Lets start with the major assumption! We will Retire in Portugal! Therefore, i believe you guessed the theme of the post!
I will start by quoting a fellow FIRE living in Portugal, Mr Obvious Investor that with his post shared several of the living costs in Portugal. I would like to make a few comparisons about our current budgeted living costs and the ones explained.
Remember my post about milestones and goals? I have refered that currently our budget is around 2k monthly even tough we believe once we reach FI we would be able to achieve 1.6k monthly. Below is the drill-down:
Scenario 1 (Current 2k monthly expenses) – Retire in Portugal
For this one to be more realistic, i’ve removed the Rental apartment costs since this is something – as i have explained in this months update here – that will be removed as a cost. A drill-down into the categories and budget.
| Category | Budget |
| Housing | € 599.81 |
| Energy | € 60.00 |
| Telecoms | € 67.39 |
| Water | € 20.00 |
| Grosseries | € 200.00 |
| Auto Insurance | € 129.55 |
| Auto Maintenance | € 58.74 |
| Auto Gas | € 240.00 |
| Parking | € 55.00 |
| Professional expenses | € 16.50 |
| Hobbies | € 40.00 |
| Clothing | € 100.00 |
| Health | € 122.00 |
| Eating Out | € 200.00 |
| Others | € 113.59 |
| Total | € 2,022.58 |
As you can see we have some costs which can be related to not yet achieving FI like maintenance, gas and insurance with 2 cars. This would be the cost of living for a family of 2, no Kids and living in Lisbon city center (owning the place, not renting). We also have a generous buffer for health costs which can be mostly free in Portugal.
Scenario 2 (Future – FI – 1.6 monthly expenses) Retire in Portugal
For this scenario i’ve made a few adjustments like reducing almost to 0€ the housing costs. We have to still pay IMI which is a tax to the municipality. I’ve considered the scenario that we move to our farm which is located ~55 minutes driving from Lisbon which is paid in full.
I’ve also reduced Auto insurance, maintenance and gas to half since i do not expect we need more than 1 car once we reach FI. This can be a challenge since me and Mrs.Firecracker are used to move independently. I’ve maintained all other values. Values are the following:
| Category | Budget |
| Housing | € 50.00 |
| Energy | € 60.00 |
| Telecoms | € 67.39 |
| Water | € 20.00 |
| Grosseries | € 200.00 |
| Auto Insurance | € 64.78 |
| Auto Maintenance | € 29.37 |
| Auto Gas | € 120.00 |
| Parking | € 15.00 |
| Professional expenses | € 16.50 |
| Hobbies | € 40.00 |
| Clothing | € 100.00 |
| Health | € 122.00 |
| Eating Out | € 200.00 |
| Others | € 113.59 |
| Total | € 1,218.63 |
Whooaa. Values are even lower than 1.6k ! This is good news right? But is it doable?
Conclusions
Do you think its doable to live outside of Lisbon with housing payed in full for the cost of 1.2k monthly (14.6k yearly)? Well, lets even assume 1.6k (19.2k yearly).
I’ve seen many people pointing to their FI goal in Portugal to be around 1M or even 1.2M . Are they considering an extra Ferrari? Im really wondering how they come up with this values and would be interested in your opinion fellow reader.
And with Kids ? How much do you think i would need to add to our budget? Would the buffer of ~400€ monthly be enought?
Summing up, those would be our values for retire in Portugal. Scenario 1 would be applicable to our current spending living in Lisbon and Scenario 2 to living in our Farm outside of Lisbon.
