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Everything You Need To Know About Retiring In Spain

This guide covers essential knowledge about retiring in Spain, the cost of living, taxes, transferring your pension and more.

Why Spain?

Spain is famous for its sunny weather, delicious Mediterranean cuisine and relaxed way of life, so it’s no surprise that there are currently around 6 million foreigners living in Spain. Great weather and gastronomy aside, Spain also boasts an excellent healthcare system, good schools, and a highly rated standard of living.

According to the annual retirement report by Blacktower Financial Management Group, Spain is the second-best European country for retirement in 2021. The report was compiled by calculating the cost of living, life expectancy, crime rates, price of property, and population age.

Spain has a long tradition of expats retiring on its sunny coastline, with thousands of Brits, Germans, Americans, and Scandinavians choosing to call it home. In fact, around 50,000 Norwegians now reside in Spain, which is almost 1% of the population of Norway. Many of these expats come for the good weather and relatively low cost of living, and stay for the culture, community and lifestyle they discover.

Who Can Retire In Spain?

Like any other country, Spain has specific regulations and requirements regarding who can retire in Spain and the process they will need to follow.

EU/EEA Citizens
Since Spain entered the European Union in 1985 and the Schengen area in 1995, EU citizens have been able to retire in the country relatively easily. EU citizens can retire in Spain without a visa or residence permit, this include those coming from EEA countries such as Norway.

Non-EU Citizens
If you aren’t an EU citizen, for example if you are Bitish, you will typically need a visa to retire in Spain. There are two visa options: long-stay visa (visado nacionale) or a residence visa (visado residencia). Let’s look at the difference between the two:

Long-Stay Visa (Visado Nacionale)
The visado nacionale grants visitors temporary residence in the country. With this type of visa, you can live, study, work and retire in Spain. It’s an indefinite visa and must be renewed annually. To qualify for renewal, you must spend at least six months of the year in Spain.

Residence Visa (Visado Residencia)
The visado residencia is the most popular visa for people looking to retire in Spain. Unlike the visado nacionale which allows you to work and study, the visado residencia only lets you reside or retire there. Due to this, it’s much easier to obtain this type of visa. If you can prove that you have enough funds to support yourself during your stay in the country (€7,200) and a private health insurance policy, you should qualify for the residency visa.

For those who plan to retire to Spain and live off their pension or annuity, a residency is often the best choice. This visa is geared towards non-working expats who have a reliable income like a pension and who want to live in Spain for more than three months of the year.

The Spain Golden Visa
There is another way to obtain residency in Spain. The Spain Golden Visa offers residency in exchange for investment. An investor can eventually apply for citizenship through the scheme if the visa holder lives in Spain for six months per year for a period of ten years or more.

The Golden Visa allows holders to travel through the Schengen area without a visa and it also allows your spouse and family to be included in the visa. There is no minimum stay requirement unlike other types of visa such as the visado nacionale.

The Golden Visa is an investment scheme. To qualify for it you must make an investment of €500,000 in real estate, transfer €1 million of capital to Spain, or invest €1 million in business development in the country.

Spanish bureaucracy is notoriously complicated, so it’s always a good idea to seek out help when applying for a visa.

Taxes In Spain

If you spend 183 days (six months) of the year in Spain, you will be considered a tax resident. As a tax resident, you will be required to submit a tax return and pay income tax.

You will typically be eligible to pay Spanish income tax on your worldwide income if you fall under any of the following categories:

Your annual income from employment is over €22,000
You’re self-employed in Spain or own a business there
You take in rental income of over €1,000 a year
You have capital gains and savings income of over €1,600 per year
You are also obliged to declare any assets abroad that have a value of over €50,000.

Spanish Tax Deductions and Allowances
As a taxpayer in Spain, you are entitled to tax deductions depending on your age and circumstances. For those between the ages of 65 and 75, the personal allowance is €6,700, increasing to €8,100 for those over 75.

Wealth Tax
If you have net assets that are worth over €700,000, you will be required to pay wealth tax which is around 0.2 - 2.5%. On top of the €700,000 allowance, if you’re a homeowner you will also be entitled to an allowance of €300,000 against the value of your main home. Note that Madrid and Andalucia do not charge wealth tax.

When dealing with Spanish taxes, we recommend that you seek professional help from a lawyer or accountant as they can get complicated.

How Much Does It Cost to Retire In Spain?

The cost of living in Spain has long been hailed as one of the cheapest in Europe. However, in recent years prices have increased in various areas, especially those with a high number of expats from wealthier countries such as England, Germany, Norway, and Sweden. Where you choose to retire will impact the cost of living you can expect. Moving away from the big cities and most popular coastlines will certainly be cheaper, but some knowledge of Spanish will be necessary to integrate.

Having said that, in cheaper regions of Spain it’s possible to retire comfortably on about €18,000 per year, moving to around €27,000 in pricier areas. According to Forbes, Spain is cheaper than much of Europe, healthcare is excellent and crime is low. If you own a property and don’t need to pay rent or a mortgage, this number could be even lower.

Rental Prices
The cost of renting in Spain changes dramatically depending on the region. For renters, Barcelona and Madrid are the two most expensive cities in Spain. In Madrid, you can expect to pay around €1000 - €1400 per month for a one-bedroom apartment in the city centre. As you move further from the city centre, this could drop to around €600 for a one-bedroom apartment.

In smaller cities such as Valencia or Almeria, you can expect to pay around €600 for a one-bedroom apartment in the city centre, dropping to around €450 outside of the city centre. Popular expats beach towns will cost more than the average rent, expect to pay from €750 for a one bed.

If you decide to look for a place to rent outside of the city centre, make sure that there are good transport options so that you can still move around with ease.

Property Prices
If you plan to purchase a second home in Spain in your retirement, the cost of a property will also vary greatly depending on the region. In Madrid or Barcelona, you are likely to pay €3000-5000 per m², while on the Costa del Sol you can find properties starting around €2,050 per m².

Food And Groceries
Your grocery shop is generally pretty reasonable in Spain if you are buying local produce. Imported goods or “international foods” can get a little pricey. On average you should expect to spend about €4-500 per month for groceries if you buy from the bigger supermarkets such as Carrefour or Mercadona. If you shop at local markets and greengrocers, you’ll find much more affordable fruit and veggies that are in season. Spain has great food resources, it’s well worth getting to know what’s in season and avoid imported goods to keep costs down..

Dining Out
Eating out in Spain is a big part of the Spanish culture. Get used to eating dinner between 8pm and 10pm. There are a lot of great, affordable restaurants all over Spain, especially if you choose Spanish restaurants and look out for a set lunch menu (‘menu del dia’) and offers.

While high-end food is available with associated prices, you can find good quality, reasonably priced food and budget food options. Eating out can cost you anywhere from €10 for your meal up to €25 per person. It’s typical to share food in Spain and order several dishes (‘raciones’) to share with the table. This not only works out cheaper, but also allows you to taste more from the menu. Tipping isn’t so common in Spain, but 10% is a reasonable amount to tip for a sit-down meal (more if you really enjoyed the meal or service). Spaniards often tip 1-2 euro, if they tip at all.

Generally speaking, you will pay for tapas in most parts of Spain, but there are still some areas of Andalucia, such as Granada, that give you a tapa with your drink. While tapas are no longer as common, you’ll usually get some crisps, nuts or olives to nibble on when you order a drink.

Getting around

In the main cities and regions, Spanish public transport is top class. Madrid, Barcelona, Bilbao and Valencia all boast great metro or tram services to get around the city as well as designated bicycle tracks, shared cars and even electric scooters. 

A single metro journey in Madrid will cost €1.50 but look out for multi-journey passes for a better deal. For example, you can buy a ten-journey transport card for €12.20 which can be used on both city buses and metros. 

Keep an eye out for great deals on the high-speed train (the AVE), you can often find cheap tickets on weekdays. The high-speed train is very comfortable and reaches speeds of up to 300km/h, meaning that you can get from Madrid to Malaga in just over two and a half hours.

If you choose a more rural spot, you may want to consider buying or renting a car. Having a car is a must if you want to explore the wild beaches in Northern Spain or the white-washed villages of Andalucia. You’ll also find taxis and Uber services in larger cities which are relatively cheap, starting at around €3.50.

Healthcare In Spain

When preparing for retirement in another country such as Spain, it’s important to understand how the healthcare system works and what healthcare options are available to you. By the time most of us reach retirement, we have at least one chronic health condition that will require us to go to a doctor, hospital, or pharmacy.

Spain’s public healthcare system is renowned for its excellence, ranking seventh in the World Health Organisation’s 2000 index of the best healthcare systems in the world. Taking that into consideration, it’s no wonder why about 90% of Spaniards opt to use the public healthcare system over private healthcare options. However, not all expats who retire there are entitled to free healthcare.

Healthcare for non-residents
Generally speaking, non-residents of Spain will need to work and make social security contributions to be entitled to use the public healthcare system. If you work for a Spanish company on a contract, part of this contribution will be made by the company and if you are self-employed, you will need to make this contribution yourself. Non-residents can also choose to make monthly contributions to get access to public healthcare.

It’s always a good idea to check with your embassy to see what you are entitled to in terms of healthcare. To give you a general idea, here are a few examples of how you can qualify for public healthcare as an expat:

- Employed or self-employed residents who make regular social security contributions
- Residents living in Spain and who receive state benefits (unemployment benefit in Spain is known as ‘paro’)

- Children who are residents in Spain
- Legal residents over the age of 65
- People under 26 years of age who are studying in Spain
- State pensioners

- EU citizens who are temporarily staying in Spain and who have an EHIC card (European Health Insurance Card)
- Those who are recently separated or divorced from a partner who is registered with the Spanish social security system

If you don’t fall into any of the categories above, you may not have the right to public healthcare and will need to take out private health insurance. Most retired expats who are spending part of the year in Spain but aren’t considered residents will opt for private healthcare by either buying a private policy or paying out if and when they need medical assistance. There are a large range of companies that offer affordable private medical insurance policies for retirees in Spain, ranging from €50-200 a month.

Healthcare for residents
If you obtain Spanish residency, you can make the most of the free public healthcare system. For those who qualify, you will need to apply for a health card (‘tarjeta sanitaria’). When you need to go to the doctor, hospital, or pharmacy you will be asked to show this card, but your care will be free except for a small payment towards prescriptions.

Despite being a great healthcare system, because so many people use it, there can be long wait times to see specialists or for non-urgent procedures. Outside of the large expat communities such as the Costa del Sol, Canary islands and Balaerics, you may not always find an English-speaking doctor. Even in major cities like Madrid you should be prepared for hospital staff not speaking English.

Banking In Spain

One of the first things you’ll need to think about before the big move is your banking. There are a large number of banks in Spain, with about 136 currently operating. The national bank is called Banco España. Despite the large number of banking options available, choosing a fully digital bank is not only greener and more convenient, especially if you choose to live away from major towns or cities, it’s also a much cheaper way to send money abroad. Digital banking cuts down on transfer fees, making it a lifesaver if you need to pay bills and manage your finances internationally.

The process you’ll follow to open a Spanish bank account will vary from region to region, but the following are the general documents that you will be required to submit to open an account:

- Proof of identity (passport, driver’s licence)
- Spanish foreigner identification number NIE (more information below)
- Proof of address (a utility bill with your name on it should work)
- Proof of employment status if applicable

The process for opening a bank account as a foreigner in Spain has gotten stricter in recent years, however in some areas you may still only need to provide your passport and your address. If you are asked to provide translated copies of documentation, always pay for the services of a sworn translator to avoid any issues.

Bueno as an alternative to Spanish banks
With Bueno you will get a Spanish IBAN account with close to unlimited usage for a low monthly fee. You can open your account in under 5 minutes online and all operations are conveniently completed online at a time and place to suit you. If you do not need a Spanish mortgage to purchase your Spanish property, Bueno is perfect for you.

Click here to learn more about how to Apply for a NIE (Número de Identificación de Extranjero)

Final Thoughts

Retiring to another country is a big move and can be overwhelming at the beginning. The best way to prepare yourself for the move is to do your research and know when you might need to get some professional assistance. With its sunny climate, culture, and low cost of living, Spain is a retirees’ paradise, but it’s key to choose the best region for you and get a good understanding of how Spanish bureaucracy works beforehand. The best bet is to find some fellow retired expats in the area who have gone through the process, they will be a great source of information. Join Facebook groups in the area to make new connections before you set off.

For those who really want to submerge themselves in the local culture, you may want to look off the beaten track for your perfect retirement spot so you can learn the language and become one of the locals. For others who want to keep some home comforts, there are a host of expat communities where you can find like-minded individuals with similar interests and life experiences to you. Whichever category you fit into, Spain’s got you covered.

Family and community are important concepts for the Spanish, so try to embrace that and get involved in the local community, dine at local restaurants, and get to know the Spanish culture - it’s worth it. If I could offer one piece of advice for expats planning to relocate to Spain, it would be this: don’t expect Spain to operate in the same way as your own country. As the famous Spanish tourism ad said, “Spain is different”. Life here is slower, queues are longer, bureaucracy is more frustrating, and people are louder. That is part of the experience, so embrace it rather than trying to change it. Before you know it, you’ll be saying ‘mañana, ‘mañana (tomorrow, tomorrow) just like the locals.

Frequently Asked Questions

Can I get by in Spain if I don’t speak Spanish?
The short answer is yes. Most Spaniards speak some English, although they are notoriously shy about doing so. In some of the bigger expat areas around Malaga, Benidorm, Alicante, Valencia, Murcia, and the Spanish islands, you can live without speaking a word of Spanish. In other parts of Spain, you might not find it so easy. Whether you choose to live in an English-speaking area or not, learning the basics of the language will always be helpful. Not only does learning the language allow you to interact more with locals, it also helps you to understand the culture more. Give it a go and take some Spanish classes or join a language exchange (known as an ‘intercambio’), it’s worth it.

Which Part Of Spain Has The Best Weather?
Spain has a pretty mild climate all year round, but you’ll find that the Canary Islands have the best year-round weather. Temperatures usually stay between 20 to 27C throughout the year. Southern Spain also has a great climate, but you will find a bigger difference in temperature between summer (it tends to be hotter) and winter (it tends to be cooler). The coldest months of the year in Spain are generally January to March.

Is It Difficult To Meet People As A Retired Expat?
It all really depends on the area you choose to live in, how much effort you put in at the beginning, and what you are expecting. If you want to dive right into a bustling expat community, then plan ahead. Join groups on Facebook and get to know some expats who are already settled in the area, research local clubs for expats and sign up for activities and get chatting to people in your new local bars and restaurants. You’ll be surprised how many people you’ll meet and how much you’ll learn about your new neighbourhood. Embracing your local community and getting involved is the best way to integrate into your new surroundings.

Are Pensions Taxed In Spain?
In Spain, your pension will be taxed as general income, so it will be taxed at a progressive rate.

If I Become a Resident, Can I Transfer My Pension Here?
The answer to this question will depend on the location of your pensions, it varies country to country. Contact your local Spanish embassy to find out how it works for your country.

About the author

Maria, the Bueno Team

As expats, we know Spain and have experienced the ups and downs of owning property in Spain