Hi from Europe..and question for you

[Scrimper]

Hi guys, I am 47, living in Southern Europe with 3 kids under 6. Neither my wife nor I work because until I was 43 I had a reasonably highly paid job elsewhere, which allowed us to come to where we are now, buy a modest place to live, and also a quite nice place to rent out. Each with no mortgage. Right now we live on the rental income of the bigger place.
I did not like the corporate world much so I was happy to leave it. And my wife is one of those people who has faith in the universe and thinks everything will be OK, so I should just be 'in the moment' enjoying this time with our kids. But what is ruining it for me is my sense of guilt that while I am still relatively young and healthy, I am not amassing a bit more money. Because although the rental income covers our costs and the house is in a high demand area, where it's not difficult to find tenants, the reality is that the two houses are all we have. No pension (not even a state one; worked in too many different countries) and nothing else. We do have free healthcare and higher education where we are, so there is that...gotta love Euro- socialism
The rental income is about 2000 euros a month and although one or both of us will probably earn something occasionally over the next 20 years, it will be low paid stuff, so my guilt is more around the fact that I am highly qualified (thanks to the sacrifices of my parents as well as my own) and so the income I am foregoing (and with each year of no work, making it much more difficult to get back to) is much more than I will ever get being here and doing this. Plus there is the fact that when you read online about how much you should have when you retire, it seems like the figures are very high. Our assets (the two houses) are currently worth around 550k euros and that, as I have said, is all we have.
I guess my question here is whether anyone else has been in a similar situation to us at any point, and what happened! It would be great to hear about other people's experiences. Thanks for reading.

 

[marko]

I've never been in a similar situation but if what you're saying is that you have virtually no other assets than your house(s), I'd be a bit concerned; a lot can change over the next 40 years of your life.

A bit of cash on hand is always a good thing IMO.

OTOH, there's a few folks on this forum who seem to get by on rental income, or just a pension etc and little else. As I've learned here there's more than one way to skin that retirement cat.

 

[EastWest Gal]

I have no experience in rental property. But I see a glaring problem is you have only one rental property. What happens if you need to make a major repair, or there is an earthquake, fire, or flood? What will be your source of income? In the past three years 3 people I know lost their homes to fire. Thankfully they had good insurance and work.

It seems if you're going to rely on rental income, you need diversification.

 

[braumeister]

I am highly qualified

at what?

Tremendous variety of occupations represented here, so you should find some knowledgeable folks to provide advice about earning some nest egg money.

 

[socca]

Plus there is the fact that when you read online about how much you should have when you retire, it seems like the figures are very high.

I've noticed on ER.org that people with families that include young children start thinking about a comfortable early retirement in the U.S. with assets around $1M per capita. So, for a family of 5, this would be $5M. Of course, this is only a very rough rule of thumb, and I'm sure that many people get by on much less. Also, for some people an uncomfortable ER is preferable to the rigors of the workplace.

Welcome to ER.org.

 

[Crewer]

Sounds like a different lifestyle than here in the US - is it also colorful? I just read Chris Stewart's Driving Over Lemons. He parlayed a colorful life in southern Spain into a bestseller!

 

[Scrimper]

Hmmm, thanks guys, food for thought. Yes i certainly prefer a modest existence with time for the kids while they're small, to missing much of their youth and having a more comfortable retirement later. But ideally once they're more independent, I would spend a bit of time adding to our bank account before 'retiring' again. The trick will be trying to do that for a few years aged around 50, with a large gap on the CV!

 

[Scrimper]

Sounds like a different lifestyle than here in the US - is it also colorful? I just read Chris Stewart's Driving Over Lemons. He parlayed a colorful life in southern Spain into a bestseller!

Yes it is not a million miles from the life in that book; people also get by on very little and have a pretty good life in a wonderful climate, where it's very child friendly and relatively safe. My challenge is being able to slow down, not being a big status high earner anymore, and not being constantly stimulated by a challenging job. Rationally i know the path I'm taking is more sensible and ultimately has more meaning, and i knew all the high status thing was pointless at the time. But we are educated to be so addicted to competition, a fast pace, and constant adrenaline....I'm finding cold turkey quite hard

 

[marko]

The trick will be trying to do that for a few years aged around 50, with a large gap on the CV!

I wish you good luck.

Personally, I was looking for work at age 53 with no gap and a stellar CV (international high tech senior executive). I wasn't looking for a big job or a big salary either.

It went unsaid directly, but I was considered too old and not hungry (i.e. too wealthy) and despite hundreds of resumes, got a few interviews but never went back to work again. Not that I'm complaining!!

 

[Scrimper]

I wish you good luck.

Personally, I was looking for work at age 53 with no gap and a stellar CV (international high tech senior executive). I wasn't looking for a big job or a big salary either.

It went unsaid directly, but I was considered too old and not hungry (i.e. too wealthy) and despite hundreds of resumes, got a few interviews but never went back to work again. Not that I'm complaining!!

That must have been hard in the short term, at least. How did you cope with the (I assume) stress and anxiety and eventually get through that to realise it was a blessing in disguise (if that's how it played out)

 

[flyingaway]

I would not rely on a single source of income for the rest of my life. But it is just me.
Furthermore, how do you know you still have skills to make money many years down the road, as you mentioned?

 

[Bamaman]

Having three babies relatively late in life does change one's priorities. I would think the kids' future needs would be your biggest concern. Children are expensive to raise no matter where you live.

We are having to raise a 6 year old girl, and our priorities are changing. After all, it is the children that really matter. But we are fortunate to have the financial resources required.

 

[stepford]

But what is ruining it for me is my sense of guilt that while I am still relatively young and healthy, I am not amassing a bit more money.

I wonder if this is a difference in attitudes or perhaps one of translation. Imagining myself in a similar circumstance I wouldn't feel any guilt. However fear/anxiety would be significant. My strong preference was for extra funds for a rainy day, and I paid for this preference with too many extra working years - but guilt had nothing to do with it.

 

[Mdlerth]

This is gonna hurt

Let me restate what I think you are saying: "Right now my family is living contentedly without me having to earn a paycheck. I worry that €2k might not be enough later on. Should I go back to w*rk to pad the stash while I still can?"

First, let's deal with the source of your income. You have a net worth of €550k, although that includes your residence, so investable assets are less. In any case, it doesn't matter if it's 550 thousand or 550 million. You have concentrated your risk by depending entirely on a single rental property. This is too many eggs in one basket. You need to consider diversifying your capital, not just by trading one large rental for multiple small ones but getting into other sectors like equities and bonds. This probably means selling the rental property.

You could secure additional income by going back to w*rk. You didn't like the rat race, but you have good credentials. However, j*b skills tend to dissipate over time. If you wait five or ten years, you may no longer be "highly qualified".

Second, we'll examine the expense side of the equation. There are people who embrace a very frugal lifestyle and could do fine in your situation. My own parents had been doing it for years, so that they could provide regular support to my two sisters.

An individual typically has greater control over spending than over income. If you can live happily on €2k/month, then you are free to focus on optimizing the non-financial aspects of life: your family, your health, your raisons d'etre.

However, it sounds like you are NOT resting easily with the 2k. You won't be happy without a bigger cushion, and you feel guilt over leaving too much on the table. I hope I don't scare you away by saying this on a retirement forum, but I think you need to go back to earning while you are still young enough and your "highly qualified" skillset is still marketable. Good luck!

P.S. You also wrote "Plus there is the fact that when you read online about how much you should have when you retire, it seems like the figures are very high." Please do not obsess over what anybody else's numbers are. Such surveys are financial planning candy; they taste sinfully sweet but have little nutritional value. Figure out what YOU need and make all your decisions based on YOUR needs. It's perfectly OK to decide you need another million, but it should be because you have determined that it fits your needs, not because someone else decided he needed it. If you view retirement as a competition, you're certain to lose. I don't want you to lose.

 

[Scrimper]

Thanks again guys and let me say also how much I appreciate the tone of the responses; people are genuinely wishing others (me in this case) well, and when they give their considered opinions, they are allowing for the fact that these will not fit all contexts. An intelligent, balanced and benevolent forum; now that is something of value!

 

[Scrimper]

'My strong preference was for extra funds for a rainy day, and I paid for this preference with too many extra working years - but guilt had nothing to do with it.' Stepford, I would like to know more about your conclusion that you 'paid' for your preference with 'too many' working years. I may be tempted into this trap so I would love to hear why you now consider it was not necessarily the best thing to do

 

[someguy]

'My strong preference was for extra funds for a rainy day, and I paid for this preference with too many extra working years - but guilt had nothing to do with it.' Stepford, I would like to know more about your conclusion that you 'paid' for your preference with 'too many' working years. I may be tempted into this trap so I would love to hear why you now consider it was not necessarily the best thing to do

All things equal, working more and therefore having more money saved reduces the chances of failure (i.e., running out of money before death). However, you can never be 100% sure against failure and it's a classic diminishing returns situation. Different folks have different comfort levels and going into retirement one has to make a personal risk decision plus a (hopefully educated) guess. Over the course of time from retirement until death, it becomes more and more clear if one saved too much, too little, or just about right. Those who saved too much "wasted" time working and could have retired earlier.

There are a number of those "too much" folks on here and plenty of "just about right". The problem is those who were "too little" probably aren't spending time posting about it on a forum like this. And in many industries being out of work for 5-10+ years or even just being a certain age may prevent getting back in for those in the "too little" group. Of course, cutting the other way are those not posting on here because they died early!

 

[stepford]

Stepford, I would like to know more about your conclusion that you 'paid' for your preference with 'too many' working years. I may be tempted into this trap so I would love to hear why you now consider it was not necessarily the best thing to do

I retired at 55 after a most unpleasant and stressful final 5 years. For the last several of those years I was well into what's described as the OMY syndrome around here (perpetually deciding to work One More Year). While I consciously chose to comfortably exceed the bare minimum in retirement savings, nevertheless upon retirement I've found that my expenses were lower than expected and I could have avoided most of that final stretch of work. Furthermore, I find the activities I now enjoy are physically demanding and I wish I had been able to take them up when I was a few years younger.

So knowing what I do now I wish I'd jumped about 3-4 years sooner.

In fairness though, it's easy to think you have traded too much time for money when the markets are riding high. If we have a good healthy crash like a decade ago I might revise my assessment and be happy I'd worked and saved those extra years after all.

 

[Blue Collar Guy]

So, for a family of 5, this would be $5M. Of course, this is only a very rough rule of thumb, and I'm sure that many people get by on much less. :

My wifes Uncle, retired with about $50 bucks in the bank . He has 5 children from 2 different wives. At age 62 he had 3 kids under the age of 18, he was getting social security for all of them, as well as for himself and his wife. He should be collecting cans for money but social programs keep him in pocket money.

 

[rodi]

Welcome to the forum Scrimper -

I'm a bit older - but retired with kids under roof... and the time with the kids is worth infinity!!! You're in Southern Europe- we've done a lot of travel with our kids in and around the Mediteranean (Sicily, Southern France, Barcelona on our last trip.) It's a great place to be a kid or a parent!!!

I've noticed on ER.org that people with families that include young children start thinking about a comfortable early retirement in the U.S. with assets around $1M per capita. So, for a family of 5, this would be $5M.

I respectfully disagree with this... I retired - family of 4, and far less than the $1M/person suggested. FAR less. Yet we have a great life. FUEGO, another member here, retired younger than you with far less than the $5 M suggested for a family of 5... (his family is 5)... and he's not on these days because they are travelling this summer in Europe while the kids are not in school. It can be done with a lot less $.

That said - I agree with the issue of diversification. We have rental income, some pension/ss income, and the rest from savings which is invested in stock and bond index funds... I would be VERY nervous if I only had one income source from a single asset class. Seems like Southern Europe was hit hard during the real estate bust 9 years ago - and your net worth is exclusively in an asset class that can boom/bust.

Is it possible to get some short term contracts or part time work? Depending on your career/skills you may be able to get short term assignments - earn some income... take some time off... then get another short term gig... That would let you increase your savings and diversify it.

 

[SAtoUS]

I can relate 100% to, 'should I back to w*rk'. I stop working at 47 in 2016. We (wife and two cats) ONLY live on our rental income. We have 5 rental properties (4 commercial).

Can I go back to work? Yes. Do I want to? H*ll no!!

It's not that you have nothing, you can always sell one or both if need be. You know, when they burn down or the earth opens up and swallows 'em. Then rent and go back to work. Don't worry too much about "what if's". What if the sky falls down? ...then we all walk around w blue hats.

If I'm you and happy (I am), don't go back to work. Why? If you can live on €2k a month, ask yourself this... What will be different if that was €20k a month? For me not much, it's all about happiness. In your case too, spending time with your kids, that time is irreplaceable.

The majority of folks posting here are all living in the US, as do I. However, I have three passports and travel lots. Americans have a MUCH different outlook on retirement than the rest of the world.

You are rich. Very very rich. For most Americans maybe not, but believe me, you are RICH.

Go here:
Global Rich List

You’re in the top 1.15% richest people in the world by income. That makes you the 69,131,560th richest person on earth by income.

With your two houses, makes you the 54,581,768th richest person on earth.

You will be just fine, don't worry.

Good luck!!

 

[Blue Collar Guy]

......Can I go back to work? Yes. Do I want to? H*ll no!! ....

Don't worry too much about "what if's". What if the sky falls down? ...then we all walk around w blue hats.
You will be just fine, don't worry.

Good luck!!

I wish I would have heard/thought of this in 2003. Great advice. I should have worried less.

 

[marko]

That must have been hard in the short term, at least. How did you cope with the (I assume) stress and anxiety and eventually get through that to realise it was a blessing in disguise (if that's how it played out)

The company was acquired. It was less stressful due to a 2 year severance (pay, benefits, car and apartment in Europe).

We already had a fair amount of investments so while not being able to get a foot in the door work-wise was frustrating it wasn't the end of the world. Lemons=Lemonade.

What did make a difference for me was finding this forum. Seriously, I've learned so much here. I mean, I might have survived nicely without it but this place has helped me tremendously.

But my point was that I know of several people over 50 who had an excellent name in their industries who've found it almost impossible to land a similar job after having been released from their old jobs, hence my caution to you. "Over 50" appears to be a problem especially in the higher paying fields; at least to those people I know.

 

[Scrimper]

Thanks a lot everyone for your continued advice and sharing of experiences; very much appreciated. It certainly is true that here, where we are, we are a lot better off than most, and the attitudes to what is enough are quite different (partly because of state provided healthcare and college but also due to cultural differences regarding what is important).
I like the advice about diversifying a bit and about taking one or two 'gigs'. I never aimed not to work; i just wanted to work very hard on things that mean something to me; being a parent, learning an instrument, etc... probably like a lot of people on here.
Thanks again!

 

[kimcdougc]

Hmmm, thanks guys, food for thought. Yes i certainly prefer a modest existence with time for the kids while they're small, to missing much of their youth and having a more comfortable retirement later. But ideally once they're more independent, I would spend a bit of time adding to our bank account before 'retiring' again. The trick will be trying to do that for a few years aged around 50, with a large gap on the CV!

Your kids will need you more as they age being teenagers etc. You should earn more $ now while they are young. Just my opinion.

Welcome to the forum.