Oct 29, 2023
Cost of Living in Portugal vs. USA: How far will your retirement dollar stretch?
Portugal is the new hot spot for expats looking for a warm retirement. There are so many things that attract them to this beautiful country—the sunny weather, the pristine beaches, and of course, the welcoming and friendly culture.
Another factor that attracts people to this warm country is the cost of living in Portugal vs USA. It is said that Portugal is much cheaper to live in compared to the U.S. and other Western EU countries. If so, which cities offer a low cost of living while still maintaining a high quality of life? We’ve done the research for you, so let's look into it together.
Comparing the cost of specific expenses in Portugal vs USA
Portugal is the least expensive Western European country, with prices about one-half to one-third lower than its neighboring countries, depending on which city you are living in. And still in 2022, the Institute of Economics and Peace rated Portugal the 6th safest country out of 163 countries in the world.
When directly comparing prices in Portugal to the United States, the picture of how far your retirement dollar will take you comes into focus. Grocery prices are over 50% cheaper in Portugal. How much do you generally spend on groceries in the US? Halve it and see if you can get all your regular groceries with that amount.
Consumer prices come in at 39.63% lower versus the US, but when you add in the cost of rent, those savings increase to 45.59%. That is the equivalent of getting a 45% salary increase. Which is great because lowering your cost of living leaves more in your pocket for fun and leisure.
If you decide to go out to eat, you’ll notice a significant difference in cost, as restaurant prices come in at 46.60% lower in Portugal in comparison to the US. So, whether you are cooking a great meal at home (even with a bottle of local wine), or going out to eat, you are going to spend less in Portugal compared to the US.
Approximate monthly cost for a family
Overall, a family of four can expect a monthly cost of approximately 1,967.03€ ($1,953.85) without rent while living in Portugal. Of course, these costs will vary slightly depending on the city where you live. How does that compare to your monthly costs in the US?
Then there is the reality of health care expenses in the United States. A recent study revealed that one in ten adults in the US have “significant” debt due to medical bills, and that overall, there is over $195 billion in adult medical debt. As a resident in Portugal, health care is virtually free, with small co-pays.
If you decide to pay for private health insurance in Portugal for faster services, the monthly costs are still cheaper than in the US. A comprehensive medical and dental insurance in Portugal costs around 80 euros per month per person.
There is no doubt that when comparing the cost of living in Portugal vs. USA, Portugal wins as the cheaper option. Portugal’s relaxed pace of life makes for a better quality of life too. But what happens when we compare the cost of living between different cities? Let’s look at the cities of Algarve, Porto, Lisbon, and Cascais to compare costs.
Cost of living in Portugal vs USA: which city is cheapest?
Most expats tend to gravitate to the larger cities of Algarve (Lagos and Faro), Lisbon, Porto, and Cascais. They are all brimming with amazing architecture, parks, and museums while still being a short drive to the beaches. But does the cost of living differ between the cities?
Cost of Living in Lisbon
Lisbon is the crown jewel of Portugal. Situated right on the coast, its hills fall right into the ocean, providing spectacular views. Its population is approximately 545,000, but the surrounding metropolis comes in at around 3 million people, making Lisbon the largest urban area in the EU.
But, despite its cultural and historical popularity, and its surrounding nature, the cost of living in Lisbon is still affordable compared to most US cities, especially when taking into account all of what Lisbon offers.
For example, when comparing the average monthly budget for a family of four (not including housing costs), Lisbon came in at around 2,247.64€ ($2,222.42) compared to Porto which was approximately 2,057.80€ ($2034.78). It was also the most expensive of the four cities when looking at basic utilities, such as electricity and gas Lisbon utility bills averaged around 121.36€ ($120) per month, while the least expensive of the four cities for utilities, Algarve, averaged just 101.13€ ($100) per month.
Rent per month for a one-bedroom apartment in the center of Lisbon was higher than a one-bedroom in Cascais. But for a three-bedroom, monthly rent was actually a bit lower in Lisbon than Cascais, at 2,183.33€ vs 1,965.96€ (in dollars, $2,158.83 vs $1,943.90).
Cost of Living in Porto
Porto is the second-largest city in Portugal, with a metropolitan area of around 1.7 million people. It has a small, historical city center, and was proclaimed a World Heritage Site by UNESCO in 1996. It is situated along the Douro River estuary, and it is named after the fortified Port wine, one of Portugal’s most famous exports.
Of the four cities, Porto is the least expensive for a nice meal out, averaging almost 20% less than Lisbon. Utility bills averaged 111.25€ ($110) per month compared to Lisbon's 120.35€ ($119).
When it came to purchasing an apartment, Porto was cheaper. Looking at price per square meter, Lisbon averaged 5,333.45€ ($5,273.59) compared to Porto’s average of 3,413.89€ ($3,375.58). Yet, both were cheaper than Cascais, which averaged 5,375€ ($3,534.88)
Porto also averaged slightly less when it came to the monthly cost of a family of four, not including rent. It averaged 2,057.80€ ($2,034.71), compared to Lisbon at 2,247.64€ ($2,222.42) and Cascais at 2,063.96€ ($2,040.80). .
Cost of Living in Cascais
Cascais is a town in the larger Lisbon district and lies on the Portuguese Riviera, and is a major tourist destination. Its marina is the site of the America’s Cup and draws tourists from all over the world to that event. The municipality has a population of over 214,000.
Not surprising, given its draw as a tourist location and its location along the riviera, property prices in Cascais are the highest when compared to Lisbon and Porto. But, when it comes to monthly costs, not including rent, it’s about the same as Lisbon and Porto. All in all, it is a great place to live.
Cost of Living in the Algarve
Algarve is considered by many to be the most important tourist region in Portugal, as it is the warmest and sunniest part of the country, with beautiful natural landscapes such as beaches, cliffs, and national parks. Its beaches attracted over 7 million tourists in the high season in 2017. It is considered an increasingly desirable place to relocate by European nationals.
And yet, its cost of living is right in line with Lisbon and Porto, though, with its appeal, the cost to rent or buy there is sure to rise.
Conclusion on Cost of Living in Portugal vs USA
As detailed above there are small differences in the cost of living among the various cities in Portugal, so it really comes down to your personal preferences, whether you want a city vibe or more of a beach lifestyle. When comparing the cost of living to US prices, it is likely that you will find Portugal more affordable, regardless of the city you choose.
However, while considering a budget for living in Portugal, it’s important to consider all of the other intangibles as well, such as quality of life. For instance, in Portugal you can expect beautiful mountain countryside, pristine beaches, free education, free healthcare, the safety factor, and friendly and welcoming people. The low cost of living is, in the end, just the icing on the cake.
Want to learn more about moving to Portugal?