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Why the Algarve is the Best Place for Your Retirement Home

Why the Algarve is the Best Place for Your Retirement Home

You’ve spent your entire life working hard and living responsibly. Now you’re facing retirement and looking forward to welcoming the next chapter of your life.

Here comes the big question – Where is the best place for your retirement home?

When it comes to retirement, there are many factors to consider. Affordability, cost of living, taxes, amenities, and lifestyle are just some.  The Algarve, Portugal ticks all these boxes.

First place in International Living’s Annual Global Retirement Index 2020 and consistently ranking in the top 10 of Live and Invest Overseas retirement destinations since 2013, the Algarve, Portugal has attracted over 100,000 expats and retirees flocking to the region, seeking sunshine, comfort and welcome tax and residency programs. Keep reading to discover why the Algarve is the best place for your retirement home.

About the Algarve

To set the picture, the Algarve is located in the southernmost region of Portugal. There are over 100 miles of stunning Atlantic coastline, featuring jagged rock formations, lagoons, caves, and world-renowned white-sand beaches.

The name Algarve is derived from the Moorish term Al Gharb, which means “western cape.” The influence of the Moors doesn’t stop with the name, however, as the medieval towns, fishing villages, artistic influences and traditional architecture featuring narrow, cobbled streets is also a throwback to 500 years of Moorish habitation in the 8th through 13th centuries.

The Algarve enjoys year-round sunshine, boasting more than 3,300 hours of sun each year. Summers are hot and dry, while winters are mild and moderate. There are about 50 wet days a year and most of them occur between November and February. The climate is stable throughout the region, with the western part of the Algarve, near the coast, experiencing just 4 to 5 degrees cooler temperatures than the east due to the Atlantic winds.

Quality of Life

Steeped in tradition and with a priority on family, Portugal is one of the safest places in the world for residents and tourists alike, ranking 3rd in the Global Peace Index 2019.

The traditional cuisine offered in the Algarve is not only among the tastiest in the world but the healthiest too. Be prepared to eat food with heavy Mediterranean influences, featuring olive oil, and plenty of fresh fish, vegetables, and fruit. If you like to cook, you will love the options provided to you by the local roadside vendors and open-air markets, offering locally grown fresh fruits, vegetables, and artisanal wine.

There is a vibrant community of ex-pats ready to welcome newcomers with a wide range of group activities and clubs. A major golfing destination, the Algarve features  42 golf courses in less than 100 miles.

Healthcare is of top international standards and medical tourism is a growing industry. Excellent roads, transport, and infrastructure also make getting around simple and easy. There are regional and international airlines available to take you from your Algarve  retirement home to anywhere else in the world.

Tax Breaks

You can enjoy substantial tax benefits and no double taxation on pensions and income derived from abroad with Portugal’s Non-Habitual Resident tax regime (NHR). Passed in 2009, the NHR tax regime provides tax exemptions for foreign pensions and other sources of income for ten years, making Portugal a financially attractive place to retire. Under this regime, you can receive welcome tax breaks, including:

  • A tax exemption on almost all foreign sources of income.
  • Fixed 20% taxation for a period of 10 consecutive years for Portuguese sources of income derived from eligible skilled professions.
  • Tax exemption for gifts or inheritance to direct family members.
  • No wealth tax.

Skilled professions considered high cultural and economic worth are also given generous tax exemptions under the regime as an incentive to attract the top talent to Portugal. Skilled professionals may include:

  • Engineers, architects, designers, and related fields
  • Actors, musicians, and artists
  • Directors, investors, and senior managers
  • Doctors, surgeons, dentists, and psychiatrists
  • Teachers, university lecturers, and science experts

To learn more about the NHR tax regime, read here.

The Cost of Buying Real Estate

Algarve real estate is a valuable commodity that retains its value even in turbulent markets. There is a wide variety of homes available — including everything from multi-million dollar modern villas in a resort community, to charming rustic homes and townhouses. Because there are so many choices, how much you spend on Algarve real estate depends both on the size and style of the structure you’re looking for as well as the location. Generally, upland areas are more sparsely populated and affordable, while the busy coastal areas are more expensive.

One way that many retirees invest in an Algarve retirement home is through the Golden Visa program. This program allows individuals to choose from a range of investment options that provide a pathway to permanent residency and citizenship within 5 years. While thousands of investors have taken advantage of this program since it began in 2012, it has proven to be a boon for the Portuguese economy and enjoys broad support from the country’s political parties. The leading share of Golden Visas have been granted to Chinese nationals, followed by those from Brazil, South Africa, Turkey, and Russia.

To learn more about the Golden Visa Program, read here and download our informative guide.

The Cost of Living in the Algarve

The Algarve features one of the lowest costs of living in all of Western Europe. The cost of living is 30 percent lower than the continental average. A retired couple wishing to live in the Algarve could do so for as little as 1,099 euros a month. A budget of just a little more can give you a nice lifestyle in the heart of the city.

Algarve City Guide

Deciding on a retirement home in the Algarve is one decision. However, deciding which city most suits your tastes and budget is entirely another. There are four cities in Algarve that provide a quality experience for those wishing to own a piece of Algarve real estate. They include:


As the capital of the Algarve, Faro not only gives its visitors and residents a rich taste of history but also appeals to shopaholics as it is the home-base for a number of different brands. In spite of this activity, the city retains a tranquil feel and is surrounded by beautiful and adventurous places to hike and view the plentiful wildlife. The presence of an international airport makes Faro an obvious choice for jet-setters, those with frequent guests, or those who are dividing their time between their retirement property and a home in their resident country.


About 35 minutes east of Lagos and with beautiful water views from the Arade River and Praia Da Rocha beach, Portimao is one of the most laid back cities in the Algarve. The area was once a shipbuilding and sardine-fishing hub but has one of the country’s most famous beaches. Filled with resorts, hotels, apartments, and restaurants, there is no shortage of places to stay or things to see (and eat). With an artsy mix of 19th and 20th century culture, it’s no wonder Portimao is a natural choice for sporting events and large exhibitions. If you’re looking for affordable Algarve real estate, Portimao fits the bill, giving you a sun-drenched Algarve retirement home or an investment property that can pay for itself with just one week’s rental each month.


In Western Algarve, Lagos is possibly the most popular city in the Algarve and offers something for everyone of every age and activity level.  The longest beach in the region exists in Lagos, along with water parks, historical sites, and plenty of places to hike and enjoy the outdoors.  Lying along the bank of the Rio Bensafrim, Lagos offers the charm of a 16th-century walled town with cobbled streets, whitewashed houses, and picturesque plazas. Lagos also has an extensive healthcare system, complete with a number of smaller clinics as well as a large hospital to meet your medical needs at affordable prices.


Calling all history buffs — Tavira boasts an infrastructure that was inspired by the Moors. Beyond that, the city is celebrated for its beautiful beaches and the mystic feel of the beautiful park RIA Formosa. Located just 30 miles from the Spanish border, Tavira is sometimes referred to as “the Queen of the Algarve.”

How we can help

Purchasing property in Portugal can provide a wealth of opportunities for business and leisure. At Real Estate Portugal, we offer a complete service to buyers, regardless of whether you’re interested in a retirement home, Golden Visa, NHR, Investment or a sun-soaked holiday home.

Browse our properties online or contact our Leisure Concierge to arrange a personalized itinerary and take in the best of Portugal.



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