If your retirement dream contains olive groves and vineyards, arts and cultural events, and life at a slower pace, Italy probably appeals to you. But is it affordable?

The answer is both yes and no. If you are looking for a retirement where you can survive on the fewest possible dollars a day, probably not. However, a modest income can stretch to accommodate la dolce vita – if you know where to look. (Italy is included in Know The Top Countries For Retiring In Europe.)

There's lots of choice: Italy has 20 regions and a wide range of climates from Alpine to hot and sunny. Each offers a wealth of amenities and activities, regional food and wine, even dialects. Speaking of which, if you decide to settle in Italy, you will need to learn at least some Italian to be comfortable. In major cities such as Milan, Rome and Venice, many people speak some English; in more rural communities, you may find yourself regularly reaching for your Italian-English dictionary.

Best Regions for Retirement

When shopping for a place to call home, a little homework on regions beyond the well-known Tuscany will go a long way in securing an affordable lifestyle. Here are three to explore, plus information on Tuscany, too.

Abruzzo. This southern region is split between the mountains and the Adriatic Coast, and one-third of its territory is made up of national parks and nature preserves. It is cheaper to buy a home here than in Tuscany. A lot cheaper – homes here are up to 80% less expensive and up to 50% less expensive than in Umbria, another popular expat destination.

A home in a rural village could cost you between US$38,000 and $100,000, depending on size and location. Larger towns or cities in the region, such as the city of Pescara on the coast, or the medieval town of Castilenti, offer homes in the $300,000 range and up. A modest monthly budget of $1581 will cover basic expenses – home, utilities, entertainment, food and wine – in most areas. Pescara to Rome is three-to-four hour day trip by car, train or bus.

Le Marche. This mountainous region of hill towns, farms and Adriatic Sea beaches is in central Italy. According to the AARP, renting a home in La Marche can run anywhere from $600 in the countryside to $1500 a month to live on the 100 miles of Adriatic coastline. Looking to buy? You might be able to find a home for approximately $300,000 on or close to the water, in a town like Senigallia or Potenza Picena – or in one of the medieval towns that dot the hilly, green countryside, such as Fermo.

The port city of Ancona is the region’s capital. If you settle there, you will find some six metro buses, plus taxi companies to help you get around. Some say this is the next “hot” area for expats given its affordability.

Puglia. Located in southern Italy, in the “heel” of Italy’s boot, Puglia is one of Italy's largest regions, 7,469 square miles. Roughly 50 miles from Greece, it offers seaside towns, mild winters, and a lower cost of living than elsewhere in Italy. The annual rainfall is almost non-existent and summers are long and hot – perfect for trips to the seashore. Larger cities include Bari and Ostuni.

If you are looking to buy, simple modern homes start at 70,000 euros ($87,486, two bedrooms) to 100,000 euros ($125,150, three bedrooms). Fixer-uppers in smaller towns such as Ceglie, can be found for as little as 36,000 euros (around $45,00). Trulli cottages – buildings with a conical roof found only in Puglia – cost 75,000 euros ($93,735) and up.

Tuscany. OK; you insist on retiring under the Tuscan sun. Unless you have a higher retirement budget than most, the trick to living in Tuscany is to look beyond a tourist’s radar. This means giving up Florence for a smaller town such as Pienza (a UNESCO World Heritage Site) or Pistoia. Pistoia sits at the foot of the Apennines and has one-bedroom apartments that typically rent for around $700 a month.

Living away from the tourist centers, doesn’t mean you can’t enjoy all Tuscany has to offer. Pistoia is about an hour from the center of Florence; other simple day trips by train or bus include Pisa or Lucca. Public transportation, assuming there's no strike – a fairly frequent occurence in Italy – is safe and cheap. A train ticket from Pisa to Florence costs roughly $8.

Visa Requirements

If you want to live in Italy and can afford to do so without a job, you can apply for a “Visto per Residenza Selettiva o Dimora” (an Elective Residency Visa) at the Italian consulate in your home country. Once you receive this visa, you must bring it to Italy to apply for a permit to stay (Permesso di Soggiorno). Most retirees use this type of visa, especially if they are collecting pension or retirement funds.

In order to qualify for this visa, you must show the annual income of every adult member of the family; sources list different amounts so check with the Italian embassy before you move. The income can be shown as pension, retirement funds or other means of income in a bank account.

When you have your “Permesso di Soggiorno” and have been living in Italy for five years, you are eligible for the EC Resident Permit for Long-Term Residents – once, but no longer, called the “Carta di Soggiorno.” This type of residency permit does not need to be renewed. 

Finding Healthcare

Italy has a national health plan. U.S. and Canadian citizens can apply to join the plan if they are legal residents. The country ranked number two on the (no longer produced) list of top 10 healthcare systems by the World Health Organization.

While Italy overall is known for having top-notch medical services and hospitals, rural public medical facilities, especially in the south of the country, can be lacking, so it is advisable that expats carry some form of private insurance, like many Italians do.

Managing Your Money

When you retire in Italy, you won’t just need to watch the stock market back home, you’ll need to follow the fluctuating euro-to-dollar exchange rate. When the dollar is up, you'll have more spare cash. When it's down, you'll need to tighten your budget. U.S. citizens who retire abroad must also factor in paying U.S. income tax and other costs.

If you opt for rural living, don't forget the additional expense of a car and car insurance. This can run 450 euros a year (around $563), plus paying for “road tax” and gas for your car, which is not cheap.

The Bottom Line

It is possible to live a vibrant and affordable life in Italy, but you have to do your homework. Finding the right region for your budget is critical to a successful retirement. For more advice, see What Does Retirement Abroad Cost? and Plan Your Retirement Abroad.