Building Your It'll Be Fun Life!: Spain—The Vibrant Dream vs. The Tax Reality

itllbefunretiremen
Jan 24
6 min read

We Should Have Done This Sooner - It'll Be Fun!

Welcome back to "Building Your It'll Be Fun Life!"

We have looked at France (colder, more expensive), and we have looked at Italy (chaotic, interesting). Now, we have to talk about the one that got away. The original dream. Spain.

If you have been following our journey, you know we live in Northern Portugal (Caminha). We love it here. But recently, we took a trip across the border just north of us, up to Vigo and the charming border town of Tui to see if we made the right choice.

Spain hits you differently the moment you cross the line. It isn't just about the scenery; it’s about the frequency. Spain is vibrant. It is colorful. It feels like a country where life is lived out loud. For years, we thought our "Fun Life" was going to be in Nerja, just outside of Malaga. We had it all planned out. But don't worry if you know us, prior to that it was the Smokey mtns.

So, standing there in Tui, sharing a plate of pimientos de Padrón, we had to ask ourselves: Did we choose the wrong side of the Iberian Peninsula?

Here is the story of why Spain is so seductive, why it beats the US Midwest in a heartbeat, and the specific reasons—both financial and emotional—that sent us driving back home to Portugal.

The Allure: Life at Full Volume

When people ask us why they should choose Spain over Florida or Illinois, the answer is usually "the weather." But the real answer is the Vibe.

Let's Tick Off Why Choose Spain!

1. The Public Living Room In Spain, the plaza is the living room. Families, seniors, teenagers—everyone is out. The energy is infectious. If you are a retiree who fears isolation, Spain cures that instantly. You walk out your door, and you are part of a community.

2. The "Leslie Factor": A Gardener’s Joy Leslie is a horticulturist, and walking through Spain is a joy for her. It’s not just the big arboretums; it’s the daily respect for greenery. In towns like Tui or the neighborhoods of Vigo, you see flower boxes that are thriving. You see public parks that are weeded, watered, and genuinely cared for. It’s not "stiff"—it’s loved. There is a palpable pride of place in Spain. People take care of their sidewalks, their storefronts, and their plants. It feels finished and welcoming. Let's face it they have more disposable income to create this type of garden.

3. The Infrastructure Upgrade Coming from the US, Spain feels like an easy transition. The highways are often glass-smooth. The high-speed trains (AVE) are marvels—they actually guarantee punctuality or give you money back. The healthcare facilities look and feel modern. If you want European charm but with "First World" efficiency, Spain delivers.

The Lifestyle Test: The Rhythm of the Day

We sat down for lunch, and this is where Spain absolutely shines. The Menú del Día. For €12 to €15, you get a three-course meal with wine. And it’s not fast food; it’s homemade, hearty, fantastic cooking. It is arguably the best value proposition in Europe. If you are a "lunch person," Spain is paradise.

But then, the sun went down. We are Americans. We like to eat dinner at 6:00 PM, maybe 7:00 PM. In Spain, that is late afternoon. If you walk into a restaurant at 7:00 PM, the chairs are on the tables. The kitchens don't open until 8:30 PM, and the locals don't show up until 10:00 PM.

And the price? That cheap lunch deal disappears at night. Dinner is à la carte, and a nice meal for two with wine easily hits €50 or €60.

The Social Disconnect: In Portugal, we eat when we want, and the vibe is relaxed. In Spain, we felt out of sync. Being on a completely different schedule from your neighbors can feel isolating in the long run.

The "Comfort" Factor: Language & Safety

This was the biggest surprise of our trip. In Northern Portugal, almost everyone under 40 speaks incredible English. If we get a flat tire or need to ask a pharmacist a question, we can communicate. We feel safe.

In Spain, we walked into shops just across the border, and the English level dropped significantly. Spain is a big, proud country with its own massive language. They don't need English the way Portugal does.

The Reality: For us, moving to a place where we aren't fluent feels vulnerable. When you are 25, gesturing is an adventure. When you are retirees navigating healthcare or bureaucracy, the language barrier adds a layer of low-level anxiety. In Portugal, that anxiety is gone.

The Financial Reality: Why We Can't "Just Move"

This is the part that kills the dream for us. We ran the numbers for a retired couple living on $3,200 a month (Social Security) with a paid-off house.

1. The Income Tax (The Annual Bill) In Portugal, we have NHR. In Spain, there is no special tax break for regular retirees.

The Rule: Spain taxes your worldwide income (including US Social Security and IRA withdrawals) on a progressive scale.
The Rates: Rates start around 19% and climb quickly.
- For an income of €38,400 (our baseline), your effective tax rate would likely be in the 20–24% range. That is an annual tax bill of roughly €7,500–€9,000.
The Exception: If you have a Government Service Pension (e.g., military, civil service), the tax treaty often allows this to be taxed only in the US. If that's you, Spain becomes much cheaper. But for regular Social Security? You pay.

2. The Wealth Tax (The "Saver's Penalty") Spain is unique in Europe for taxing you just for having assets.

The Regional Tax: In places like Galicia (Vigo) or Valencia, if your assets (savings + house) exceed €700,000, you pay tax on the excess every year.
The Solidarity Tax: This is the National tax for assets over €3 Million.
The Verdict: If you move to Nerja (Andalusia), you are fine on Wealth Tax (unless you have €3M+), but you still pay high Income Tax. If you move to Vigo (Galicia), you might get hit by the Regional Wealth Tax plus the high Income Tax. Portugal, by comparison, has no wealth tax at all. You save, you keep it.

3. The Wolf Factor (Our Son) We are a package deal. Wolf is 25. He’s building his own business.

In Portugal, he gets the IRS Jovem (a 0% tax start that slowly rises).
In Spain, even with the Digital Nomad Visa, he’d pay a flat 24% tax from day one. For a young guy starting out, that 24% difference is the difference between thriving and just surviving.

Where You Could Build a Great Life (Not in "BFE")

If the taxes don't scare you and you are ready to embrace the late nights, where should you go? We looked for places that offered that "Spanish Buzz" without the Madrid price tag. You don't want to be isolated; you want a life.

Alicante: It has an airport, a beach, a castle, and real city life, but apartments are still in the €200k–€250k range. It’s affordable, connected, and sunny.

Rincón de la Victoria (Malaga): If you want the Costa del Sol without the "British Tourist" vibe of Marbella, this is it. Authentic, Spanish, and connected to Malaga city by bus.

Valencia Suburbs (like Paterna): You get access to the third-largest city in Spain—the arts, the science center, the beaches—but at half the rent.

The Verdict

We had to go home, for us Spain will a wonderful place to visit. So, we drove back across the bridge into Portugal.

We breathed a sigh of relief. We realized that while we admire Spain—its polish, its vibrancy, its beautiful gardens—we are comfortable in Portugal. We can afford the life here without looking over our shoulder. We can talk to the merchants wave our arms and use poorly structured portuguese and they will have patinece. We can eat dinner at 7:00 pm or maybe 7:30 pm.

Spain is the exciting friend we love to visit for a long weekend. But Portugal? Portugal is the place that lets us sleep soundly at night.

It’ll be fun.

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