Table of contents
Retiring in Portugal usually means moving on the D7 visa, which needs a pension or similar income of €920 a month or more in 2026, then living under ordinary Portuguese income tax, since the old NHR break closed to new registrations in 2024. The three decisions that matter most come early: how your pension will be taxed, what happens to your US or UK healthcare, and whether your income covers a realistic budget rather than the visa minimum.
This guide takes those decisions in order for American and British retirees, with the official rules behind each one and the points that still need a professional’s view.
Retiring in Portugal: your first-year plan
Most of the hard-to-reverse choices fall before your first Portuguese tax year ends.
- Check your income against the D7 and gather a year of pension statements.
- Decide on healthcare cover before you give up anything at home, especially Medicare Part B.
- Work out your pension tax under the US or UK treaty, since most movers become Portuguese tax residents in their first year.
- Budget for your chosen city, not the visa minimum.
- Apply for the visa from home, then attend your AIMA residence appointment in Portugal.
The retirement visa: the D7
The D7 is Portugal’s visa for retirees and people living on their own income, and its income bar for 2026 is €920 a month, tied to the Portuguese minimum wage. The threshold rises by half for a spouse and by 30% per child, and the income must be stable and regular, so pensions, rent and dividends can all count (Ministry of Foreign Affairs).
US and UK consulates also ask for funds in Portugal: €11,040 for a single applicant, or a year of minimum wages. Our full guide to the D7 visa covers the documents, steps and fees.
How your pension is taxed in Portugal
You become tax resident after more than 183 days in the country within any 12 months, or once you hold a home there you intend to keep as your habitual residence (article 16), and Portugal taxes your worldwide income, pensions included, at mainland rates of 12.5% to 48% in 2026 (article 68). The non-habitual resident (NHR) regime closed to new registrations from January 1, 2024, apart from a narrow transitional group (tax authority leaflet). Its replacement, IFICI, covers listed professional activities and excludes pension income (IFICI guidance).
Which country taxes each pension depends on the tax treaty, and the US and UK treaties differ. Retirees comparing countries may also look at Italy, which offers foreign pensioners a 7% flat tax in small southern towns.
| Pension type | US retiree (US–Portugal treaty) | UK retiree (2025 UK–Portugal treaty) |
|---|---|---|
| State pension | US may tax Social Security; Portugal may also tax it and credits US tax (art. 20 and 25) | Pensions taxable only in the country of residence (art. 17); the State Pension isn’t named in the text and HMRC hasn’t published a view |
| Private and workplace pensions | Portugal taxes them (art. 20); US citizens still file and report them in the US | Taxable only in Portugal (art. 17) |
| Government-service pensions | Taxable only in the US, unless you’re resident in and a national of Portugal (art. 21) | UK-only, except for someone who holds Portuguese and not British nationality, when both may tax (art. 18) |
Sources: the US–Portugal convention and the 2025 UK–Portugal convention, which applies in Portugal from January 1, 2026.
What the table means in practice
For a British retiree with a workplace pension, the change is simple: Portugal taxes it and the UK doesn’t. For an American on Social Security, both countries keep a claim, and how the credit nets out depends on your citizenship and income, so this is the point to get advice before you move. US citizens also keep filing US returns every year, which our guide to moving from the USA covers.
Healthcare after 65
Your residence permit gives you the right to use Portugal’s public health service (SNS), but neither Medicare nor most UK cover follows you automatically.
For Americans, original Medicare generally doesn’t pay for care outside the US (Medicare). Keeping Part B costs $202.90 a month in 2026, but dropping it and re-enrolling later usually adds 10% to the premium for each full year you went without, typically for as long as you have Part B, with limited exceptions (Medicare penalties). If there’s any chance you’ll move back, weigh that before cancelling.
For Britons, people receiving a UK State Pension may be entitled to an S1, which gives access to state healthcare in Portugal funded by the UK (GOV.UK). You then register at your local health centre for a user number. British movers will find the wider checklist in our UK relocation guide.
About 1.67 million SNS users had no family doctor in mid-2026, according to press reports of SNS data, so private health insurance is worth pricing. Get quotes for your age before you budget, since premiums and exclusions for older applicants vary.
Getting your pension paid in Portugal
US Social Security can be paid straight into a Portuguese bank account, and British pensioners there still get the yearly State Pension uprating. Portugal is on SSA’s list of countries for international direct deposit (SSA). Portugal is also on the GOV.UK list of countries where the State Pension is increased each year, unlike places such as Canada and New Zealand (GOV.UK).
Exchange rates still matter: a pension paid in dollars or pounds buys more or less each month as the euro moves, so leave a margin.
A realistic retirement budget
A retired couple renting a two-bedroom flat should expect to spend about €2,100–€2,600 monthly, well above the D7 minimum of €1,380 for a couple. That range comes from INE median rents and average household spending, set out in our cost of living in Portugal breakdown, with Porto and the Algarve at the lower end and central Lisbon at the top.
Add private health insurance if you want faster access, a car if you settle outside the cities, and flights home. The D7 threshold is a legal floor, not a measure of comfort.
Where retirees choose to live
The Algarve and Madeira draw retirees for their climate, and Lisbon’s coast for its services. Faro averages 455 mm of rain a year and Funchal 20.0 °C, while Faro district had more than 167,000 foreign residents at the end of 2025. Mid-sized cities such as Coimbra and Braga offer rents under €10 per m². Our comparison of where to live in Portugal sets the places side by side.
Staying for good
After five years of legal residence you can request a permanent permit, provided you show basic Portuguese, means and accommodation and have no serious criminal record (AIMA). Naturalisation now requires 10 years (7 for EU and CPLP citizens) and includes a language and culture test (Lei Orgânica 1/2026). Before that, unjustified time away of six consecutive months, or eight months altogether while a permit is valid, can cost you the permit under the Foreigners Act, which matters if you plan long summers at home; AIMA can authorise longer absences if you ask first.
Frequently asked questions
What retirees ask most before moving.
How much money do you need to retire in Portugal?
For the D7 visa, a monthly €920 in 2026 plus savings at US and UK consulates. A couple living comfortably should expect €2,100–€2,600 monthly, varying by city.
Is NHR still available for retirees?
Not for new arrivals. NHR closed to new registrations from January 1, 2024, apart from a narrow transitional group, and the IFICI regime that replaced it doesn’t cover pensions.
Is my US Social Security taxed in Portugal?
The US–Portugal treaty lets both countries tax it, with Portugal crediting US tax. The net result depends on your citizenship and income, so get advice.
Is my UK pension taxed in Portugal?
Under the 2025 treaty, private and workplace pensions are taxable only in Portugal once you’re resident. Government-service pensions stay taxable in the UK for British nationals.
Does Medicare work in Portugal?
Generally no. Original Medicare doesn’t cover care outside the US, so you’ll rely on the SNS or private insurance.
Can British retirees use the NHS in Portugal?
Not the NHS itself, but UK State Pension recipients may be entitled to an S1 for state healthcare in Portugal.
Retiring in Portugal works best when the money questions are settled before you go: confirm your pension clears the D7 with room to spare, map how each pension will be taxed under your treaty, and decide on healthcare before giving up cover at home. Then choose a city your budget suits; the Portugal relocation guide walks through the move itself.
Sources
- Lei 23/2007 (Foreigners Act), consolidated text
- Residence visa: necessary documentation
- IRS Code, article 68 (rates)
- Non-habitual resident: registration leaflet
- Ofício Circulado 20276/2025 (IFICI)
- United States–Portugal income tax convention
- 2025 UK–Portugal double taxation convention
- Medicare: travel outside the U.S.
- Avoid late enrollment penalties
- International direct deposit countries
- Living in Portugal
- Countries where the State Pension is increased each year
- Lei Orgânica 1/2026 (Nationality Law amendment)
- IRS Code, article 16 (tax residence)
- Migration and Asylum Report 2025
- Climate normals 1991–2020
- Permanent residence permit (art. 80)
This guide is general information, not legal, tax or financial advice. Immigration and tax rules change often and depend on your circumstances. Check the official sources above and speak to a licensed professional before you apply or move. Read how we research and review in our editorial guidelines.
