"It's like cheating"

[explanade]

A couple retires with $2.2 million in assets.

But they move abroad, settle for a time in Portugal.

So moving for lower COL is not really FIRE?

It’s a lifestyle that’s tough to criticize — even for Grant Sabatier, creator of finance website Millennial Money and author of “Financial Freedom,” a book that helps guide people toward the kind of financial independence the Rastellis enjoy.

For one, he thinks the couple were wise to move abroad to cut down their cost of living, a move known in the FIRE (financial independence, retire early) community as “geo-arbitrage.”

“Portugal is like cheating when it comes to FIRE, because I think the cost of living is like 25% or 30% what it is in the U.S.” Sabatier tells CNBC Make It. “So if they’ve saved $2.2 million, that effectively means they have $6 or $7 million in U.S. dollars.”

https://www.cnbc.com/2022/10/06/gra...in-portugal-with-2point2-million-dollars.html


I've only visited Portugal once. Maybe in some small village it's that cheap but Lisbon and Porto didn't seem that much cheaper.

I'm sure you could find some impoverished neighborhoods, far away from the riverside in Porto or near the waterfront in Lisbon where housing is really cheap.

But you could kind of find very low-cost places in the US, where housing is a fraction of what it would cost in big cities.

 

[njhowie]

"Cheating" was likely just a poorly chosen word by Sabatier.

"Geo-arbitrage" is, in fact, much more appropriate to the situation and what is being done.

 

[tfudtuckerpucker]

Our daughter and SIL moved to Portugal last year, and shared their experiences and perspectives here. They are millennials and not retired, so things would be different for an older retired couple. In general, I suppose it would not be wise to move there mostly for financial reasons, without considering healthcare, language, culture, friends and family proximity, etc.

 

[njhowie]

Our daughter and SIL moved to Portugal last year, and shared their experiences and perspectives here. They are millennials and not retired, so things would be different for an older retired couple. In general, I suppose it would not be wise to move there mostly for financial reasons, without considering healthcare, language, culture, friends and family proximity, etc.

Very cool. Very exciting being young and just going for it.

 

[Bamaman]

We have a relative that's moving back from Portugal after 7 years there as a teacher.

Many of those moving there live down on the Algarve--flying into/out of Faro. The weather's great and it's like Florida to the English.

My late niece and her husband lived in SW London, but kept a modern condo there that they rented out weekly.

 

[jim584672]

With 2.2 million you can basically live anywhere. Don't see the point to going through all the hassle of a different country.

 

[ShokWaveRider]

With 2.2 million you can basically live anywhere. Don't see the point to going through all the hassle of a different country.

+100, you do not need to patronize YouTube Clickbait to find somewhere to settle. Ever Tried Learning Portuguese as a native English speaker with no Spanish?

Seriously though. Depending on one's age (EG. 60+) it is easy to live almost anywhere with anything over $2m in investable cash.

The other thing is healthcare, while folks sing the benefits of medical in other countries and how cheap it is compared to the US. Unless you are 100% eligible for the local healthcare system with no caveats or exclusions or extra costs, it is hard to beat Medicare in the USA with a supplement when one is over 65.

We are Canadian, British and EU Citizens and still consider Medicare with a "G" supplement a pretty good gig.

 

[brucethebroker]

Our daughter and SIL moved to Portugal last year, and shared their experiences and perspectives here. They are millennials and not retired, so things would be different for an older retired couple. In general, I suppose it would not be wise to move there mostly for financial reasons, without considering healthcare, language, culture, friends and family proximity, etc.

How informative and charming. Thanks for sharing.

 

[Gotadimple]

Lots of folks 'geo-arbritrage' and they don't have to go to another continent to decide to settle in an area with a lower COL. It's still F.I.R.E.

 

[Major Tom]

Lots of folks 'geo-arbritrage' and they don't have to go to another continent to decide to settle in an area with a lower COL. It's still F.I.R.E.

Precisely. I think the use of the word cheating was an error. It is no more "cheating" than moving within the same country, from a HCOL area to a LCOL area. Lots of folk do that.

 

[GenXguy]

Seriously though. Depending on one's age (EG. 60+) it is easy to live almost anywhere with anything over $2m in investable cash.

Anyone that has $2M in cash likely has millions more already invested. Who just has $2M in cash lying around that can be invested?

The other thing is healthcare, while folks sing the benefits of medical in other countries and how cheap it is compared to the US. Unless you are 100% eligible for the local healthcare system with no caveats or exclusions or extra costs, it is hard to beat Medicare in the USA with a supplement when one is over 65.

We are Canadian, British and EU Citizens and still consider Medicare with a "G" supplement a pretty good gig.

Assuming you have worked at least 40 quarters to get free part A, it's not bad. But it can be $1000/mo for one person for A + B + supplemental if they don't get free Part A (I know some people in that situation who are nowhere close to traditional Medicaid qualifications), plus you really need B and a supplemental, then you have drug costs and other out of pockets costs. So, it gets pretty expensive.

 

[Sunset]

....
Seriously though. Depending on one's age (EG. 60+) it is easy to live almost anywhere with anything over $2m in investable cash.

......

Anyone that has $2M in cash likely has millions more already invested. Who just has $2M in cash lying around that can be invested?

.....

To me, investable cash , means a person's actual cash + cash they have already invested, it excludes house, car, paintings, etc.

Doesn't mean $2M in cash under the mattress.

 

[GenXguy]

To me, investable cash , means a person's actual cash + cash they have already invested, it excludes house, car, paintings, etc.

Doesn't mean $2M in cash under the mattress.

Well the first I've heard someone refer to money that's already invested as cash. To me, if someone had cash, then invested it, it's no longer cash. I have a plenty invested in stock funds in my Vanguard and retirement accounts, and I would never refer to that as cash.

Otherwise, I would nearly meet that threshold (and exceeded at one point), and as a single person nearing retirement, there's no way I could just retire anywhere I want with those investments. In fact, I've even delayed retirement further due to such high inflation eroding the value of my savings/investments, despite living in a somewhat LCOL area (although higher property taxes than almost all states).

 

[Car-Guy]

With 2.2 million you can basically live anywhere. Don't see the point to going through all the hassle of a different country.

From my POV, that would depend on lifestyle and for how long... 2+m just ain't what it once was.

 

[ShokWaveRider]

To me, investable cash , means a person's actual cash + cash they have already invested, it excludes house, car, paintings, etc.

Doesn't mean $2M in cash under the mattress.

Exactly.

 

[marko]

To me, investable cash , means a person's actual cash + cash they have already invested, it excludes house, car, paintings, etc.

Doesn't mean $2M in cash under the mattress.

+1
I think that's the generally accepted definition. Its not cash, as in dollar bills not invested. Its money that is invested and working for you as opposed to your house etc.

 

[whatnot]

Our daughter and SIL moved to Portugal last year, and shared their experiences and perspectives here. They are millennials and not retired, so things would be different for an older retired couple. In general, I suppose it would not be wise to move there mostly for financial reasons, without considering healthcare, language, culture, friends and family proximity, etc.

I have watched a few oh their YouTube videos.
I’ve really enjoyed their perspective and information.

 

[explanade]

Parts of Portugal can be nice weather-wise.

Plus if you want to travel all over Europe, its better to be there than say some small town in the US.

So for some people, it can be a better lifestyle.

 

[nap470]

I found this video interesting at the time. A retired teacher and his wife from NYC just decided to try retirement in Portugal. Neither knew the language and chose a smaller area after first doing a visit.

https://youtu.be/loVNObzwyUU

 

[cyber888]

If you read the article - 2.2 Million is their Net worth, and not their cash or liquid asset. I'm surprise some discussions here refer to this as cash.

I'm not sure if this is the same couple I saw on Youtube, but in the Youtube video I saw about a couple going to Portugal with 2.2 Million net worth, when they left the US, they still own 2 homes and are still renting 2 homes in the United States to generate income. So, their investible asset may be around 1.5 - 1.6 Million and the rest are in real estate rentals.

 

[YVRRocketSurgery]

I read the article last week and the only things that stuck with me are: The couple geo-arbitraging and Portugal. Did make me think about a few other FIRE couples I've read about that moved to Portugal.

And net worth vs investable cash/assets has always kind of been fuzzy from a practical sense for me because you can always sell your home, invest the proceeds, and rent.

 

[NoEZmoney]

Portugal - Expats Are Coming!!

Portugal had a Golden Visa program a few years ago that was really attractive. I believe you could buy a house for 200,000 Euros and get a fast track to residency. Lots of reasons to go to Portugal, we've been there and we found it quite attractive but there are some caveats. The Golden Visa has changed to 500,000 Euros as a lot of expats were buying up properties in Lisbon and Porto and turning them into AirBnB's making it tough for the Portuguese to afford to live in their own cities. The gov't has placed a moratorium on AirBnB's hoping to slow that issue down. They are encouraging expats to buy in smaller communities in the interior and the GV cost is around 200,000 Euros +/- in some areas.

Healthcare (national and private) is considered very good and rates high according to the WHO. Costs of living in major cities is higher as far as rents are concerned but expats who live there say they are paying 25 to 30% less than COLA in US. (Mileage may vary depending on variables).

This American couple has been living in Portugal for years and they have done a lot of videos on their experiences. While they spend a lot of time focusing on investing for FIRE, they do share their personal, first hand experiences as expats living fulltime in Portugal (using healthcare, insurance for family, real estate, etc).

 

[kcowan]

When we evaluated moving to Mexico, we realized that we could afford to live there for just 6 months a year and keep our place up north. Been doing that since 2007.

Made 2 million pesos on our first condo and have now moved to more appropriate one.

 

[mtpisgah]

To me, investable cash , means a person's actual cash + cash they have already invested, it excludes house, car, paintings, etc.

Doesn't mean $2M in cash under the mattress.

Agreed for the most part. I also put the caveat of cash as being non retirement savings. So money I can spend (or invest) on whatever I want without penalty (excluding my wife yelling at me).

 

[zippy2020]

Thanks for posting this! Very enjoyable video. It echoes much of what one of our senior friends said about emigrating to Costa Rica for a LCOL.