Anyone from Europe - how to FIRE 45 in Europe

[matjung]

I was about 35 years old when I wanted to achieve FIRE by 40.
Now I am 45 and doing a form of part time work.

I reckon I could already be FIRED if I lived in a cheap country.

I see a few issues when dropping out of the work force.
My current passive income is roughly 15K per year.
Then there is a savings stock of 100K.
If I took out 5K per year I had an expected budget of 20K per year for 20 years - ceteris paribus.
Based on today's prices for accommodation, transport, cloths, food and hobbies - it does not sound much.
In my current country, I contribute 25K per year into the public and private pension system.
Staying in this country would not work. Moving to something like Greece or Cyprus might work straight away.



If you retired early, would you continue to make contributions into a public pension system?


As of today, my expected public/private pension with 65 is around 1K per month.
If the passive income stayed flat at 15K. I had about 27K to get along with when I legally retire in 20 years time.


If I worked another 5 years, my expected passive income goes up from 15 to 20K. With the savings stock I had a budget of 26.6 for 15 years.

The expected public/private pension will be closer to 2K per month.
Then I am closer to 39K net per year.


My impression is, that due to poorly designed public/private pension systems - going to work - does not add much value to my pension.

I have to work for 5 years to make the expected monthly pension go up by 1K.


I'm a kind of conservative when predicting numbers.



What are your thoughts / experiences in Europe.

 

[Zona]

If your current passive income is 15k per year for one person, you might consider Portugal. That is about the minimum passive income requirement for the D7 retirement visa. I don’t know how residency works for EU citizens - maybe EU citizens won’t need to go through the visa process to get residency. I know Portugal has a very generous non habitual residence scheme (NHR) for the first 10 years of tax residency (again, not sure if the NHR is available for EU citizens).

Lots of sun and good weather especially in the southern part of the country, friendly and kind locals, affordability depends on the area though.

 

[Zona]

I should clarify that we are not tax residents of Portugal, but have spent the last couple of years considering it.

 

[Sunset]

OP - Does not seem like your savings are large enough. Simply imagine a few years of high inflation so costs are 33% higher forever.
Eating dog food is not attractive.

I'd rather work hard and a lot for 5 more years, than run out of money and have to beg/work when old.

 

[matjung]

When I am looking at all the real estate millionaires in this forum - I'm already starting to feel poor. My background is in fixed-income. I'm not to worried about the hedging-/put side of making investments.
I've never been to Portugal, just to Spain.
I had the impression that Spain is a high tax country.
Portugal:
https://taxsummaries.pwc.com/portugal/individual/taxes-on-personal-income
Pro:
Net wealth/worth taxes : There are no net wealth/worth taxes in.
Currently I pay wealth tax. Compiling the asset list is every year big hassle.
Conts:
Income Tax
Income tax rate of 28.5 to 35% i
VAT up to 23%
Capital gains
As a general rule, capital gains will be subject to tax at a flat rate of 28%.
Dividends and interest are liable to taxation at a flat rate of 28%
The so called passive income depends on funds, stocks, bonds, reit, warrants, capital gains
For my investment positions in Germany I have to pay 25% capital gain taxes.
Believe it or not my portfolio in Switzerland (no capital gains tax) performs 50% better than the one in Germany with almost the same risk.

NHR
Thanks a million for that acronym.
It sounds interesting, I need to have a closer look into that topic.
EU Citizens qualify for it.
https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/

 

[JakeinChina]

When I am looking at all the real estate millionaires in this forum - I'm already starting to feel poor. My background is in fixed-income. I'm not to worried about the hedging-/put side of making investments.
I've never been to Portugal, just to Spain.
I had the impression that Spain is a high tax country.
Portugal:
https://taxsummaries.pwc.com/portugal/individual/taxes-on-personal-income
Pro:
Net wealth/worth taxes : There are no net wealth/worth taxes in.
Currently I pay wealth tax. Compiling the asset list is every year big hassle.
Conts:
Income Tax
Income tax rate of 28.5 to 35% i
VAT up to 23%
Capital gains
As a general rule, capital gains will be subject to tax at a flat rate of 28%.
Dividends and interest are liable to taxation at a flat rate of 28%
The so called passive income depends on funds, stocks, bonds, reit, warrants, capital gains
For my investment positions in Germany I have to pay 25% capital gain taxes.
Believe it or not my portfolio in Switzerland (no capital gains tax) performs 50% better than the one in Germany with almost the same risk.

NHR
Thanks a million for that acronym.
It sounds interesting, I need to have a closer look into that topic.
EU Citizens qualify for it.
https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/

With all due respect, it doesn't seem like you have enough to retire at 45. My one question, which I think most are thinking is why are you only working part time at such a young age of 45? You're in prime earnings age in your life. Why not work full time, save as much as you can, then retire at say in your early 50's?

If you stopped working now and moved to Europe on only 15k annual income, what happens when you turn 50 or 55 and are no longer able to find work if things don't work out? Our ability to generate income is a short window in our lives, unless you have a certain skill set that you can do when you get older.

My suggestion, if you really want to retire, is bust your butt working full time for the next 5 to 8 years, save as much as you can, then review your finances and hopefully you can retire then. I would also look into cheaper EU countries or countries with good to decent qualities of life but lower costs compared to say a Spain or Portugal. Portugal will only get more expensive as so many expats are moving there now. Best of luck.

 

[NW-Bound]

... If you stopped working now and moved to Europe on only 15k annual income, what happens when you turn 50 or 55 and are no longer able to find work if things don't work out?

The OP is already living in Zurich!

It is not possible to survive in Zurich on 15k. I am not a European, but have visited Switzerland on two trips, and just the high grocery costs scared me. I don't know about other living costs, such as rent and transportation costs, but am sure that they are higher than in nearby France for example.

 

[Surewhitey]

Our friends are in the process of moving to South France with their daughter already there with their family. $15k annually can go a long way in the country, non-city life in many countries. Our friends are doing it on a shoestring since 2007 and we are amazed at how they get by, but they do.

Healthcare is a huge thing for us, but over there, not so much.

Some friends in Denmark are window washers in the summer and make enough to live abroad for the winter months in Mexico. I'd say find some seasonal work that pays well (surprisingly windows do, maybe commercial work).

Take advantage of the social systems there too. One of the Danes "finished" high school whilst living in Mexico & his living was financed by the government for a year. Probably a few ways to legitimately do this kind of thing.

 

[matjung]

Well, going to work does not fulfill my life.
I always felt happier when I am not working for others.
Wherever I will retire, it won't be this country.
I think you must be born in Switzerland so that a retirement is feasible.

Maybe I'm working in the wrong industry for too long.
Or I'm in midlife crisis number 15 (I'm not counting).
I start working in a new job, and a few months later it gets boring.
Learning something new and getting to know new people, is the interesting aspect of my role. Then it is just work.
I'm working in IT with Finance. A lot of our work is having a temporary character.
When I look back at the last 20 years. I was always working in Cost Centers, never in Profit Centers.

When I'm not working. I have time to analyze company annual and quarterly reports. I allocate money and see the results of my asset allocation.

I also have time for traveling around.
I made the decision of not retiring this year.
I keep piling up assets under management.
Switzerland is a great country for the savings pic and investment account.

I think even students cannot live on 15K in Zurich.
In some countries around the Mediterranean or Black Sea it could be possible.

I don't know yet.


The 15K is passive income. Independent from the job market.

Depending on capital markets.