Spain Comparable to France

[Whisper9999]

I asked a question a few months ago about retiring, or semi-retiring, in France and got GREAT responses. But I wonder if I am being realistic as I don't know French yet but am pretty good with Spanish. Well, and my wife is a native Spanish speaker as well!

Anyway, here is my understand of retiring in France:

1. You must pay about 40% of your income in "social taxes".
2. You have to pay about 19% for VAT (but the cost is usually hidden to the consumer).
3. You get generally very good medical care with no underwriting and minimal copays if you intend to live in France year round.
4. Anyone can get into the French system that will live their year round but you must work ahead and find which system/branch of government - can't remember the name for it- that you will be under.

My question is this:

Can you say 1-4 about retiring in Spain as well? Are the taxes, social contributions, quality of medical care, etc. roughly the same there?

I know the Dutch and some other Europeans love to vacation in Spain, so I have the idea it's a very warm and hospitable country in general. But is that way toward retirees and do quite a few Americans retire there?

 

[Bestwifeever]

I also would find Spanish the easier language, but I would worry more about the Spanish economy vs. the French.

I'm sure you could google your questions as they pertain to Spain.

 

[Whisper9999]

Well, I already know that European countries are generally set up the same, but the "devil's always in the details", eh? Besidaes, there is no substitute for actually talking to someone who has lived there.

As far as Googling, I can only say to try it: you'll get a million "retire overseas overnights" markety, hypey sites with very little information.

The one thing I did think of was trying to find a Spanish forum and giving it a whirl, but I thought I'd try here first since it's really more Americans that I want to talk to.

By the way, I will admit that the AARP has a pretty good article. It mentioned the $230 per month figure for insurance that I have heard quoted. But I don't know if that's for the private system or public? Again, the devil (or angel) is always in the details.

Also, I know taxes in France for the typical middle-classer working in France was usually roughly 40%. I was curious if Spain was likely to be more or less than that?

 

[Animorph]

Given that Spain is following in Greece's footsteps, the answers to those questions may be very different in the future than they are now. Heck, even the U.S. hasn't got a clue as to what our taxes will be in 2013.

 

[Whisper9999]

In case anyone is int'd here is the taxes as of 2009 I guess:

Retiring to Spain

 

[MichaelB]

A weak economy is a problem for working people but not so for retired folk like us. It can even be an advantage. Likewise taxes.

 

[Whisper9999]

Yes, that's just what I was thinking. I don't want to be callous to the people of Spain, but a collapsed real estate market is a great buying opportunity. (Although one has to be incredibly careful of course.) The nice thing about a country in Western Europe is that social order will be maintained while the economies prune themselves and prices and deals go down often. Of course, that's not the case in many third world countries.

Regardless, my bottom line is this: I LOVE Western Europe. That's where I want to spend a lot of time. I don't need a lot of money to be happy there: it's just so gorgeous and I greatly admire the history and culture there. My hats off to the Europeans...

 

[Lsbcal]

Have you looked into the social dynamics of moving to your chosen location? I don't have great insights on this but there are a few books that might be useful:

Almost French by Sarah Turnball

Sixty Million French Men Can't Be Wrong by Jean-Benoit Nadeua & Julie Barlow

 

[friar1610]

I have a friend who retired from the military and then went on to make big bucks in the private sector. One of his four current residences is a condo on the Costa del Sol where he spends two stints a year - each several months. I've corresponded with him via email about the Spanish economy as it impacts him. He says that where he is living it would be hard to tell that Spain is having economic problems, although there is more real estate on the market than normal. He says the restaurants are crowded, there are plenty of luxury yachts and cars around, etc. But then again he is in a high-priced enclave that attracts a lot of wealthy ex-pats who probably had sufficient cushion to weather any downturn.

 

[Midpack]

Given that Spain is following in Greece's footsteps, the answers to those questions may be very different in the future than they are now. Heck, even the U.S. hasn't got a clue as to what our taxes will be in 2013.

A weak economy is a problem for working people but not so for retired folk like us. It can even be an advantage. Likewise taxes.

I'd be a little leery at the moment too especially with the PIIGS, might want to let the Eurozone sort itself out first. Taxes, healthcare, other? But MichaelB may well be the more likely outlook as I know I tend to err on the side of caution (maybe too much), who knows...

 

[MichaelB]

Let me clairify my previous comment. Spain is in recession and has very high unemployment. This typically would lead to prices falling and bargains appearing, things that appeal to any person approaching retirement.

Most of that usually is the result of currency devaluation, which may not happen with Spain. I certainly wouldn't suggest keeping more than a few months expenses there. Nonetheless, it is a developed European economy and the standard and cost of living will usually be comparable to the US. Real estate prices will probably fall substantially and that could be an opportunity for someone that has already decided to retire there and is waiting for the right moment.

No matter which country one chooses, my view is a "plan B" is mandatory when one retires abroad.

 

[Whisper9999]

Thanks for the comments guys. (Sorry to be slow to respond.)

I'm also really wondering about tax rates and health care costs/quality compared to Spain if anyone has any feedback...

 

[Midpack]

Thanks for the comments guys. (Sorry to be slow to respond.)

I'm also really wondering about tax rates and health care costs/quality compared to Spain if anyone has any feedback...

You may have picked this up from earlier posts, but I'd wonder if what I learned today about taxes or health care costs/quality/eligibility in Spain would continue to apply, or for how long? I'd think expats might get hurt before or worse than native citizens, as the Eurozone grapples with fiscal debt/deficits.

Best of luck...the culture and climate in Spain do look appealing IMO.

 

[Whisper9999]

True. However, you have to get that starting point to for beginning comparison purposes.

 

[FIREd]

I asked a question a few months ago about retiring, or semi-retiring, in France and got GREAT responses. But I wonder if I am being realistic as I don't know French yet but am pretty good with Spanish. Well, and my wife is a native Spanish speaker as well!

Anyway, here is my understand of retiring in France:

1. You must pay about 40% of your income in "social taxes".
2. You have to pay about 19% for VAT (but the cost is usually hidden to the consumer).
3. You get generally very good medical care with no underwriting and minimal copays if you intend to live in France year round.
4. Anyone can get into the French system that will live their year round but you must work ahead and find which system/branch of government - can't remember the name for it- that you will be under.

My question is this:

Can you say 1-4 about retiring in Spain as well? Are the taxes, social contributions, quality of medical care, etc. roughly the same there?

I know the Dutch and some other Europeans love to vacation in Spain, so I have the idea it's a very warm and hospitable country in general. But is that way toward retirees and do quite a few Americans retire there?

I am a little late to the party, but I wanted to correct a few things about France:

1) "Social taxes" are currently in the 7-13% range depending on your income sources. In addition, you may owe income taxes (although there are ways to lower your income tax liability by taking advantage of tax breaks on certain investments), as well as some amount of wealth tax if your net worth exceeds 1.3M euros. Note that the recent change of government means that taxes are in flux. People with higher incomes and net worths will most certainly start paying higher taxes after the summer, but taxes will probably go up for everyone in the future.
2) The VAT is currently at 19.6% (with lower rates on some basic necessity products). There were talks about increasing it, but that seem to be off the table now.
3) correct
4) this is a little bit tricky. Currently, anyone living in France full time can join the French system, whether they have worked in France or not, through a program called the CMU. However, this program is currently deep in the red and it is probable that either access will become restricted or premiums increased in the future.

 

[BigNick]

1) "Social taxes" are currently in the 7-13% range depending on your income sources. In addition, you may owe income taxes (although there are ways to lower your income tax liability by taking advantage of tax breaks on certain investments), as well as some amount of wealth tax if your net worth exceeds 1.3M euros. Note that the recent change of government means that taxes are in flux. People with higher incomes and net worths will most certainly start paying higher taxes after the summer, but taxes will probably go up for everyone in the future

What the OP calls "social taxes" - called "charges" (that's a French word, pronounced "sharj") - are an extension of the employee/employer deduction system. Some retirement income is not subject to them at all. (At least, my forthcoming pension from my international organisation employer isn't, although it does count for income tax.)

One of the new French government's election policies was to merge CSG (the biggest "charge") with income tax. This is a sensible modernising measure, but very politically sensitive because it will mean a lot more people than at present "paying income tax" (even if the amounts don't change). Historically, income tax was not something that working class people expected to be asked to pay, especially if they had 3 or 4 kids: they paid their "charges", each of which was assigned to a specific purpose (so much for health insurance, so much for retirement, so much for unemployment) and the wider financing of the country was done by VAT and income tax on the moderately better off. The French still pay income tax much the way Americans do, unlike most of the rest of Europe where you have it deducted from your salary every month; tax season is quite a big deal in France.

Tax is pretty progressive (i.e., it starts at a low rate) in France. As a retiree, to be paying 40% of your income in tax and "charges", you'd probably need to be making around six figures.

2) The VAT is currently at 19.6% (with lower rates on some basic necessity products). There were talks about increasing it, but that seem to be off the table now.

For all practical purposes, you can ignore VAT, because you can't avoid paying it and it's in the sticker price of almost every item you buy.

The bigger problem I see with the OP's approach is that, unless you speak reasonable French or join a large expat community (which will typically be Brits, Dutch, or Germans - and even the Brits will seem like foreigners to many Americans, unless you have many years of European experience), it can be quite lonely in France. Very few people, especially over 50, speak - or are willing to speak - English in social contexts, regularly, so that you can be your friend. If you are prepared to totally immerse yourself, and really, really learn French - say, so that you can follow entire movies with no subtitles, or complex current affairs shows on TV - then go for it. Otherwise, you will stick out like a sort thumb. (Similar considerations apply in Spain, but there are larger expat communities on the eastern and southern coasts.)

However, I agree with the OP about the Spanish property market. There are some amazing bargains out there. This nice little place for US$75,000 (and you could probably offer 80% of that) caught our eye a couple of months ago, but we were just randomly browsing, not ready to move yet.

 

[rodi]

Given that Spain is following in Greece's footsteps, the answers to those questions may be very different in the future than they are now. Heck, even the U.S. hasn't got a clue as to what our taxes will be in 2013.

I'm not sure Spain is following in Greece's footsteps.

My understanding is that the two countries are in trouble for different reasons.

Greece had HUGE borrowing, that they covered up. And now have a debt-GDP of 159%.

Spain has a much healthier (although still high) debt to gdp ratio - just under 80% (up from less than 70% last year)... But the root causes of the financial collapse in spain have more to do with banks exposure to bad real estate loans. (Sound familiar - sounds like the US problems to me.)

Not all PIIGS are the same. Ireland had different issues than Italy, who was different than Spain.

I've been trying (not always successfully) to understand all of this since my husbands family is originally from Italy and we've considered at least part-time living in Southern Italy.

As was mentioned - what's bad for the locals (unemployment, collapsed housing market), might be great for retired folks.

 

[Whisper9999]

Guys, I realize appreciate the comments, even though some of it makes my head hurt. It's interesting that there so many experts on France on this board - thanks much - but it looks like I may have to go to a Spanish board to find some answers on Spain. Well, that will be good practice for me.

I already can handle Spanish pretty well, by the way, and believe I could learn French as well over a few years. I really enjoy languages and my wife is fluent in Spanish. This is part of why I was asking about Spain: we could up and running without as much difficulty. I just think France is so gorgeous though!

Again, thx much - and I'm taking notes!