Retiring from the US to Spain: What Changes, and How Much You Need

A 2026 guide for Americans planning the move

Figures current as of October 2026. Edited by The Pensora Team. Education, not personal advice. See Important information at the end.

Spain gives American retirees a lot for the money: good food, real cities, solid public healthcare, and a cost of living well below most of the US. It also has one of Europe's more demanding tax systems, and the paperwork that comes with it. Know the rules before you sign a lease and Spain can be a very good deal. Learn them after, and it gets expensive.

In short The US keeps taxing you as a citizen, and Spain taxes your worldwide income once you're resident. Spain's tax authority treats US Social Security as taxable in Spain, whatever many websites say. 401(k) and IRA withdrawals are taxed in Spain and still counted by the US. Spain doesn't recognise the Roth's tax-free status. Your US retirement accounts can count toward Spain's wealth tax. Retiring there takes a visa that asks for about €2,400 a month of passive income. Medicare doesn't pay for care in Spain.

New to retiring across borders? Get the free Borderless Retirement Blueprint, the five-step guide, by email.

1. How much you need

One sum does most of the work: a year's costs there, less your state pension, divided by a safe withdrawal rate. For a 30-year retirement, Morningstar puts that rate at 3.9% [1].

Our working estimate for a comfortable year on Spain's coast or in a mid-sized city is about €33,000 per person (mid-2026). Madrid, Barcelona and the smarter parts of the Costa del Sol cost more. For someone with a partial US Social Security record, our model credits about €10,800 a year:

• €33,000 yearly cost − €10,800 Social Security = €22,200 for your savings to cover
• €22,200 ÷ 3.9% = about €569,000

That's the target at 65 in our model, before tax and health insurance, and Spain's tax bill is higher than many Americans expect (section 3). Run the free Global Retirement Portability Check for the US → Spain route. It takes about a minute and shows every assumption.

2. The right to live there

Most American retirees use Spain's non-lucrative visa. In 2026 it asks for income or savings of 400% of Spain's IPREM index: €2,400 a month for the main applicant, plus €600 for each family member [2]. You also need private health insurance from a Spanish-authorised insurer with no co-payments, and you can't work, not even remotely for a US employer [2]. If you still work, Spain's digital nomad visa is the usual alternative. Without a visa, you're limited to 90 days in any 180.

3. Who taxes what

When Spain starts taxing you. You're generally Spanish tax resident if you spend more than 183 days a year there, or if your main business or financial interests are there [3]. Spain then taxes your worldwide income. Pensions are taxed like earnings, at combined national and regional rates from 19% to around 47%, higher in some regions. Savings income (interest, dividends, gains) has its own scale, from 19% to 30% [3].

The US never stops. You keep filing a US return every year and report foreign accounts on an FBAR once they total more than $10,000 at any point in the year [4].

The two countries divide the work through their tax treaty, updated by a protocol in force since 2019 [5]:

Social Security, settled. Many websites say Spain can't tax US Social Security. The treaty says only that the US "may" tax it, and Spain's tax authority has ruled that this doesn't stop Spain taxing it too [5][6]. Expect to declare it in Spain. Which country then gives credit for the other's tax depends on technical treaty rules: this is exactly where a professional who files in both countries pays for themselves.

A worked example. A single retiree aged 66 withdraws €30,000 a year from an IRA, with no other income.

• Spain treats the withdrawal like earnings and deducts €2,000 for expenses, leaving €28,000 to tax [3].
• On the standard combined national and regional scale, that's about €6,570 before allowances.
• The over-65 personal allowance of €6,700 saves about €1,270 [3].
• Spanish tax: about €5,300, roughly 18% of the €30,000. Your region can move that by a few hundred euros.
• The US counts the same withdrawal. Under the treaty's relief rules it generally credits the Spanish tax, so the total usually lands close to the Spanish figure rather than both added together [5].

Two Spanish extras. If your assets abroad, such as US bank or brokerage accounts, are worth more than €50,000 in any one category, you file Modelo 720 in your first year as a resident. After that, you file again only if a category grows by more than €20,000, or if you sell or close something already declared [7]. Spain also charges a wealth tax on net assets above €700,000, plus up to €300,000 for your main home, and US retirement accounts can count toward it [8]. Madrid and Andalucía currently give full relief, though a national solidarity tax still applies above €3 million [8].

4. Your investments: a trap on both sides

European funds. The standard European fund (UCITS) counts as a "passive foreign investment company" under US tax law [9]. Gains get punishing tax and interest charges, plus a yearly Form 8621 per fund.

US funds. Most Spanish and European brokers won't sell US-listed funds to EU residents, because EU rules require a disclosure document most US issuers don't produce [10].

The usual answer: keep a US brokerage account and keep buying US funds there. Ask your broker in writing, before you move, whether they'll serve you at a Spanish address. Some won't. Moving money directly between US retirement plans, provider to provider, is generally not taxed in Spain; cashing out is.

Currency. If your savings are in dollars and you spend euros, a 10% fall in the dollar is a 10% pay cut. Decide which currency you'll spend in, and move toward it gradually. Matching funds to your passport is Step 2 of the free Borderless Retirement Blueprint.

5. Social Security, Medicare and healthcare

Your work years count in both countries. A US–Spain social security agreement has been in force since 1988 [11]. It stops double contributions and can combine credits from both countries.

Plan for a smaller cheque. The 2026 Trustees Report expects the main trust fund to run out in late 2032, after which about 78% of scheduled benefits would be payable unless Congress acts [12]. Make sure your plan still works at 78%.

Medicare stays home. It generally doesn't pay for care outside the US. Drop Part B and re-enrol later, and you can face a lifetime penalty of 10% for each full year you went without it [13].

Healthcare in Spain. Americans have no UK-style S1 route, so the visa needs private cover with no co-payments. Quotes we found for people aged 60 to 70 run from about €200 to €400 a month per person, and many Spanish insurers stop taking new customers between 65 and 70 [14]. After a year of residence, some people join the public system through the Convenio Especial, a pay-in scheme that costs about €157 a month from age 65 [14].

6. Easy to overlook

Your last US state. The treaty binds only the federal government. If your old state still considers you a resident, it can tax your income with no treaty relief. Once you're genuinely a non-resident, federal law stops states from taxing your retirement income [15]. Cut ties clearly.

Inheritance. Spain taxes heirs, not the estate, and each region sets its own reliefs: close family pays almost nothing in some regions and a real bill in others [16]. US estate tax still applies to citizens worldwide. EU rules let you choose, in your will, the law of your nationality for your estate [17].

Before you move: a six-point checklist

1. Run your number for the US → Spain route.
2. Get your Social Security statement and check your work credits.
3. Ask your US broker, in writing, if they'll keep you at a Spanish address.
4. List every account abroad; above €50,000 in any category, Modelo 720 applies.
5. Price visa-grade health insurance before your 65th birthday.
6. Book one session with a tax professional who files in both countries.

Questions people ask

Does Spain tax US Social Security?

Yes, for Spanish tax residents. The treaty lets the US tax it too, and Spain's tax authority has ruled that Spain can tax it as your home country [5][6].

Are 401(k) and IRA withdrawals taxed in Spain?

Yes, as ordinary income at progressive rates, and the US counts them as well, generally with a credit for the Spanish tax [3][5].

How much income do I need for Spain's non-lucrative visa?

In 2026, €2,400 a month for the main applicant, plus €600 for each family member [2].

Edited by The Pensora Team. Last reviewed: October 2026. The review covers the accuracy and clarity of the information presented. It is not personal advice.

Important information

This article is general information for educational purposes only. It is not financial, investment, tax, legal, immigration or insurance advice, and it is not intended as a financial promotion or as investment advice under the laws of the United States, Spain or any other country. Nothing in it is a recommendation, offer, solicitation or invitation to buy, sell, hold or transfer any product or account, to engage in any investment activity, or to take any particular course of action, including whether or when to move, withdraw from a retirement account, convert to a Roth, or claim a pension.

It does not take account of any reader's personal circumstances, objectives or needs, and no adviser-client or fiduciary relationship is created by reading it or by using Pensora's tools. Pensora is not a registered investment adviser, broker-dealer or tax preparer, is not registered with the US Securities and Exchange Commission, any US state, the Spanish CNMV or any other financial authority, and does not provide regulated advice. Cross-border tax, retirement-account, immigration and healthcare decisions are best taken with suitably qualified and licensed professionals in both the United States and Spain.

Rules, rates, thresholds, exchange rates and projections differ by country, region and individual, and change often. Spanish tax depends heavily on the autonomous region. Figures are as published by the sources listed, as of October 2026, may have changed since, and may not apply to any individual case. Treaty interpretations can differ between tax authorities and practitioners. Projections are the estimates of the bodies named, not guarantees. Examples, cost estimates and planning approaches are illustrations only, not forecasts or recommendations. The value of investments can fall as well as rise. Past performance is not a reliable guide to future results.

Pensora is an independent publisher. It is not a government body, is not affiliated with or endorsed by any authority or organisation named here, and receives no commission or payment from any product, provider or adviser mentioned. Pensora's tools produce estimates only; actual entitlements and tax liabilities are decided by each national authority. This article is not directed at any person in any jurisdiction where its publication would be unlawful. While care is taken to keep this information accurate, no warranty is given as to its accuracy or completeness, and, to the extent permitted by law, Pensora accepts no liability for any loss arising from reliance on it. Links to third-party sources are provided for reference only.

References

1. Morningstar, The State of Retirement Income, December 2025 (3.9% safe starting withdrawal rate, 30 years).
2. Spanish Ministry of Foreign Affairs, Non-lucrative residence visa (2026: 400% of IPREM, €2,400 a month, plus 100% per family member; health insurance; no work). exteriores.gob.es
3. Spain, Personal Income Tax Law 35/2006 (LIRPF), Articles 9, 17, 19, 57, 63 and 66, and regional scales; Agencia Tributaria, 2026 savings-income scale (19% to 30%). agenciatributaria.es
4. US Treasury, Financial Crimes Enforcement Network (FinCEN), Report of Foreign Bank and Financial Accounts (FBAR). fincen.gov
5. Convention between the United States and Spain for the Avoidance of Double Taxation (1990), Articles 1, 20, 21 and 24, as amended by the Protocol of 2013 (in force 27 November 2019). irs.gov
6. Spanish Directorate-General for Taxation, binding rulings V1841-13 and V0249-20 on US Social Security received by Spanish residents; Agencia Tributaria guidance on US-source income.
7. Spain, Order HAP/72/2013 (Modelo 720, foreign assets above €50,000 per category); Court of Justice of the EU, Case C-788/19 (2022) on its penalty regime. agenciatributaria.es
8. Spain, Wealth Tax Law 19/1991 and regional rules; Temporary Solidarity Tax on Large Fortunes (Law 38/2022).
9. US Internal Revenue Code, §§1291–1298 (passive foreign investment companies); IRS Form 8621.
10. Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs).
11. US Social Security Administration, Agreement between the United States and Spain (in force 1 April 1988). ssa.gov/international
12. US Social Security Administration, 2026 Annual Report of the Social Security Board of Trustees (June 2026). ssa.gov/OACT/TR/2026
13. Centers for Medicare & Medicaid Services, Medicare coverage outside the United States; Part B late enrolment penalty. medicare.gov
14. Published 2026 premium ranges from Spanish insurers and brokers for visa-compliant, no-co-payment policies; Spanish Social Security, Convenio Especial fee (2026). Individual quotes vary.
15. United States Code, Title 4, §114 (limit on state income taxation of certain pension income of non-residents).
16. Spain, Inheritance and Gift Tax Law 29/1987, and regional reliefs set by each autonomous community.
17. Regulation (EU) No 650/2012 on succession (choice of the law of nationality, Article 22).