Overnight, I received this question from a reader:
“Kathleen, my husband, 10-year-old son, and I are taking the leap and selling our house to move out of the United States to find a simpler way of life. We are looking into Panama, Ecuador, and Portugal as our potential new homes. I’ve got a bit of research done on Panama and Ecuador; however, I have questions about Portugal.
“You have been providing a lot of information on retiring there. What do you know about the opportunity to live and invest in the Algarve region as non-retired people?
“We are looking into two options—purchasing a bed and breakfast or small hotel or purchasing multiple apartments for rental (either short term or long term, depending on the market). Is this idea feasible as a way to make a living in the Algarve region? We are definitely not ready to retire and would love some feedback on options for income…”
Panama, Ecuador, or Portugal… not a typical list of choices. We’re asked about Panama versus Ecuador all the time… but Panama and Ecuador versus Portugal?
In fact, it’s a more relevant comparison than you might imagine.
Usually when we think of the world’s cheapest places to retire, we think first of key spots in Latin America… and Asia. In the context of lowest-cost best options, we ignore the Continent. For the most part, that’s a reasonable position. The unfortunate consequence is that anyone retiring on a tight budget strikes Europe off his (or her) list unilaterally. No way someone of modest means could ever retire to Europe… right?
We’ve been working hard lately to make the point that it is possible to embrace the best of an Old World lifestyle in retirement even if your budget is what might typically be described as ideal for Ecuador.
So… Ecuador or Portugal? It’s a legitimate choice.
Portugal, specifically this country’s Algarve region, is legitimately one of the cheapest places in the world to retire right now.
How cheap are we talking?
Our correspondent on the ground, Luis da Silva, tempts us with reports of daily lunch specials in some restaurants priced as low as €3.50.
“Avoid restaurants with menus in multiple languages,” Luis advises. “These places are targeting the foreign tourist market. If you want authenticity at a low price, look for the pratos do dia (dishes of the day) signs scribbled on blackboards or papers taped near restaurant entrances. Staff in these places won’t speak English, but you can get by with sign language, a phrasebook, and a friendly smile.”
Of course, you could spend much more than €3.50. This coastal region boasts five-star restaurants, too, where you can feast on some of the freshest and best-prepared seafood in the world.
You could rent an apartment for as little as €450 per month; for €600 per month you could rent well. You could live on as little as €500 per month in addition to whatever you’re spending on rent.
In other words, you could retire to the Algarve with a budget of €1,000 per month. That translates today, thanks to the down-and-out euro, to US$1,100 to US$1,200.
That’s a cost of living you expect to find in parts of Latin American or Asia… not Europe.
Two big advantages of relocating from North to Central or South America are, first, a reduced cost of living and, second, sunshine.
Portugal’s got loads of that, too. This country’s Algarve coast boasts more sunny days than anywhere else in Europe and one of the world’s best year-round climates.
Take that, Ecuador.
The reader who wrote overnight is wise to consider options beyond the typical affordable, sunny, and welcoming locales in the Americas.
Furthermore, she makes a second point that reminds me that we have been remiss in our reporting on the Algarve. We’ve been recommending it as a top retirement haven. It is that, but it’s more, as well. It is, in fact, a great choice for someone in this reader’s position—someone younger, maybe with a family, not ready for retirement, and needing to generate an income.
Not by getting a job. Business bureaucracy and a shrunken post-2008 economy mean that Portugal is not a good choice if you’re looking for employment.
But who wants a job when you could start a business?
“Entrepreneurs,” Luis tells us, “will find that the region’s excellent communications infrastructure, pleasant working environment, and cheap and talented labor force, together with a range of EU and national incentives to encourage start-ups, make this a preferred location for launching a business.”
You’re wondering, dear reader who wrote in overnight, if you could support your family running a small hotel or a bed and breakfast in the Algarve? Sure thing. Could you make a living from a small portfolio of rental properties? You bet.