$2.5 million to retire (Legg Mason PR story)

[NW-Bound]

Exactly. And if you want to take the pension before official retirement age, there is of course a penalty, 0.3% per month. If you postpone, the payment increases by 0.5% per month.
It's taxable income, and health insurance is also deducted, so the net amount is less.

Edit to add: It's not "6003€ in tax", but "6003€ in pension contributions", but I guess that's what you meant. Income tax comes on top of that, of course.

Yes, I am aware that you have other taxes. By the way, SS is really a tax because the same as with a general tax, an individual is not guaranteed any return. SS is not a contractual obligation. The US Supreme Court said so in 1960 in the case of Flemming v. Nestor. You may not even get anything.

Anyway, it appears that the German system benefit is proportional to the lifetime contribution. The US SS is not. A worker with an annual income of $100K gets about 2.5X the benefits of one who makes $25K, not a 4X factor.

Also, one who works 40 years does not get 2x the benefits of one who works 20 years.

 

[LARS]

It took a while, but it began to dawn on me that there were all kinds of social programs in place and, with the glaring exception of healthcare, the system of social safety nets wasn't that different from those in Europe and Canada. Funny thing, how countries create and keep alive their own folklore and myths...............

Very interesting to hear your perspective on this. As you say, we are generally led to believe that Europe is the "Nanny State", at least historically speaking compared to US. Can I ask how long ago was your initial experience and, if it was a while ago, do you think the "safety net" has changed dramatically?

My curiosity is in whether it has changed, not whether it should or shouldn't have, or how so (i.e. not looking for political view).

 

[TimSF]

Yes, $2.5 million seems reasonable for my situation - 52, no pension but SS, and $80k a year expenses.

 

[NW-Bound]

...It took a while, but it began to dawn on me that there were all kinds of social programs in place and, with the glaring exception of healthcare, the system of social safety nets wasn't that different from those in Europe and Canada. Funny thing, how countries create and keep alive their own folklore and myths...............

I knew a guy who, with the help of his siblings, emigrated to the US from the Netherlands. After being here about 2 years, working so hard just to get money for medical insurance for his family, he gave up and moved back. I think he would have stayed if ACA was available. Just one data point...

 

[Big_Hitter]

interesting....come to think about it, I personally only know one European who has moved here and stayed - does the UK count as Europe?

 

[NW-Bound]

Our nephew married a Dane. She is happy here. Her uncle independently moved to the US with his family. I heard that they loved it here. In megacorp, I worked with a guy who moved to Germany, but then moved back to the US. Of course there were a few Canadians who came here and stayed.

 

[NW-Bound]

I forgot that one of my wife's friends is a Norwegian along with her husband, and another friend is German. They are retired now, and we never heard of them mentioning the thoughts of moving back.

And then, there are tons of European immigrants on this forum who moved and worked here.

 

[Big_Hitter]

Now, on the other hand, I personally know a guy, who with the help of Megacorp, came from Africa to the US to study geophysics (fully paid) with the plan to return and be a geophysicist. Last I heard he's married with kids and driving a cab in Houston.

 

[GTFan]

Yes, $2.5 million seems reasonable for my situation - 52, no pension but SS, and $80k a year expenses.

For where you're living sure, but as a blanket statement for people looking at retirement it's horrible.

 

[longranger]

Horrible?? I don't get it. If someones expectations for a happy life before and after retirement require perpetual very high income most are creating a self fulfilling prophecy of unhappiness. Very few high wage earners will save enough to maintain their lifestyle without a move to a lower COL area. As has been emphasized many times on this forum flexibility and an ability to tighten spending are critical to most happy retirements.

 

[Major Tom]

Very interesting to hear your perspective on this. As you say, we are generally led to believe that Europe is the "Nanny State", at least historically speaking compared to US. Can I ask how long ago was your initial experience and, if it was a while ago, do you think the "safety net" has changed dramatically?

My curiosity is in whether it has changed, not whether it should or shouldn't have, or how so (i.e. not looking for political view).

I know there are others here who are more informed than I. I grew up in the UK, and was educated there, then promptly moved the US in my early 20's. I don't have much experience, or knowledge of "adult life" there (i.e. jobs, taxes etc).

I went to University in the UK in the 80's. Back then, if you qualified and were accepted by a British University for a first degree (Bachelors), the government was mandated to pay you a maintenance grant. This began as a result of legislation passed in 1962. I remember that my campus accommodation and meals during the week were paid for, the cost of my degree course was paid for, and on top of that, I received a check at the beginning of every semester to pay for my general living expenses. During the several-month long summer vacation, we were allowed to sign on for unemployment benefits as well, until the next academic year started. For students who wanted to find a summer job, it was just for extra pocket money - usually to fund a vacation abroad (India, or wherever the cool place to go happened to be). This went on for 4 years (the length of my course).

I remember my Dad talking about America and saying that he had heard how over there, students often worked their way through college. I was quite impressed with how dedicated and industrious these Americans seemed to be, as the UK government completely funded my life for 4 years while I was earning my degree (as well as drinking beer and running a pirate radio station on campus ).

During the 90's and after, as the numbers of students in higher education increased, government funding levels dropped. I'm not sure of the details, but at least as far as higher education goes, the UK is not as much of a "nanny state" (for want of a better term) as it used to be.

As for other UK social programs, I don't know how they have fared over the years. I'd be interested if anyone else has input on this - or information on how these things have changed over time anywhere else in the EU.

I knew a guy who, with the help of his siblings, emigrated to the US from the Netherlands. After being here about 2 years, working so hard just to get money for medical insurance for his family, he gave up and moved back. I think he would have stayed if ACA was available. Just one data point...

Yes, healthcare is that one big thing that sticks out to differentiate the US from the rest of the developed world.

 

[Alan]

interesting....come to think about it, I personally only know one European who has moved here and stayed - does the UK count as Europe?

Yes, the UK pays into Europe as a full member and is covered by all the European Parliament laws (and the UK has MEP's that sit in that parliament). The UK passport is an EU passport which allows one to live and work in any EU country. The UK is not a part of the Eurozone, which is a subset of EU countries that use the Euro.

To answer a query above, we spent several months in Australia last year, including a month with my brother and his family. I can confirm that it is a heavily taxed country, but it does have universal healthcare free at point of service (called Medicare) plus private healthcare, which my brother has, and complains about it just I like complain about my US private healthcare. (mostly about the complex invoicing). Australia also has a 401k style of retirement savings scheme called Superannuation which he funds to the max as his company doesn't have a DB pension plan.

To answer a question or 2 about the UK. They do have 401k style pension plans called Self Invested Private Pensions (SIPP's) and the law has just changed this year that allows the funds to be withdrawn as desired. It used to be that unless you could prove income above a certain threshold that SIPP funds had to be converted to an annuity by the time you reached age 70. Now a thing of the past, you can take out cash as and when you want. The UK also has the equivalent of a ROTH, but it is for savings not just retirement so there is no age requirement for penalty free withdrawals. They are called ISA's, and the after tax money grows tax free, is not taxed on withdrawal, and can be invested in stocks and bonds.

The UK is now abandoning its 30 year experiment with allowing folks to opt of the UK SS system and are now moving to a very simple SS pension. (Everyone gets the same amount depending on how many years contributions they have paid in). The opt out system was that you only paid ~3.2% "FICA" instead of ~6.4% and could invest the 3.2% yourself in qualified private plans. My BIL, who is a lawyer and very savvy financially, opted out when it was first introduced in the 80's and he reckons he has only done as well as if he had not opted out at all. Overall it has not been seen as a success.

 

[Focus]

It took a while, but it began to dawn on me that there were all kinds of social programs in place and, with the glaring exception of healthcare, the system of social safety nets wasn't that different from those in Europe and Canada. Funny thing, how countries create and keep alive their own folklore and myths...............

That's the whole point of this eye-opening book by Peter Baldwin from a few years ago: "The Narcissism of Minor Differences: How America and Europe Are Alike." Here's the Oxford University Press site synopsis:

"There is much heated rhetoric about the widening gulf between Europe and America. But are the US and Europe so different? Peter Baldwin, one of the world's leading historians of comparative social policy, thinks not, and in this bracingly argued but remarkably informed polemic, he lays out how similar the two continents really are. Drawing on the latest evidence from sources such as the United Nations, the World Bank, IMF, and other international organizations, Baldwin offers a fascinating comparison of the United States and Europe, looking at the latest statistics on the economy, crime, health care, education and culture, religion, the environment, and much more. It is a book filled with surprising revelations. For most categories of crime, for instance, America is safe and peaceful by European standards. But the biggest surprise is that, though there are many differences between America and Europe, in almost all cases, these differences are no greater than the differences among European nations. Europe and the US are, in fact, part of a common, big-tent grouping. America is not Sweden, for sure. But nor is Italy Sweden, nor France, nor even Germany. And who says that Sweden is Europe? Anymore than Vermont is America?"

This book entirely changed my perspective. Some might find it dry, but I think it's full of fascinating stuff.

 

[marko]

Very interesting to hear your perspective on this. As you say, we are generally led to believe that Europe is the "Nanny State", at least historically speaking compared to US.

My very close German friend insisted that his kids so some of their schooling in the US "so that they can see with their own eyes that if you're sick or poor they let you die in the street like a dog in the US".

His view surely was that in Europe everyone is "Nannied" and happier for it.

 

[MichaelB]

Thanks for an interesting discussion
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