugal where most schools are concentrated in the major cities. Spain is better in that respect because you can live anywhere. Not so much in Portugal.
We still chose Portugal because we already knew where we wanted to live, and we knew there were good international schooling options for our daughters, so it wasn’t much of an issue for us.
On the 2020 Global Peace Index, you’ll see that Portugal is the 3rd safest country in the world, and Spain the 38th. By living here in Portugal, we’re able to walk the streets wherever we want without issue. We feel safer than we’ve ever felt living in Spain, the US, or even Japan.
Things To Do
There’s so much to do in both Spain and Portugal, but Portugal is a little different. Because it’s so much smaller, it’s easy to live somewhere peaceful in the countryside while only being a 20-minute drive away from a major city. Basically, you can do a lot more in close proximity compared to Spain. Aside from that, I think both countries are on par with each other when it comes to entertainment and recreation.
We love both Spain and Portugal, but we’re happy with the choice we made. I think the criteria we used to make this decision sums up the most important things to consider when you want to relocate to a new country - something that is helpful even if you’re planning to move to an entirely different continent. If you want to read more about our early retirement in Portugal, be sure to check out our blog and YouTube channel at OurRichJourney.