Retiring in Spain: the visa, healthcare, taxes and where people settle

Spain appeals to American retirees for its climate, healthcare, safety and cost. It asks for more than most retirement destinations in return: a visa with a real income test, private insurance in the early years, and Spanish tax on your worldwide income. Work through those three before you choose a town.

The visa retirees use

Spain has no visa called a retirement visa. Retirees apply for the non-lucrative visa, which is for people who can live without working.

	Approximate amount a year
One person	€28,800 (about $33,000)
A couple	€36,000 (about $41,000)
Each further dependant	€7,200 (about $8,300)

Social Security, pensions, annuities, investment income and savings all count. The figures are tied to an official index that can change, and the dollar amounts move with the exchange rate, so confirm them with your consulate.

You apply at the Spanish consulate that covers your US state, with an FBI background check, a medical certificate and proof of Spanish health insurance. The first permit lasts a year and is renewed after that. After five years you can apply for long-term residency.

Healthcare

Medicare doesn’t pay for care in Spain. Retirees usually move through these stages:

• Private Spanish insurance from the start. The visa requires a policy with no copayments and no waiting periods. Premiums rise with age, and some insurers won’t take new customers past a certain age, often somewhere between 65 and 75. Get quotes before you commit to moving.
• The public buy-in after a year. People who have been registered as living in Spain for a year can usually join the public system through a scheme called the convenio especial, for a monthly fee that is higher for people aged 65 and over. It doesn’t include subsidised prescriptions.
• Both. Many retirees keep a private policy for faster access to specialists and use the public system for everything else.

Spanish healthcare is good in both systems. See healthcare in Spain and health insurance in Spain. Many retirees keep Medicare Part B so they are covered on visits to the US or if they move back.

Tax on retirement income

To keep a non-lucrative permit you have to live in Spain for most of the year, and that makes you a Spanish tax resident. For retirees this means:

• Spain taxes worldwide income. Private pensions, IRA and 401(k) withdrawals, dividends, interest and capital gains are all reportable in Spain.
• The treaty has specific rules for Social Security and government pensions, which are treated differently from private pensions.
• Roth accounts and other US tax shelters don’t necessarily get the same treatment in Spain as in the US.
• Wealth tax can apply to worldwide assets above an allowance, depending on the region.
• You report foreign assets to Spain on a separate form if they pass a threshold.
• You still file a US return every year, with credits to prevent double taxation.

The order and timing of things like selling a house or converting retirement accounts can make a large difference, and the planning has to happen before you become resident. See taxes in Spain and US taxes when you live in Spain.

Social Security and money

• Social Security can be paid to a US account or directly to a Spanish bank.
• Your income is in dollars and your costs are in euros. A weaker dollar raises both your cost of living and the dollar amount you need to meet the visa threshold.
• Spain has discounts for older residents on trains and local transport, and some depend on age alone.

See the cost of living in Spain for budgets.

Where retirees settle

• The Costa del Sol, from Málaga west through Marbella and Estepona: the mildest mainland winters, many private clinics that work in English and a large foreign community.
• The Costa Blanca, from Dénia and Jávea to Alicante: long-established retiree towns, lower prices and a dry climate.
• Valencia: a flat, walkable city by the sea with big-city hospitals.
• The Canary Islands: spring weather all year, at the price of distance from the mainland and the US.
• Mallorca and the Balearic Islands: beautiful and well connected to Europe, with high housing costs.
• Northern Spain: cool summers and green country for people who don’t want heat, with little English spoken.
• Madrid and Seville: for retirees who want a city first. Seville’s summers are very hot.

Stairs and hills matter more at 75 than at 60. Many Spanish apartment buildings have no lift, and old town centres are steep and cobbled. Look for a lift, a nearby health centre and shops within walking distance. See the best places to live in Spain.

Before you commit

1. Spend a few months renting in the town you are considering, including its worst season.
2. Check that your income meets the visa threshold with room for exchange rate moves.
3. Get health insurance quotes at your current age.
4. Have a cross-border tax adviser estimate your Spanish tax bill.
5. Think about driving. A US licence is only valid for about six months after you become resident, and after that you need a Spanish one.
6. Read the steps for the whole move for the order to do things in.

Common questions

Can a US citizen retire in Spain?

Yes. Most American retirees use the non-lucrative visa, which requires passive income or savings of roughly €29,000 a year for one person and about €36,000 for a couple, plus private Spanish health insurance. You apply at the Spanish consulate for your US state before you move.

Can I collect Social Security while living in Spain?

Yes. US citizens can receive Social Security retirement benefits while living in Spain, paid into a US account or directly to a Spanish bank.

Does Medicare work in Spain?

No. Medicare generally doesn't pay for care outside the United States. Retirees in Spain use private Spanish insurance at first, and many later join the public system through a monthly buy-in. Many keep Medicare Part B for visits home.

Are US pensions taxed in Spain?

If you become a Spanish tax resident, Spain taxes your worldwide income, which includes private pensions and retirement account withdrawals. The US-Spain tax treaty has special rules for Social Security and government pensions and prevents the same income being fully taxed twice. A cross-border tax adviser should review your case before you move.