By LiveAlgarve on 20th December 2024 - 2-3 m. reading time 

Retiring abroad offers the promise of a relaxed lifestyle, favourable climate and financial advantages. Portugal, particularly the Algarve region with towns like Lagos, Portimão, and Carvoeiro, has long been a top choice for retirees. Approaching 2025, several factors enhance its appeal, including recent pension increases, cost of living considerations, and updated visa and tax regimes. In this week’s blog, we assess whether, as a retiree, you should consider homes for sale in Portugal.

Pension Increases

Recent adjustments in pension schemes across various countries have bolstered retirees' incomes, making relocation to Portugal more financially viable:

• United Kingdom: The State Pension has increased by 8.5% for the 2024/2025 financial year, providing retirees with additional income to support their lifestyle abroad.
• United States: The Social Security Administration has announced a 3.2% cost-of-living adjustment (COLA) for 2024, enhancing the purchasing power of American retirees.
• European Union: Several EU countries have implemented pension increases to keep pace with inflation, ensuring that retirees maintain their standard of living.

Cost of Living in Portugal

Portugal is renowned for its relatively low cost of living compared to other Western European countries. In the Algarve region, expenses are particularly manageable:

• Housing: Renting a one-bedroom apartment in Lagos averages around €900 per month, while in other areas it is possible to find for closer to €700.
• Utilities: Basic monthly utilities, including electricity, heating, cooling, water, and garbage, for an 85m² apartment, cost around €150.
• Groceries and Dining: Local markets and restaurants offer affordable options, with a meal-for-one at an inexpensive restaurant costing about €11.

Visa Options for Retirees

Portugal offers visa options tailored for retirees:

• D7 Visa (Passive Income Visa): Designed for non-EU citizens with a stable passive income, such as pensions. As of 2025, the minimum income requirements are:
  • Single applicant: €870 per month.
  • Additional 50% (€435) for a spouse.
  • Additional 30% (€261) for each dependent child.

Applicants must also provide proof of accommodation in Portugal and have a clean criminal record.

• Non-Habitual Resident (NHR) Tax Regime: The NHR regime, which offered tax benefits to foreign retirees, was officially discontinued for new applicants on January 1, 2024. However, individuals who applied before this date can continue to benefit from the regime for up to ten years.

Why the Algarve?

The Algarve region is home to a beautiful coastline, pleasant climate and welcoming communities – just some of the reasons why it remains a top destination for retirees. Towns like Lagos, Portimão, and Carvoeiro offer a blend of natural beauty, cultural heritage, and modern amenities, making them ideal for those seeking a fulfilling retirement.

Conclusion

With recent pension increases enhancing financial comfort, a reasonable cost of living, and accessible visa options, Portugal continues to be an attractive destination for retirees in 2025. The Algarve region, in particular, offers a quality lifestyle that combines affordability with rich cultural experiences.

Please note that visa requirements and tax regimes are subject to change. It is advisable to consult with legal and financial professionals for personalised advice.