Retiring in Iceland: a complete guide
Discover why Iceland is a good option as a retirement destination and what you need to do to settle in this country.
Summary
Iceland's official retirement age is 67, but reduced benefits can start at 65.
The average cost of living in Iceland is high, impacting housing, food, and transportation expenses.
Iceland offers universal healthcare with comprehensive coverage for all residents.
Find a financial advisor who can offer expert advice about retirement.
What are the pros and cons of retiring in Iceland?
Retiring in Iceland offers a unique and captivating experience. However, it is important to weigh up the pros and cons before making this Nordic island your home. If you are contemplating retirement in Iceland, consider the following factors:
Pros
High quality of life: healthcare, safety, community.
Natural beauty: Glaciers, volcanoes, hot springs.
Clean environment: Low crime, clean air and water.
Rich culture: Nordic traditions, arts, history.
Universal healthcare: High-quality, affordable care.
Stable economy: Strong economy, social welfare system.
Cons
High cost of living: Housing, groceries, and dining out are expensive.
Harsh weather: Long, dark winters with extreme weather conditions.
Remote location: Limited direct flights and isolation can be a challenge.
Limited job opportunities: Finding work may be difficult, especially without Icelandic language skills.
Language barrier: Icelandic is the primary language, making communication challenging.
Limited cultural diversity: Smaller population and less cultural diversity compared to larger countries.
What are the best places to retire in Iceland?
While over a third of Iceland’s population lives in Reykjavík, there are other places that retirees can consider. These are the recommended areas for those looking for the best places to retire in Iceland:
Reykjavík: Vibrant capital with cultural activities and healthcare access.
Akureyri: Lively arts scene and beautiful natural surroundings.
Selfoss: Rural setting with access to natural wonders.
Hafnarfjörður: Picturesque fishing town with Viking heritage.
Kópavogur: Modern amenities and cultural centers.
What age can you retire in Iceland?
In Iceland, the official retirement age is 67, but you can opt for reduced pension benefits at 65, with early retirement options also available.
Age-related benefits include the Old-Age Pension (from age 67), pension payments from individual Pension Funds, healthcare discounts, and various senior discounts on services like public transportation and cultural events.
What is the average cost of retirement in Iceland?
Iceland's high cost of living is due to its remoteness, reliance on imports, and high taxes, but it is generally around $2600 a month. Housing, groceries, dining out, and transportation are significantly more expensive. However, the social welfare system and universal healthcare offset some costs, and the strong economy offers opportunities for supplemental income.
Do you pay taxes after retirement in Iceland?
Yes, you pay taxes on retirement income in Iceland. Pensions, whether from Icelandic or foreign sources (including Social Security), are subject to income tax. The tax rate varies depending on your total income.
Withdrawals from retirement savings accounts may also be taxed, but there may be exemptions for certain types of accounts. Consulting a tax professional is crucial to understanding the specific tax implications for your situation.
What programs are there for emigrating to Iceland?
When considering emigration to Iceland, expect to find no specific retirement visas. Instead, the options available include Family Reunification, a Financially Independent Person Permit, or a Work Permit. Each permit has specific requirements, so it is best to consult an immigration lawyer or the Icelandic Directorate of Immigration for guidance.
What visas do I need to retire in Iceland?
To retire in Iceland, you'll need a residence permit. Options include Family Reunification (for those with family ties), a Financially Independent Person Permit (proof of sufficient funds and private health insurance), or a Work Permit (with a job offer). All options require a valid passport, a clean criminal record, health insurance, proof of accommodation, and sufficient funds. Consult an immigration lawyer for further guidance.
What are my healthcare options in Iceland?
Iceland has a universal healthcare system that covers all residents, regardless of income or pre-existing conditions. The system is primarily funded through taxes and provides comprehensive coverage for various medical services, including doctor visits, hospital stays, prescription drugs, and specialist care.
Is it safe to retire in Iceland?
Iceland is considered one of the safest countries in the world. It has very low crime rates and a strong sense of community safety. Violent crime is rare, and most incidents involve petty theft or property crime.
What is the housing market in Iceland?
Iceland's housing market is characterized by high demand and limited supply, resulting in relatively high prices. The average cost per square foot in the capital region, Reykjavík, ranges from $400 to $588 USD, depending on the type and size of the property.
| Location | Average House Price |
|---|---|
| Reykjavík | $500,000 - $1,500,000+ |
| Akureyri | $350,000 - $800,000+ |
| Selfoss | $300,000 - $600,000+ |
| Hafnarfjörður | $400,000 - $1,000,000+ |
| Kópavogur | $450,000 - $1,200,000+ |
What happens to my retirement benefits if I retire in Iceland?
Social Security benefits can generally be paid to you in Iceland. If you've worked in Iceland, you'll receive an Icelandic pension. US retirement account withdrawals may be subject to both US and Icelandic taxes.
Is Iceland a good place to retire?
Iceland appeals to retirees who value natural beauty, high quality of life, and a strong social safety net. It offers stunning landscapes, unique culture, and universal healthcare, but its high cost of living and harsh weather can be deterrents.
Get expert financial advice
Retiring in Iceland offers a unique lifestyle with natural beauty, a strong social safety net, and a good quality of life. However, it's important to be prepared for the high cost of living and potential challenges like the language barrier and harsh weather.
Consulting a financial advisor through Unbiased can ensure you get expert retirement advice, regardless of where in the world you choose to settle.
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