First year of retirement in Germany -- Seems to be Working..

Retirement_Rookie

Retirement_Rookie

Dryer sheet aficionado
Joined
Jun 25, 2017
Messages
37
Location
the countryside
Am reading this forum with interest. Retired in 2017 at 55 after 28 years federal service. I'd done everything my career had to offer and I wasn't happy with the politics of the moment as well as where my agency was heading. Retirement was well-timed: I have two 94 year-old parents, both with serious health issues, living in rural US and I spent six months helping them get squared away while a sibling moved closer to help them. During that time I finished up a long and costly divorce from my wife of thirty years, ran through a lot of money, and decided to move abroad. My parents are squared away now. I visit when I can and there are other siblings who stepped up.

Things are going better now. I have moved with my new German partner to her homeland of Germany, where the cost of living is considerably less than in the U.S. I have a large house out in the country which I rent for €1300 a month (+another €100 in water and heat charges). I own a used car, have about $275,000 in the bank or in an IRA, and get a small pension of $2600 a month. (Half of my federal pension.) I have good health care, plan to start drawing social security when I can, and found that the red-tape to get a German residence permit was minimal. (It basically took a day at the government office. It's renewable annually. I don't have the right to work but don't want to do so.)

I am still adjusting with the challenge of going from a very high-paced, high-action job to my new rural life. I ride my bicycle a lot, swim at the outstandingly good local swimming pools (cost = €2.50 per entry) and eat and drink way better here in Germany than in the US. To my shock my grocery bill is probably less than a third of what it was in the U.S. I am increasingly of the opinion that it's as cheap here in Germany (my area of Germany, a lower cost area) as the more expensive areas of Mexico.

We travel a bit. (Just got back from a week in Portugal. The tickets to get there were €75 each roundtrip, and Portugal is cheap.) Also go to France and elsewhere; we travel based upon what's cheap at the moment, and usually use AirBnB which is fabulous.)

I don't have much of a safety net but so far things are working in Germany. If anybody has any advice to offer -- or questions about moving to Europe, feel free. I appreciate all the honesty on this site.
 
Welcome to the forum!
That was a great introductory post. I'm sure you'll get quite a few questions about living in Germany.
 
Welcome!

Through DNA testing I recently found a cousin in Germany (in a small town near Mannheim) and have been there to visit 3 times already. I agree about their quality of life.

Whereabouts are you?

omni
 
Genau! Und congrats on the retirement! I agree 100% with everything you said about Germany...Essentially it is pay less and get more when compared to the US. Food is much better in quality and is cheaper, and then you have beer and wine for about a third of the price as here in the States. Even California wines are cheaper in Europe than in the US. Only thing that really seemed to cost more was gasoline (although I didn't have to pay the regular price thanks to my uncle).

I retired from the military after my final tour at the NATO air base in Geilenkirchen (NRW). We lived in a pretty rural area, and truly enjoyed it. Great for the family, and would love to do it again.

Only advice I have (which you seem to be doing already) is to peruse the Ryanair website often.
 
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Congrats! As a young soldier, I spent a total of four years in Deutschland. Lived on post for only first year. Shopped at Aldi, drank beer at a local gasthaus, bought meats, cheese, and wine from a small market that made the meat and cheese. At the gasthaus, I was made an honorary guest of the "stamtish" during my last year. :dance:

If the stores were closed, there was a house nearby that sold beer (Hacke Beck) out the front door. :)

Fond memories - taking DW there in September.
 
I'm surprised the cost of living in Germany is lower, but the data I see confirms that.
 
Yes, my biggest surprise was how inexpensive things are. I served in Europe in the late nineties and Germany in particular seemed more expensive then. Coming from New England, I find housing rental here so much less then New England or Maryland (where I also owned a house). I am certain an equivalent property to what I have in Germany would rent for twice, easily, or maybe three times my rent if I were renting in Massachusetts or in Maryland. But gasoline is ghastly expensive. That's okay, I can ride my bike to do some shopping, I walk to the farm next door for eggs (there's an honor box so you just take the eggs out of the refrigerator by the hen house, put the €2.50 in the box, and go home).

It makes me think a lot. We have this idea in America that Europe is so destroyed by taxes and so on. And yet it's so much cheaper here -- and the infrastructure is first rate, the healthcare is supposedly better, etc. I just don't understand where America went wrong, economically.
 
Welcome! My DW has family in Germany, and we’ve visited before. I loved almost everything about the place. I’d definitely consider spending at least a couple of years there in retirement. One question: how does healthcare work when you’re on a resident visa?
 
So I know Europe pretty well. Own a place in France (selling it -- that's another story), have lived in France, Croatia, Belgium, Switzerland, and now Germany.. Germany is cheaper than all of the other European countries I've lived in. (Traveling, it seems to me that Spain, Portugal, and Poland are cheaper, but I haven't lived there.) I know Mexico very well.. lived there for years.. I think where I live is about the same or less expensive than Los Cabos or San Miguel de Allende, two places popular with expat retirees. One must admit that Mexico beats Germany hands down on weather, although Germany beats Mexico hands down on security and healthcare! I guess it's what you want to focus on. For me the centrality and the civilization here beat the weather of Mexico, as much as I love Mexico.
 
So regarding healthcare, it hasn't been an issue for me because I have U.S. insurance from my retirement. To get a residence visa I simply had to go into the foreigners office of my town and provide the following: (a) a copy of my passport; (b) a photocopy of my 401K; (c) an ID card from my former organization saying I was retired; (d) proof of income in the form of a few bank statements; and, finally (e) my health insurance card from the US. They looked these things over, said come back in a month, and that was it. I thought this was ridiculously relaxed. (As a former US civil servant I know we're a heck of a lot tougher than this in America with people who want to move to the USA.) I asked the official, essentially, "is that it? am I approved?" and he said "sure. No problem. You're from the U.S. it's very easy for you." That was it. Now regarding your specific question on healthcare, I don't know how it works if you're not bringing U.S. health insurance. You can probably get it through your wife. I didn't go that route. My partner (we're not married yet) has great insurance from the German government. Never pays more than a few euros for a visit to the doctor, nothing if it's serious, etc. But she told me that if I hadn't had my own health insurance it would have been more complicated and we would have needed to get married, which we have yet to do. I should add that I have to renew annually, but if the process is the same, I am not going to lose a lot of sleep over this.
 
I had no idea if was so easy getting around the Schengen Agreement in Germany. I figured you would have to be a student to get a visa. Those retirees paying big cash money for visas in Portugal must be sick.

And to think I have been wasting so much money touring expensive countries like Italy, England and Ireland--where the costs are 150% that of the U.S. for food, restaurants, etc.

I do love touring Germany, but have not been there in 3 years. We do plan on touring the Saxony area soon--Dresden soecifically.
 
Welcome aboard, Retirement Rookie. Look forward to your posts and an expat's view of retirement. So, none of us know what the future will bring, but is it your intention to stay fulltime & indefinitely in Germany, do you plan on splitting your time with the US? Just curious, wondering about logistics and such.
 
MichaelB said:
Welcome aboard, Retirement Rookie. Look forward to your posts and an expat's view of retirement. So, none of us know what the future will bring, but is it your intention to stay fulltime & indefinitely in Germany, do you plan on splitting your time with the US? Just curious, wondering about logistics and such.
Click to expand...

+1

The "fun" will start when you become resident and have to pay German income taxes as you will also have to continue to pay US taxes since you are a US citizen. There is a Double Taxation Agreement between the US and Germany so you can claim the appropriate foreign tax credits.

https://www.irs.gov/pub/irs-trty/germany.pdf

We moved to the UK in 2016 and like you find it much cheaper to live here than where we lived in the USA. Cable, Broadband Internet, Car Insurance, Cell phone plans, Property taxes, House Insurance, food shopping etc. all much cheaper. Gasoline is much more expensive but public transportation is plentiful and affordable, particularly if you are at retirement age as bus passes are free. So far we have averaged around 5k miles/per in our car which gets over 60mpg so not a huge expense.

Being retired we have no payroll taxes in either the UK or USA and we have now been through 2 tax returns. First year we paid about $5k more, 2017 we paid about $7k more, but the last year living in the USA we paid over $11k in healthcare (insurance plus oop). I have been using the NHS quite a bit this last 18 months with a heart condition (Afib) and will be having surgery (AF Ablation) in a couple of months time after I get back from a 2 week vacation starting tomorrow. It is great to never see a single invoice or charge for doctor or hospital visit.
 
Bamaman said:
I had no idea if was so easy getting around the Schengen Agreement in Germany. I figured you would have to be a student to get a visa. Those retirees paying big cash money for visas in Portugal must be sick.

And to think I have been wasting so much money touring expensive countries like Italy, England and Ireland--where the costs are 150% that of the U.S. for food, restaurants, etc.

I do love touring Germany, but have not been there in 3 years. We do plan on touring the Saxony area soon--Dresden soecifically.
Click to expand...

According to the officials I spoke with, in Germany there's a special visa regime for people from OECD countries. He specifically said, when I told him that I am from the US: "as long as you are American and have financial resources, it will be easy.." What I don't know is how they judge financial resources. I didn't know Portugal was offering investor visas. I'd looked at a Swedish passport (my father is Swedish) because Sweden is an EU country. The Swedes basically told me that it was impossible unless he'd retained it. (He lost it fighting on the American side in the Second World War, it seems.) Ireland and Italy offer EU passports pretty easily but I don't have Irish or Italian family. (One grandparent must be of those nationalities, I think.) So under the circumstances German residency was lucky, particularly since I wanted to move there anyway. Germany also offers very easy visas for Jewish people. (I also understand that this is the case for Portugal.) I am not Jewish but I've been advised this is an option for some. Both Germany and Portugal would like to build up their Jewish communities. Germany because of WWII guilt; Portugal I am not sure why.
 
Yes, taxation will be interesting. I've heard three schools of thought on this from resident Americans:

(1) They just slip under the radar. (I think this is crazy and don't plan to do this, but I talked to one lady who has a residence permit and has been here for years and somehow not paid taxes.)

(2) They find that the dual taxation treaty with its tax credits makes Germany marginally more expensive but not terribly so.

(3) The German government doesn't tax U.S. government pensions. (Somebody told me this is a legacy of the post WWII occupation.) I am still researching this. But apparently U.S. military and federal pensions may not be taxed at all. This doesn't apply to social security I think. I am still investigating this and will report back when I find out. If it's true than this is the best of all worlds. Florida income tax levels in Europe!
 
MichaelB said:
Welcome aboard, Retirement Rookie. Look forward to your posts and an expat's view of retirement. So, none of us know what the future will bring, but is it your intention to stay fulltime & indefinitely in Germany, do you plan on splitting your time with the US? Just curious, wondering about logistics and such.
Click to expand...

For the time being I plan to divide my time between Germany and other countries overseas. I find America a lot more expensive. I have family in the states so will go back at times, but so far I am finding more family members want to spend their vacations with me here so in the short term I think I will be here in Germany and only go to the USA when necessary.
 
Alan said:
+1

The "fun" will start when you become resident and have to pay German income taxes as you will also have to continue to pay US taxes since you are a US citizen. There is a Double Taxation Agreement between the US and Germany so you can claim the appropriate foreign tax credits.

https://www.irs.gov/pub/irs-trty/germany.pdf

We moved to the UK in 2016 and like you find it much cheaper to live here than where we lived in the USA. Cable, Broadband Internet, Car Insurance, Cell phone plans, Property taxes, House Insurance, food shopping etc. all much cheaper. Gasoline is much more expensive but public transportation is plentiful and affordable, particularly if you are at retirement age as bus passes are free. So far we have averaged around 5k miles/per in our car which gets over 60mpg so not a huge expense.

Being retired we have no payroll taxes in either the UK or USA and we have now been through 2 tax returns. First year we paid about $5k more, 2017 we paid about $7k more, but the last year living in the USA we paid over $11k in healthcare (insurance plus oop). I have been using the NHS quite a bit this last 18 months with a heart condition (Afib) and will be having surgery (AF Ablation) in a couple of months time after I get back from a 2 week vacation starting tomorrow. It is great to never see a single invoice or charge for doctor or hospital visit.
Click to expand...

How did you enroll in the NHS? Did you have US insurance? I didn't know foreigners could do this..
 
Retirement_Rookie said:
Yes, taxation will be interesting. I've heard three schools of thought on this from resident Americans:

(1) They just slip under the radar. (I think this is crazy and don't plan to do this, but I talked to one lady who has a residence permit and has been here for years and somehow not paid taxes.)

(2) They find that the dual taxation treaty with its tax credits makes Germany marginally more expensive but not terribly so.

(3) The German government doesn't tax U.S. government pensions. (Somebody told me this is a legacy of the post WWII occupation.) I am still researching this. But apparently U.S. military and federal pensions may not be taxed at all. This doesn't apply to social security I think. I am still investigating this and will report back when I find out. If it's true than this is the best of all worlds. Florida income tax levels in Europe!
Click to expand...

Yes, tax evasion probably means fines and expulsion if caught.

It's the same with the UK regarding US government pensions, they are only taxed in the US. With SS it is not taxed at all in the US, only in the UK, so I expect that will be the same in Germany as the treaty looks very similar to that with the UK. UK SS is taxed by both countries, lump sum IRA to Roth conversions are only taxed in the US, Roth distributions are tax free in both countries.
 
Retirement_Rookie said:
Yes, taxation will be interesting. I've heard three schools of thought on this from resident Americans:

(1) They just slip under the radar. (I think this is crazy and don't plan to do this, but I talked to one lady who has a residence permit and has been here for years and somehow not paid taxes.)

(2) They find that the dual taxation treaty with its tax credits makes Germany marginally more expensive but not terribly so.

(3) The German government doesn't tax U.S. government pensions. (Somebody told me this is a legacy of the post WWII occupation.) I am still researching this. But apparently U.S. military and federal pensions may not be taxed at all. This doesn't apply to social security I think. I am still investigating this and will report back when I find out. If it's true than this is the best of all worlds. Florida income tax levels in Europe!
Click to expand...

This link might help. BTW, the SOFA agreement (along with numerous subsequent addenda) btwn US/Germany is the controlling document for these sorts of things, and there are differences btwn the SOFAs the US has with “Allied” countries and countries on the other side during WWII.

Looking forward to hearing how you settle in.

https://www.howtogermany.com/files/German_Compliance_Matrix.pdf
 
Alan said:
Yes, tax evasion probably means fines and expulsion if caught.

It's the same with the UK regarding US government pensions, they are only taxed in the US. With SS it is not taxed at all in the US, only in the UK, so I expect that will be the same in Germany as the treaty looks very similar to that with the UK. UK SS is taxed by both countries, lump sum IRA to Roth conversions are only taxed in the US, Roth distributions are tax free in both countries.
Click to expand...

I'm curious about this comment "lump sum IRA to Roth conversions are only taxed in the US".

Assuming one moved from the US to the UK...they could start converting tIRA monies to Roth....but they still need to pay US taxes for some years, no? Would this not also include taxes on the Roth conversions?

omni
 
omni550 said:
I'm curious about this comment "lump sum IRA to Roth conversions are only taxed in the US".

Assuming one moved from the US to the UK...they could start converting tIRA monies to Roth....but they still need to pay US taxes for some years, no? Would this not also include taxes on the Roth conversions?

omni
Click to expand...
If you are a US citizen you have to pay US taxes no matter where you live, only Eritrea also has this citizen based taxation.

In a few years time I will start receiving UK and US SS plus RMD’s which will put me in the UK 40% bracket, currently I’m in the 20% bracket. (IRA distributions not moved between retirement accounts are taxable in both UK and US).

For several years now I have been doing Roth conversions and only have 2 more years to go before it is all Roth. DW will then finish converting hers over the following 2 years as she pays no UK tax at present because the qualified dividends and cap gains are below her UK allowances, but once her US and UK SS starts she will move into the 20% bracket. (Everyone must file as individuals in the UK).
 
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Alan said:
UK SS is taxed by both countries, lump sum IRA to Roth conversions are only taxed in the US, Roth distributions are tax free in both countries.
Click to expand...


Do you by any chance know how the UK treats gains within an IRA or within a ROTH? Do they use the same treatment as the US or do they consider it regular capital gains taxable each year at whatever tax rate the UK has for capital gains?
 
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