Early Retiring to Hungary

[Old Microbiologist]

I am 57 and retired from the Army in 1999 after 28 years. I have since been working Civil Service but am fed up working for the government (mostly as my boss is an ignorant ahole) and I am ready to retire. My wife is originally from Russia and wanted to be closer to her relatives there but to not actually live in Russia due to all the high costs and associated corruption charges. She is 61 and ahead of me in retiring. Being an insanely smart woman she took up day trading 3 years ago and averages over 100% a year (except for last year where we took a huge bath). However she has recovered 60% of our losses in the last 6 weeks and it looks like we will be ahead by a lot in a few more months. Luckily, we don't need those funds for some time to come. Between my civil service position and Army retirement I have been earning over $200K a year so she has been saving $7K a month to cover the costs of the move and renovations of the house. After searching carefully we decided Hungary was a great place to retire. I spent 6 years in Germany and speak German and Hungary is nearly identical except more centrally located in Europe with close access to the Alps and the Adriatic sea not to mention all the wonderful places in Europe. We are 90 minutes from Budapest and also from Vienna. We found a wonderful house in Balatonfured, Hungary near lake Balaton which cost us roughly $275K for a 300s.m. (roughly 3,000 sq. ft.) house on about 1/2 acre of formal gardens. We have an indoor swimming pool an indoor sauna and the house is only 10 years old. So, as of now we have $3K a month from my retirement and I expect to free-lance from Hungary for another $24K a year or so. As I am only 57 I have a while to go before I begin receiving Social Security. My wife didn't work he 40 quarters and will need to use mine. If I understand it correctly, that she will get half of mine but not until I begin drawing it at age 62. We will be moving later this Summer once I finish buying all the stuff we will need in Europe. We also have 3 houses here in the US but are waiting for the market to recover before attempting to sell. In the mean time the rent fully covers all the mortgages and in 2 of the houses adds $2K a month for 1 and $1K amonth for the other. The third pretty much covers the mortgage plus $200. We will bank the excess to cover non-renting periods and repairs. We have currently in our investment portfolio 2 rollover 401Ks coverted to brokerage IRAs at Scottrade, 1 SEP-IRA also at Scottrade, 1 Roth IRA at Scottrade, and 1 day trading brokerage account also at Scottrade. She plays regular with the IRAs (trading normally with 3 days clearance before repurchasing). The Brokerage account is now back over $100K after falling to a low of $16K in March. It is a crazy time and woefully we had cashed everything out last year and "thought" it had hit bottom and got back in only to be nailed hard. Not much one can do as all the bad stuff happens after market. Since then, we return to cash daily and are limiting profits to 10% a trade now. Things are so volatile you can trade the same stock 3 or 4 times a day and make 10% each time. But, you have to be absolutely familiar with the patterns and watch the level 2 traders very carefully to see what is going on. We also play on bad days with SKF which is a short financial stock that trades at twice the rat of actual fall of the financial sector so can be very hot. She also limits trades to 100 shares so they are easy to dump in an emergency. Anyway, the strategy works well if you are careful. The key is knowing the patterns and watch intensely. She limits herself to certain stocks about half of which are ADRs. Anyway, it will be an adventure and we are eager to get going. I look forward to seeing what other member so fthe group have to say and what advice they may have. I have researched among a bunch of Brits who retired to Hungary and 1000 Euros a month easily covers all expenses so we should be well set.

[chris2008]

Welcome to the forum.
If your regular income is 3k and you only spend 1k you will be in good shape.
However, I would rather rent for the first year in a foreign country than buy. The hungarian language is said to be one of the most difficult european languages. So good luck with that, too.
Let us know how things work out.
Chris

[Old Microbiologist]

Yes, plus we will have some additional income. I am serving as a Board Member of a for-profit corporation for a small fee of $24K a year and am also being hired by a contractor for remote telecommuting work at $200 and hour. My wife is also a professional web designer and does that free-lance and can do that as well for another $30K a year if necessary so we are set more or less. Not to mention she can make a quick $10K in a day or so trading if necessary. That has become fairly reliable. For now we are re-investing all profits and rebuilding our accounts. Hopefully, the market is recovering as all indications seem to point to.

We decided to buy the house in Hungary as it is absolutely lovely (see attached photo) and we were very lucky to find two houses together which share the same property. My wife's sister who works in Murmansk but lives in Moscow bought the other as a vacation home. We also plan operate that house as a bed and breakfast and share the profit with her family. We are only 300 meters from the lake and our town is a resort town s in high demand during the Summer. Beds go for around 50 Euros a night in season. We will hire staff to do the breakfast and clean the rooms. Labor costs in Hungary are low at around $5 per hour.

Yes, the Hungarian language is tough. I thought Russian was bad but Hungarian is definately a struggle. Luckily, nearly every Hungarian I have met speaks some German, so it isn't as bad as it could have been. Most Hungarians over the age of 45 also speak Russian (it was required under the Soviet Government) although they are not all that eager to reveal that. English is on the rise as Hungary is now a member of the EU and English is the common language. So, people 30 and under are now speaking English. Our next door neighbor who is Hungarian speaks English, German, Hungarian (of course) and Russian and is married to a very nice Russian woman. They are in our age group and share many of the same interests so we were very lucky as it turned out.

I also plan to start a ski adventure tour company to run skiing trips to wild and interesting places. I am both a ski patroller and snowboarding instructor and have worked in many of the 'stans (Uzbekistan, Kazakhstan, Kyrgistan, Tajikistan, and Georgia) and have skiied in many of them. There are some very fun places to go that are far off the beaten path so I am reasonably certain there are enough crazy skiers out there who want to both travel to interesting places and ski powder in environs only seen by a few hardy soles. Being close to many of these I am sure I can put together enough for trips to these areas. The advantage is I get to go as well!! But most of my time will be oil painting and/or water colors plein air in Hungary. I plan to mountain bike around the area and paint the scenery to my heart's content. My wife is heavily into photography so I am certain a lot of our time we will be travelling.

Until we get too old for most of what we like to do, we will be enjoying life to its fullest. We could have continued to work and amass a small fortune but decided to retire and enjoy life while we are young enough to enjoy it. I am reasonably certain that by age 70 I won't be as active and can settle down.

[FIREd]

Hi Borsch, welcome.

The house looks awesome. My wife and I have been talking about possibly retiring in the Alps (I love to ski). Are you at all worried about currency fluctuations and especially a devaluation of the US$? It sounds like a lot of your income is US-based so how do you hedge against this risk besides free-lancing locally?

[Old Microbiologist]

It is an intersting problem. One could listen to the forecasters and predict gloom and doom but I don't expect it to drop as far as they say. Having lived in Germany the last 2 times this happened I am reasonably certain that the worst will be it goes back to where it was before the crash. We can handle that no problem. When we bought the house the dollar was 145 forints. When we paid for it the dollar was 220 forints. As the house was priced in forints we came out ahead. But, even at 145 forints/dollar it was okay and we used that to base our forecasts on. The house is completely paid for and the property tax is negligable (less than $50 a year). Utilities will be our main costs andthese run around $200 a month for electric/water/trash/sewage based on the previous owner's bills. Phone, internet, and satellite TV will be additional costs and are comparable to those in the US. Most of the house is heated with a very large ceramic fireplace/stove and firewood is cheap. Food is more expensive for some things and less for others so it is a wash; however, the quality is vastly different and much better in Hungary. Wine etc. is a lot less ($0.50 a bottle). Gas is a lot more ($8-10 per gallon). We are taking a Prius so the latter costs will not be horrible. Insurance is roughly $200 a year. So, we could survive well on $1000 a month at those prices. I haven't bothered to recalculate them after the dollar rose so much but for now it is very good. Remember that all commodities are traded in dollars so the dollar will remain the major currency for a long time to come and the dollar rate is set by us (The Federal Reserve). There is a lot of talk about adopting a world-wide currency whcih IMHO is a good idea and it would likely be the dollar. This will destroy the Forex traders but make me very happy. Basically, no one knows what the future will hold and it is all macroeconomic guesswork and even Warren Buffett took a bath last year. My firm belief is that the US economy is artifically controlled completely by the US government through the Plunge Protection Team (evidence abounds - do a google for PPT and read all the conspiracy theories; however, we have very good modeling of what the PPT is up to and are using that now to our advantage) and that we (the US Dollar) are in no danger at all.

We looked very hard at France and were all set to go to Evian, France until we discovered what great deal Hungary is. I love the Alps and Evian would have been closer for me, but I will be 2 hrs away from the hoch Alps which still isn't too bad. Graz is only 1 hour away and also has average skiing. Slovenia is equally close (and actually Ukraine is as well with the Carpathian mountains) and is good as well but I prefer boarding in the deep powder of the Alps, particularly in the Stubaital are but I also love Lech/Zurs/St. Anton as well but they are a lot farther and require an overnight. The trains are also a reasonable option as well. What I love best is that Europeans generally hate to get off the groomed piste which leaves vast amounts of untracked powder for me. The disadvantage for me is they also generally hate snowboarders as we track it all out and are slower and get in the way a lot. So, my boarding off piste makes everybody (especially me!!!) happy.

[FIREd]

Funny you mentioned Evian... That's the area where we've been looking... We figured we could live comfortably on 2,500 euros a month there.