Intro

[Eric S]

I've been asked to introduce myself. I'm 56, retired (I did lots of different things), and enjoy travel, cooking, craft beer, indie movies, and quality TV.

I'm planning on retiring to Portugal, one of my favorite countries, which offers first world standard of living/quality of life at nearly third world expense. Also, there's a sweetness you don't find in more bustling countries (Spain, France, UK, etc).

I plan to use super discounted plane fares to cheaply explore the continent and North Africa. Trains go everywhere in-country, so I might not even need a car.

I was an early adopter of Internet, so many of my friendships are virtual, anyway. Plus, having done lots of travel for both work and pleasure, I have friends all over the world. The move will take me away from American friends, but bring me closer to European ones. Zero sum.

My primary concern, of course, is to not find myself destitute at age 90, when I may be less flexible and resourceful. I've posted to ask about budgeting a house purchase, and found it tricky to persuade forumites to focus on the central issue: not running out of money before I run out of life. My tastes and local expenses have nothing to do with it. There's a hard maximum I can prudently spend, regardless of external factors, and I'm hoping to determine what that is.

Once I do, I'll try to spend way less if possible. I dislike the stress of getting too close to the line. For me, the ultimate luxury is to have sufficient slack to enjoy minor indulgences freely. A big part of that is keeping them minor! Secondhand blu-ray disks, not Porsches. Pizza slices, not Château Lafite. I live like a poor guy who just found twenty bucks in an old pants pocket. Works for me!

 

[braumeister]

the central issue: not running out of money before I run out of life. My tastes and local expenses have nothing to do with it. There's a hard maximum I can prudently spend, regardless of external factors, and I'm hoping to determine what that is.

FWIW, that is exactly what FIRECalc is designed to do. Have you spent much time using it?

 

[The Cosmic Avenger]

Welcome, Eric S.!

Craft beer: brew, drink, or both? I made one batch many years ago, and decided that it was OK, but not up to the quality of what I could buy, and that I wanted to do other things with my time, too. This was when our child was small, so I may try it again eventually.

 

[pacergal]

Unfortunately, there is no guarantee to never run out of money. However, studies show that if you withdraw less than 4% over 30 years, it is likely that a portfolio survives. Being 56, that number would probably be 3%, as you most likely will live more than 30 years. But I am not a CPA, just a random person on the forum.
Any pension or Social Security may change the withdrawal amounts.

Have you played around with Firecalc to check your spending? There is a section that will run a calculation on how much you can spend yearly.

 

[rodi]

Welcome.

I assume you've looked into whatever visa issues you'll need to address. Banking gets slightly more complicated because of the US reporting requirements. There are a couple of threads here that delve into those issues. (Use the search function at the top of the page to look for FATCA, for example). The other issue for US folks overseas is health insurance... Some of the same threads will discuss that.

We've toyed with moving abroad. My husband and sons are Italian duel citizens. (I haven't bothered to file the paperwork to file for citizenship as the spouse, a multiyear process.) There is definitely an appeal to it.

 

[W2R]

FWIW, that is exactly what FIRECalc is designed to do. Have you spent much time using it?

+1

It sounds like FIRECalc would be a great option for your next step! It's free, link at the bottom of each page here in the ER forum.

 

[Eric S]

Welcome, Eric S.!

Craft beer: brew, drink, or both? I made one batch many years ago, and decided that it was OK, but not up to the quality of what I could buy, and that I wanted to do other things with my time, too. This was when our child was small, so I may try it again eventually.

Drink, never brewed, though I know many home brewers and pros.

It's like cooking: it's all about 1. iteration (i.e. doing it a bunch of times) and, 2. burning desire to improve (so you slowly erase mistakes, tinker with formulas, and try slightly new moves over long term). If you just want beer to drink, you're better off buying. If you want to get it just the way you like, and are willing to turn it into action, homebrewing's great!

 

[Eric S]

FWIW, that is exactly what FIRECalc is designed to do. Have you spent much time using it?

Not enough, it seems!

I'm pretty good on the budgeting of expenses part. I'm also reasonably good at the investing my savings part. My problem is figuring out how much I can afford to pay for my upcoming house.

But a couple people have suggested limits over $1M, and I won't spend that, so I guess I'm reasonably ok.

Renting would turn it into a monthly expense, which is easier to budget for, but I've lived in >10 rental apartments including some owned by lunatic landlords, and I'm pretty allergic to that set-up, at least for indeterminate periods (a few months or a year might be doable). I prefer not to give a potentially erratic random person the power to completely upturn my life (by suddenly raising price, terminating the lease, etc).

 

[Eric S]

We've toyed with moving abroad. My husband and sons are Italian duel citizens. (I haven't bothered to file the paperwork to file for citizenship as the spouse, a multiyear process.) There is definitely an appeal to it.

Everywhere's great for 5 days. Everywhere's a bit of a pain for 14 days. If you can stay 15 days and still think it has appeal, that would be meaningful!

For Italy, I think it has a lot to do with patience. Patience for bureaucracy, for stuff not working all the time, for rigid social customs and mores. If you can't find all those things charming, it's just going to keep wearing at you more and more.

Portugal is a little more efficient and a little more tolerant. Bureaucracy's just as bad, but doesn't have its tendrils in every aspect of life.

 

[NW-Bound]

FIRECalc uses historical investment return of the US stock and bond markets since 1871. That means it does not apply to investments in Europe, Asia, etc... And people here have forever worried about the market may not be as kind to investors as it had been through the industrialization age of the past. The usual way to deal with that uncertainty is to draw less than the recommended 4%, such as 2.5-3.5%.

You will keep your US investments, I assume. You still have to prepare to spend less if the euro-dollar exchange rate changes adversely.

Once I do, I'll try to spend way less if possible. I dislike the stress of getting too close to the line. For me, the ultimate luxury is to have sufficient slack to enjoy minor indulgences freely. A big part of that is keeping them minor! Secondhand blu-ray disks, not Porsches. Pizza slices, not Château Lafite. I live like a poor guy who just found twenty bucks in an old pants pocket. Works for me!

Then, buy the least housing that you can still feel comfortable in, and have plenty of margin for peace of mind. You are still young, and later when you find your stash is building up as you underspend, you can still upgrade. Maybe business-class seats, maybe fancy restaurants, expensive Cognac or aged port wine as they drink in Portugal (not being a port drinker, I just learned that there are port bottles going for $500-1K).

The above frugal demeanor is the philosophy of Andrew Tobias, whom I read many years ago and liked, because it fits my personality.

"A luxury, once enjoyed, becomes a necessity" -- Anon.

I thought that originally came from Tobias, but not sure anymore. It has also been described as a corollary from Parkinson's Law (1955)

“Work expands to fill the time available for its completion.” -- C. Northcote Parkinson (1909-1993).

The following is Andrew Tobias' original, and I am reasonably sure of it.

"It is possible to live well whether you are rich or poor. When you are poor, it just costs less" -- Andrew Tobias

 

[Dtail]

Why not run your numbers through Firecalc and let us know the results.
Many of us can answer detailed questions about the results, or how to input unusual items.

 

[Letj]

Have you considered the added tax burden of living in PT? The first 10 years you’re taxed at 10% and that includes gains in Roth IRAs. However, after 10 years, tax rates would be quite high at a time in your life when you may need more money.

 

[Eric S]

I don't have Roth IRA, it's conventional, and relatively puny. And I'm not sure what you mean re: high tax rates after ten years. If that's not specific to Roth IRAs, can you please expand on that?

 

[Letj]

I can see how I confused you. I assumed you were aware, as a potential retiree, that PT taxes retirees (you need a D7 visa) 10% the first 10 years. It used to be zero percent but other EU countries weren’t happy with the scheme. After ten years the taxes are massive (progressive). You may want to check out the tax rates based on income brackets.

 

[Eric S]

I can see how I confused you. I assumed you were aware, as a potential retiree, that PT taxes retirees (you need a D7 visa) 10% the first 10 years. It used to be zero percent but other EU countries weren’t happy with the scheme. After ten years the taxes are massive (progressive). You may want to check out the tax rates based on income brackets.

Ah, so this will really eat up my investment income. Thanks!

 

[P.S.]

For Italy, I think it has a lot to do with patience. Patience for bureaucracy, for stuff not working all the time, for rigid social customs and mores. If you can't find all those things charming, it's just going to keep wearing at you more and more.

We lived for two years in Italy, pre-kids. While the Swiss are revered for their precision and Germans for their dependability, Italians have la dolce vita, or more accurately la dolce far niente.
And as much as we loved the Italians, daily life could be exasperating. Classic example: after calling the real estate agent for what seemed like the umpteenth time our hot water heater not working (even after replacement), the agent came and inspected, gave us a sad smile, shrugged, held her hands up to the air, and explained - It is like the moon, in the sky, sometimes it works, sometimes it doesn’t.


We love Portugal, the sweetness of its people, the simpler way of life than Italy. But would only consider buying a second home if we had gobs of wealth to pay our way out of inconveniences. I would happily rent though, for an extended period of time, once the kids are out of school.

 

[Eric S]

Interesting! Thanks for posting!

But as for paying one's way out of inconveniences, I've experienced every economic level (except stupendous wealth, but I have friends with that), and finally realized that money's useful for paying one's way out of discomfort, but not out of inconvenience.

If Bill Gates needs to go from 1st Avenue to 10th Avenue in NYC rush hour, he could wave $10K in the air but it wouldn't get him there any sooner than you. He can, however, get a bigger and more comfortable chair in certain situations.

A wad of cash can occasionally grease wheels in southern European bureaucracies, but most often not. And money doesn't make unreliable or inefficient parties suddenly straighten up and fly right. If they were able to do better, they had plenty of incentive to do so for their own benefit, so your needs and your extra few bucks won't make the diff.

And "elite" workers, who charge a steep premium, are actually MORE likely to be conmen and hacks than those making more modest livings and taking pride in their work. You want to hire skilled doers, not skilled self-branders.

The aggravation, inefficiency, and general maddening indignation of life can't be bought off. If you're a billionaire, able to hire a staff to handle stuff full-time, you've still got to contend with finding, managing, and retaining those people, who present their own aggravations, inefficiencies, and maddening indignations. And in the unlikely event you find outstandingly competent people, they don't need to (and won't want to) work for you long-term, regardless of what you pay them.

 

[Letj]

Interesting! Thanks for posting!

But as for paying one's way out of inconveniences, I've experienced every economic level (except stupendous wealth, but I have friends with that), and finally realized that money's useful for paying one's way out of discomfort, but not out of inconvenience.

If Bill Gates needs to go from 1st Avenue to 10th Avenue in NYC rush hour, he could wave $10K in the air but it wouldn't get him there any sooner than you. He can, however, get a bigger and more comfortable chair in certain situations.

A wad of cash can occasionally grease wheels in southern European bureaucracies, but most often not. And money doesn't make unreliable or inefficient parties suddenly straighten up and fly right. If they were able to do better, they had plenty of incentive to do so for their own benefit, so your needs and your extra few bucks won't make the diff.

And "elite" workers, who charge a steep premium, are actually MORE likely to be conmen and hacks than those making more modest livings and taking pride in their work. You want to hire skilled doers, not skilled self-branders.

The aggravation, inefficiency, and general maddening indignation of life can't be bought off. If you're a billionaire, able to hire a staff to handle stuff full-time, you've still got to contend with finding, managing, and retaining those people, who present their own aggravations, inefficiencies, and maddening indignations. And in the unlikely event you find outstandingly competent people, they don't need to (and won't want to) work for you long-term, regardless of what you pay them.

I find a lot of what you say here rings true. I’d like to add that having money and not even gobs of it brings its own aggravation. I am in the process of fixing up and selling some of my rental properties and even though I have project managers, they can only do so much. They are still answerable to me and can’t make major decisions without me which keeps me involved more than I want to between dealing with them, government bureaucracy, contractors, craftsmen, etc. It’s why people who have lots of money have to be involved in their businesses. It’s hard to relax and enjoy retirement when you have business interests.

 

[Eric S]

I find a lot of what you say here rings true. I’d like to add that having money and not even gobs of it brings its own aggravation. I am in the process of fixing up and selling some of my rental properties and even though I have project managers, they can only do so much. They are still answerable to me and can’t make major decisions without me which keeps me involved more than I want to between dealing with them, government bureaucracy, contractors, craftsmen, etc. It’s why people who have lots of money have to be involved in their businesses. It’s hard to relax and enjoy retirement when you have business interests.

Well, most money-related aggravation can be mitigated by trying less desperately to turn it into lots more money!

I do realize that suggestion seems unamerican! But one can try less hard to make lots more, or else try medium-hard to make just a little more. I think the problems come from the intensity of needfulness rather than anything specific to money itself. Flooring the gas is always stressful in any context.

 

[Letj]

Well, most money-related aggravation can be mitigated by trying less desperately to turn it into lots more money!

I do realize that suggestion seems unamerican! But one can try less hard to make lots more, or else try medium-hard to make just a little more. I think the problems come from the intensity of needfulness rather than anything specific to money itself. Flooring the gas is always stressful in any context.

I couldn’t agree with you more! Believe me I am very contented and really have no interest in amassing wealth at the expense of time and quality of life. I am trying to off load properties to truly free myself. The issue in my market, if your properties are not renovated, investors want to pick them up at fire sale prices. I have so many opportunities I’ve left on the table that some think I am nuts. First I walked away from a good career at 50 and could consult or work easily but won’t.

 

[Eric S]

I couldn’t agree with you more! Believe me I am very contented and really have no interest in amassing wealth at the expense of time and quality of life. I am trying to off load properties to truly free myself. The issue in my market, if your properties are not renovated, investors want to pick them up at fire sale prices. I have so many opportunities I’ve left on the table that some think I am nuts. First I walked away from a good career at 50 and could consult or work easily but won’t.

I don't think you're nuts. Life's short. Submitting to unnecessary stress is what's nuts.

 

[Markola]

Everywhere's great for 5 days. Everywhere's a bit of a pain for 14 days. If you can stay 15 days and still think it has appeal, that would be meaningful!

That is a slow-traveler’s quote to live by! It’s been exactly my experience.

 

[pb4uski]

FWIW, that is exactly what FIRECalc is designed to do. Have you spent much time using it?

Not enough, it seems! ...

Why not run your numbers through Firecalc and let us know the results.
Many of us can answer detailed questions about the results, or how to input unusual items.

Input your situation into FIRECalc assuming no house purchase, following the tabs along the top for Other Income/Spending (which would include Social Security), etc.

The under the Investigate tab, select the option for FIRECalc to solve for a spending level at a given level of success (95% is the default)... see first picture below. Then Submit and you'll see a graph similar to the second picture below (based on FIRECalc's default assumptions).

Then reduce the starting portfolio balance for an amount that you might spend on a house and see if you think you can live with the resulting safe spending level.... trial and error making changes until you have somehting that you can live with.

 

[trumpeting_angel]

Such an interesting conversation! Since retiring, I’ve been enjoying a more pared-down lifestyle. In Vermont there had to be a good reason to get out of your jeans and flannel shirt, and I’ve pared down my w*rk wardrobe dramatically.

I’m moving, though, to the Southern Hudson Valley, where there’s a higher COL. My daughter, SIL, and 2-year-old granddaughter live there, and when I missed the little one’s second birthday due to the pandemic I knew things had to change.

People down there wear nice clothes. Good thing I didn’t dump all of them!