Spain is a popular retirement destination for many Europeans.

Although perhaps not as popular as Portugal, Spain continues to be a popular retirement destination for many European expatriates. Although not as affordable as Portugal, a Spain retirement remains a popular option because of its warmer climate in comparison to the cooler parts of Western and Northern Europe. Clearly, many Europeans view Spain as one of the best places to retire in Europe.

Spain Retirement: The Spanish Economy

Although off to a slow start in the 20th century in comparison to the countries of Western and Northern Europe, Spain lead Europe in economic growth in the late period prior to 2005. Today, in terms of per capita income, Spain ($31,000) is just slightly behind such countries as Australia, France and the United Kingdom ($34,000) and was thought capable of surpassing these countries by 2010.

Madrid in the early evening.

For a while, Spain seemed to be one of the major engines driving Europe’s economy. In 1900, Spain would probably have been classified as a developing country, in the year 2008 it was the ninth largest economy in the world and on its way to become a leader in Europe’s economy.

Today, like many other countries around the world, Spain has fallen into a recession. Unemployment is now at 18% and rising. The construction and housing industry which accounted for nearly 20% of the country’s income and responsible for much of Spain’s growth has collapsed with no relief in sight in the foreseeable future.

During the construction boom, real estate rose in value at very rapid rates, approaching nearly 300% increase in the past decade. Foreign investors and expatriates accounted for as much as 40% of the demand for housing and helped fuel the boom. However, today close to 30% of the homes are now vacant. It’s currently unknown when the housing bubble will burst. Some estimates say that homes in Spain may be overpriced by 20-60%. On the other hand, the foreign demand for retirement homes or investments may continue to prop prices up.

Besides the large, but shrinking construction industry, Spain’s economy is also based on manufacturing (textiles, construction, metals), tourism and agriculture (wine, olives, grains). The largest sector in Spain’s economy are services, which account for close to 67% of the nation’s economy. Tourism is the major service industry and Spain in ranked at or near the top of countries in terms of tourist arrivals and spending.

Typical Spanish housing are flats rather than single family homes.

So what is the assessment of Spain as a retirement haven for retired American expatriates? The answer is unclear. If you are a well-heeled investor, the housing market seems very vulnerable at the moment-making Spain a bit risky. On the other hand, should the bubble burst, the retiree with modest means may see housing and rental prices begin to fall-making Spain more desirable.

Despite the economic woes that Spain is currently experiencing, the country has experienced significant growth in the last decade, has a solid foundation in its economic infrastructure, and provides the potential expatriate who is considering a Spain retirement with a fairly developed country in which to retire.

Spain Retirement: Food

Spain’s rich history pretty much insures that Spanish cuisine is at once unique, but a reflection of influences that range from the Roman Empire, the Moors of Northern Africa/Middle East, to the plants and animals brought back to Spain from the New World at the peak of Spain’s colonial glory. There probably is not one Spanish cuisine, but a range of cuisines that have developed in different regions around the country.

In addition to a unique cuisine(s), Spain also offers a unique style of dining that seems almost too carefree to the more Calvinistic American. Lunch extends into the late afternoon and dinner occurs late in the evening. In between, it is common for the locals to have a period of enjoying tapas in bars around town.

The paella rice dish is a classic part of Spanish cuisine.

Tapas are appetizers served with drinks and come in a wide range of choices. They are a remnant of Old Spain where Spanish law required coach drivers to have food along with their drink … and the food usually was some bread served with a piece of meat sitting on top (tapas) of the cup. 

A rich and diverse cuisine is available for expatriate living with a Spain retirement – whether it’s in a fine restaurant, a street restaurant or vendor, or as a guest in someone’s home.

Spain Retirement: Healthcare

Spain offers a comprehensive public healthcare system that provides universal healthcare to all – a model system that even the USA has been looking at in its efforts to reform healthcare. The public healthcare system consists of hospitals for acute care, an emergency services system, and a number of health centers distributed throughout the country. The World Health Organization ranks Spain’s system as the seventh best in the world.

Typically, in such a large system, there are long waits to see specialists. To offset the weaknesses of the public system, there exists a private healthcare system. The public system cares for a majority of Spain’s population and is financed through taxes and is essentially free – even for foreigners (with some limitations). The private system is more expensive because it is self-supporting, but provides perhaps a third of the hospital beds in the country and offers more ready access to specialized healthcare at a price.

Spain Retirement: Housing

A wide range of housing is available in Spain. There is a question however as to the stability of the housing market. How the country will fare when the Spanish housing bubble bursts is really difficult to say. In some respects, it may not be as bad as some project because of the large number of foreign immigrants that help keep demand and prices afloat.

If renting, there is concern over the shortage of rental units since the government has built in large incentives for home ownership and has the highest percentage (80%) of home owners in Europe. This tends to keep prices for rentals on the high end and creates a shortage of affordable housing for locals and expatriates living in Spain alike.

Spain Retirement: Social and Political Issues

In 2004, Spain was rocked by a bombing initiated by Islamic fundamentalists. However, it does not appear to be a consistent pattern of terrorist activity and Spain may simply have been a target of opportunity at a time when the movement was very active across the world.

On the other hand, the Basque independence movement remains a historically (since the 1960’s) ongoing pattern. The region between Spain and France is the home of the Basques who have been pursuing independence for a long time. While most are probably everyday peace loving people, the militant organization (ETA) still persists and has been associated with occasional terrorist bombing types of activities. Expatriates living in Spain should keep an eye on this independence movement.

Spain Retirement: Communications and Transportation

As a developed country, Spain offers a modern communications and transportation infrastructure. Expatriates opting for a Spain retirement will find that public transportation is widely available and affordable and is integrated into a Europe-wide transportation network.

Spain Retirement: Summary

Spain is no longer one of the more affordable places to retire. It does however, offer an appealing climate, nice beaches, and a picturesque human landscape whether in the city or countryside. It remains a popular tourist and retirement destination for many Europeans.

There are really no major environmental risks to a Spain retirement, but there are occasional and ongoing incidents with terrorism associated with the Basque independence movement. Although the risk is real and something that any potential expatriate who chooses Spain for retirement should keep in mind, the risk seems relatively low in recent years.

The housing market is tight despite the oversupply of homes due to home purchase for investments and creates a shortage of affordable homes. It may not be a good place for a home purchase until the housing bubble resolves itself.

Retiree’s Ranking of Spain: 4.0/5.0

(Photos by Createisma, Freakland, Franfoto01, and Bienias)