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Everything You Need To Know About Retiring In Spain

Retirement is often referred to as the ‘golden years’, you’ve paid your dues, left the workforce, and now you’re ready to spend your pension money by making the most of your newfound freedom and time. For many, moving to sunnier climes is the perfect way to make the most of the golden years and start a new chapter. However, with a plethora of options, choosing the perfect place to retire in Spain can be tough.

This guide covers everything you need to know about retiring in Spain, from finding the best regions for retirees, the cost of living, taxes, and transferring your pension, we’ve got you covered.

woman on bicycle

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 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.

Non-EU Citizens

If you aren’t an EU citizen, 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 are able to live, study, work, and retire in Spain. It’s an indefinite visa and must be renewed annually. In order 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 (€6,000) 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. The 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

Don’t forget that 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.

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 definitely 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 this Forbes article, Spain is not only cheaper than much of Europe, but healthcare is also 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. Barcelona and Madrid are the two most expensive cities in Spain to rent. In Madrid, you can expect to pay around €900 - €1000 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. Cities such as Seville, Malaga, and Las Palmas in the Canary Islands offer much cheaper rental options than the major cities.

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 out €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 fork out about €300 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, so get to know what’s in season and avoid imported goods to keep costs down.

Dining Out

Eating out in Spain is a must and 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. Eating out can cost you anywhere from €7 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 off the menu. Tipping isn’t so common in Spain, but 10% is a reasonable amount to tip for a sitdown meal (more if you really enjoyed the meal or service).

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.

Spanish Paella

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 extremely 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.

As we have already seen, 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 that 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 in Spain

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 benefits in Spain is known as the ‘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. For context, a prescription inhaler costs around 25 cents in the pharmacy with a health card.

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 huge number of banks in Spain, about 136 currently operating, to be precise. 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 handier –especially if you choose to live away from major towns or cities–, but 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 these 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 an address. If you are asked to provide translated copies of documentation, always pay 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. And you can open your account in under 5 minutes online. Of course all operations are done online as well. If you do not need a Spanish mortgage to purchase your Spanish property Bueno is perfect for you.

Applying for a NIE (‘Número de Identificación de Extranjero’)

No matter what type of banking you decide to go for, you will need to apply for a foreigners’ identity number which is known as a NIE (‘Número de Identificación de Extranjero’). This is basically a government-assigned number for foreign residents. Spanish residents have a DNI (Documento Nacional de Identidad) which serves the same purpose, but it’s a plastic card with a photo on it that can also be used as proof of identity.

European citizens will need to apply for a NIE within three months of arriving and non-European citizens will usually get theirs along with their residency.

When you apply for a NIE, you will usually firstly receive a piece of white paper with your name, address, and identification number. This is a temporary number that can be used to open a bank account, get a mobile phone contract, file taxes, put bills in your name, rent a property and so on. The temporary NIE is only valid for three months, after that you will apply for the green paper NIE card which is valid for five years.

You will need your NIE for almost everything in Spain, so make it a top priority when you get settled. To apply for your NIE, follow these steps:

Step One
Firstly, you’ll need to go to a government bank and pay the fee, which is about €11. To pay the fee, you will first need to fill in a payment form called a modelo 790 which can be printed off and filled in, or you can pick up a copy at a local police station. You will be given a proof of payment that you will need to show during the next step.

Step Two
You can choose to make an appointment to apply for your NIE or just arrive at the police station early in the morning and get in line. If you want to book your appointment, go to the official website and select your province from the drop down menu. If you’re an EU citizen, choose Certificados UE or Expedición de tarjeta de identidad de extranjero for non-EU citizens and select your date and time.

Step Three
Once you have paid the fee in the bank, head to the nearest police station with the following documents:

  • Your proof of payment from the bank (modelo 790)
  • Two copies of a filled-in NIE EX18 application form (You can pick one of these up at the police station or foreign office (referred to as ‘Oficina de Extranjeros’ or ‘extranjeria’) or print them off from the official website. While there is an English option that you can use as a guide, you will need to submit the form in Spanish
  • Your passport (it should have at least a year of validity)
  • A translated letter outlining the reason for applying for the NIE (for example, a property purchase agreement, mortgage agreement, or other documentation that shows you have financial interests in Spain)
  • Two photocopies of your passport
  • Two small passport photos
  • Visa or landing card (non-EU citizens)

It’s a good idea to bring any extra documentation you have just in case. If you have proof of address such as a bill, and a second form of photographic identification (e.g. driver’s licence), this might come in handy.

Things To Remember
If you haven’t booked an appointment, there can often be long queues in the police stations and many stations will stop letting people in around 13:30/14:00. Before you go, double-check that you have all the necessary paperwork and check the timetable at your local police station. Get there early to beat the queues. Not all staff in the police stations will speak English, so it’s worth jotting down the main words you’ll need in Spanish to get by.

If you are unsure about what documentation you will need, there are plenty of third-party companies that will help you obtain your NIE for a small fee. You can also apply in the Spanish embassy in your home country before your move or appoint a lawyer to apply on your behalf. Requirements vary across the different regions of Spain, so do some research on what you’ll need in your municipality in advance.

Check out this handy article to find out more about what a NIE number is and why you’ll need one.

Next Steps
Once you become an official resident in Spain, you will have to register on the Spanish population register known as el Padrón. Once you register at your local town hall, you’ll receive a certificate called the certificado de empadronamiento.

The Top Spots To Retire In Spain

Costa Del Sol

The Costa del Sol is a firm favourite among retirees looking for sunny beaches and mild winters. With 160 kilometers of coastline, there are plenty of beaches and seaside towns to choose from. The Costa del Sol is home to one of the largest communities of expats and English speakers in Spain, many of whom are located around the province of Malaga. In this stretch of paradise, you’ll find upmarket towns like Puerto Banús (Marbella), pretty beach towns like Nerja and Fuengirola, and a wide variety of golf courses and live-in golf resorts.

If you get bored of the beaches and seaside towns, you can also find plenty of other options to keep you entertained such as museums, bars, and shopping centres. The old towns of Marbella and Alcazaba in Malaga are steeped in history and you are just a short drive from the beautiful mountain towns of Mijas, Ronda, and Juzgar. You’ll find a bustling melting pot of expats and you can even join the many excursions and trips run by local expat clubs to explore other parts of Spain and Morocco.

The Canary Islands

The Canary Islands are another top pick for expats looking for sunny beaches and a relaxed way of life. Just 60 miles away from the Moroccan coast, winters on the islands usually have temperatures around 20C, meaning you can enjoy outside living all year. You’ll find the biggest concentration of expats on the main islands of Tenerife, Fuerteventura, Gran Canaria, and Lanzarote, but there are small communities of expats on La Palma, La Gomera, and El Hierro.

Costa Blanca

Costa Blanca in the south-east of Spain is a beautiful stretch of coastline that runs from Denia (further north, near Valencia) to Pilar de la Horadada (further south) with Alicante as the capital city. It boasts 200km of glistening beaches, coves, and pretty seaside towns. The Costa Blanca is jam-packed with things to do, from swimming and snorkelling, to cultural activities and hiking, there’s no risk of boredom in this Spanish paradise.

There is a thriving expat community in the Costa Blanca region, with a large concentration of Norwegian expats around the towns of Torrevieja and L’Albir. You’ll come across Norwegian restaurants, clubs, churches, and even Sjømannskirken parishes in the area. Other popular expat destinations on the Costa Brava include the stunning towns of Javea, Calpe, Santa Pola, Benidorm, and Guardamar del Segura. If you are looking for something with a more local vibe, the little seaside towns of Cabo Roig, Dehesa de Campoamor, and Torre Horadada have a much more Spanish population. Much like Costa del Sol, the weather stays mild all year round, with slightly hotter summers, averaging 29C.

If you’re looking for a livelier expat community, Benidorm and Torrevieja are probably the two busiest towns in the area. If you are craving something a little more laid-back, there are around eighteen smaller towns and villages in the area which have a smaller expat community and that much-coveted relaxed Spanish lifestyle.

Mascerat Spain

Costa Del Azahar

As you move up the Spanish coast, you’ll hit the less well-known Costa del Azahar. This stretch of coastline in the province of Castellón is often called the Orange Blossom Coast and it boasts 120 kilometres of beaches, coves, and coastal towns. Although it’s just a one-hour drive from nearby Valencia, this coastline of Spain is still quite unknown and is relatively unpopulated compared to other areas on the Spanish coast. Having said that, thanks to its excellent weather (some of the best in Spain), up and coming expat community (those looking for something a little more peaceful), and affordable prices, Costa del Azahar is quickly becoming a top pick for expats. You will find small, retired expat communities in the cities of Torreblanca, Benicassim, Oropesa, and La Llosa.

Valencia

Valencia has been a firm favourite for retired expats for quite some time now and it’s not surprising since it strikes a great balance between a coastal beach town and a bigger city with plenty of culture. With its affordable prices, great weather, and great services, Valencia has something for everyone. For those days when you don’t fancy hitting the beach, you can stroll around the city centre, enjoy its famous paella, take a visit to the spectacular arts and sciences museum, or enjoy the street music all year round.

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 the locals, but 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. The south of 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.

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