Couple from Switzerland

[undecyphered]

Hello everyone,

I’ve been lurking on this forum for many years, so I thought I’d drop by and give you a view of what an “upper middle class” situation can look like.

Like everyone on this forum, I am pursuing “early retirement” and to this end am living a “rather frugal” life, but in a very expensive country (Switzerland).
By “rather frugal” I mean that I am not indulging in any luxuries, as those would not provide me with any kind of enjoyment. I however never scrimp on essential items (food, etc.) but purchase them when I really need them.
I am not looking to actually retire but rather be financially independent, in order to stop caring about my corporate job and perhaps launch my own venture eventually.

I am working a “rather easy” job, effectively working no longer than 30 hours a week, for a very cool company in a non-competitive environment. My wife is in a very similar situation. We both are in our late thirties.
Besides work, we have 2 young kids to take care of, so life is pretty busy ?

The numbers below are for my household (wife + myself). I will assume CHF 1 = USD 1 (actual number are in CHF, and CHF 1 = USD 1.1 at the time of writing).

Revenues:

• From our salaried jobs, monthly: ~$22K paid out + ~4K going directly to our retirement accounts (equivalent to the 401(k) in the USA).
• From our financial investments: on average around $80k per year. We invest mostly in bonds and stocks, very conservatively (no fancy stuff).

This makes a total of around $310k per year in revenues.

Expenses:

• A little over $2k /month for renting our apartment.
• Around $2k / month for food.
• Around $2.5k /month for the kids’ daycare.
• Around $3k / month in tax.
• Another say $1k / month for other various expenses (health expenses are already mostly taken care of by my employer, which saves me a lot!).

This makes a total of around $130k / year of expenses.

Savings:

• We save around $180k / year, on average (a little less than 60% of our revenues).

Net worth (excluding future social security pension rights):

• Around $1.7m of net worth, exclusively in financial assets. We do not own any real estate – other financial assets offer much more attractive (and safer, because less concentrated / more diversified) returns.

Future Social Security pension rights:

• They currently stand at around $2k / month, in real dollars. Those will be paid out when we reach 65 years old.
• Those rights will keep being adjusted for inflation year after year, and will keep increasing if we keep working (up to around $5k / month toward the end of our career).

So yeah, that’s it.
I failed at getting rich because I didn’t take any business risks and didn’t invest much in my corporate career.
However, I am pretty satisfied with where I stand today, considering that I enjoyed a pretty low-stress life.
Going forward, I look forward to becoming financially independent (within the next 5-10 years) while kickstarting my own venture (perhaps on the side, to begin with) in order to unlock more value and have more fun with my professional life. As I said initially, I want to pursue financial freedom rather than literal "retirement".

 

[Sunset]

Welcome...

Seems you are doing VERY fine with working income of 230K for "easy" jobs..

I do wonder if you are too conservative with your investments. If I were in your shoes, I'd be at least 80% stock. Especially if stocks are treated better tax wise. Not suggesting wild stocks, just broad based ETF's with extremely low fees.

 

[Yipper]

Welcome and thank you for sharing your details. Lots of different experiences shared here and the information shared on this forum has been very helpful and valuable to me. I don't post all that often but feel this is the home of the best E-R discussions anywhere.

 

[undecyphered]

Welcome...

Seems you are doing VERY fine with working income of 230K for "easy" jobs..

I do wonder if you are too conservative with your investments. If I were in your shoes, I'd be at least 80% stock. Especially if stocks are treated better tax wise. Not suggesting wild stocks, just broad based ETF's with extremely low fees.

You're absolutely right. In fact, capital gains are tax-free in Switzerland!
Coming from a rather poor background (my parents' household was hovering around the poverty line) I have always struggled with risk-taking. A scarcity mindset is hard to change. At least it takes a lot of time and efforts...
Additionally, in "socialist" Europe, we don't have the same kind of early education / exposure to investing because most people would expect to be "taken care of" by social security. The US are way ahead in this respect.

 

[Texas Proud]

A couple of questions for a bit more detail... but where in Switzerland do you live? We just visited there last year to spread some of my mom's ashes all over the country as her and my dad loved the country. Heck, we love it also but as you mention it is expensive...

Are you a US citizen?
If so, are you working for an US firm? (this is to find out if you are paying into SS... not sure what the cross border rules are)

What are the requirements to live there?

I worked for 1 1/2 year in London and loved it, but there is no way I could afford to live where I was living... I would walk to the King's castle in maybe 15 minutes... so big time rent...

Congrats.... you are well on your way to doing what you want...

 

[undecyphered]

A couple of questions for a bit more detail... but where in Switzerland do you live? We just visited there last year to spread some of my mom's ashes all over the country as her and my dad loved the country. Heck, we love it also but as you mention it is expensive...

Are you a US citizen?
If so, are you working for an US firm? (this is to find out if you are paying into SS... not sure what the cross border rules are)

What are the requirements to live there?

I worked for 1 1/2 year in London and loved it, but there is no way I could afford to live where I was living... I would walk to the King's castle in maybe 15 minutes... so big time rent...

Congrats.... you are well on your way to doing what you want...

It's amazing that you took the trip in order to do that. I guess it must be a very difficult thing to do, emotionally speaking.

I'm living in a "relatively cheap" region of Switzerland, on the French-speaking side. We're not living in Geneva nor in Lausanne. All in all, this makes a big difference for housing, as it is around 30%-40% more expensive in Geneva or in Zurich. But we earn less than we would in Geneva (perhaps around 25% less): all in all, it's even.

I am not a US citizen, and I am not working for a US firm.

If you are non-European, I believe rules are tougher and you must find a job in a Swiss company in order to be sponsored. From there, things are quite easy: after a few years, you can obtain a residence permit, a sort of green card. However, you need to be very qualified (or well-connected) as Switzerland is not very "immigrant-friendly" (Swiss first, then "first-class" Europeans, then "second-class" Europeans, then the rest of the world).

For an American, the French-speaking part of Switzerland is not advised (would be tough to integrate, culturally speaking).
Zurich would be okay, especially if you speak German. But even if you don't, there are a few large "multinational" Swiss companies there who can accommodate foreigners. That'd still be tough culturally, though, as the German side of Switzerland is notoriously tough to crack. Still, I believe that would be easier than the French-speaking side for an American.
If you manage to get a job there, you'll make at the very least $140k, so money wouldn't be a serious issue (and housing is quite easy to find there).

 

[Sunset]

You're absolutely right. In fact, capital gains are tax-free in Switzerland!
Coming from a rather poor background (my parents' household was hovering around the poverty line) I have always struggled with risk-taking. A scarcity mindset is hard to change. At least it takes a lot of time and efforts...
Additionally, in "socialist" Europe, we don't have the same kind of early education / exposure to investing because most people would expect to be "taken care of" by social security. The US are way ahead in this respect.

I also came from a poor background, my parents never owned a house all their working lives.
I learned from them that not taking risk meant being poor all the time. I did have the contrasting benefit of seeing my Uncle checking stock pages and knew he was investing the market. He was not poor.

 

[Texas Proud]

Thank for the info but I am NOT looking for a job... we will visit there again but probably never live there...

I actually like my cheap part of the world even though DW would like someplace else.. as I say, we can always visit... she has a step-daughter that lives in Germany close to Switzerland who loves living there... but I am language challenged (LOL) and do not want to try and learn another...

 

[FIREd]

Hello neighbor! I am in Geneva and It seems to me that you’re already doing fine so I don’t have much to contribute. Welcome!

 

[pacergal]

Welcome to the Forum!

 

[MarieIG]

. . .

Like everyone on this forum, I am pursuing “early retirement” and to this end am living a “rather frugal” life, but in a very expensive country (Switzerland).
By “rather frugal” I mean that I am not indulging in any luxuries, as those would not provide me with any kind of enjoyment. I however never scrimp on essential items (food, etc.) but purchase them when I really need them.
I am not looking to actually retire but rather be financially independent, in order to stop caring about my corporate job and perhaps launch my own venture eventually.

I am working a “rather easy” job, effectively working no longer than 30 hours a week, for a very cool company in a non-competitive environment. My wife is in a very similar situation. We both are in our late thirties.
Besides work, we have 2 young kids to take care of, so life is pretty busy ? . . .

Welcome to the Forum undecyphered.

The only "nit I have to pick" with you is - your statement that you are not rich. Based upon your quality life - it seems to me that indeed you are. Cherish the present (in addition to planning for the future).

It does appear that you are well on your way to meeting your financial goals. Enjoy the journey.

I hope that you will chime in often in the future.

 

[undecyphered]

Thank for the info but I am NOT looking for a job... we will visit there again but probably never live there...

I actually like my cheap part of the world even though DW would like someplace else.. as I say, we can always visit... she has a step-daughter that lives in Germany close to Switzerland who loves living there... but I am language challenged (LOL) and do not want to try and learn another...

I see...
Financially speaking, for a couple without children to support, I would say that $7k/month would be the bare minimum to cover the essentials (survival mode); $8-9k/month should be frugal but not in survival mode ; $10k/month would be alright (no luxuries though).
Based on this I would estimate that (excluding any social security pension) one would need around $2.5-3m to live decently, without any luxuries.
This is why I personally target a first "minimal" threshold of $3m, although my current career path would probably take me anywhere between $5-10m I guess. But this is assuming I'll have spoiled all my creative years doing stuff for someone else... Quite a dilemma.

 

[undecyphered]

Welcome to the Forum undecyphered.

The only "nit I have to pick" with you is - your statement that you are not rich. Based upon your quality life - it seems to me that indeed you are. Cherish the present (in addition to planning for the future).

It does appear that you are well on your way to meeting your financial goals. Enjoy the journey.

I hope that you will chime in often in the future.

Thanks for the advice ("cherish the present"). I know that I am very lucky with what I already have.
I am "metaphorically rich" indeed, but not materially yet because as explained in my previous post, I estimate we would need a minimum $3m to live normally (yet still on the frugal side) in Switzerland. In my mind, being rich means being financially independent (at the very least).
Of course we could soon go away and retire in our home country (which is much cheaper) or basically any other European country.
But once you've tasted Swiss conditions, it's pretty tough to be anywhere else if you value hardcore security, pristine nature, democracy and political stability. On this, I find it sickening that so many Swiss cannot afford to retire in their own country because of the cost of living.

 

[Bryan Barnfellow]

Hello and welcome to the forum from another couple in Switzerland (Lugano in our case--for the last 15 years). It looks as though you are doing well and enjoying what this great country has to offer, which is quite a lot. We early retired (from my job here) in 2015 and take advantage of the easy travel to the rest of Europe especially. We just returned from a week in Vienna (Wien) via train and plan to return at some point for a month-long stay, which is a preferred way to really get to know a place.

We began our FIRE journey in 1992 (at my age 37) long before that acronym ever was devised. And never thought we'd retire in such an expensive place. But you get used to things, right? We managed it on a single salary and a frugal lifestyle, even in this alpine nation. Now we have enough to live comfortably and travel extensively. Our only recurring concern is the USD/CHF exchange rate, since most of our investments are in the US. A strong Swiss franc is a problem when they trade (as they do now) for about 0.91 for every 1.00 dollar we bring over. But it's great for travel abroad, so a bit of a silver lining in that cloud. We budget a fair amount below 0.91, just to be safe.

I would take slight issue with two of your statements. First, I don't think of Switzerland as "socialist" at all. We definitely pay for just about everything and enjoy a low-ish tax rate in this very capitalistic country. Not that I have any problem with true socialist economies here in Europe. They have distinct advantages and disadvantages, as do those with capitalistic bents. To each their own. That said, I find that Switzerland is pretty well organized for retirement in terms of pensions, savings plans, retention of health care policies, and a safety net for the less advantaged. But agree that it's better not to be poor here.

Second, I don't think that finding a place to live in Zurich is particularly easy. The housing situation is quite competitive there, no? That's my understanding at least.

All that said, it's great to have another Switzerland-based member on the forum! And if you are ever in Canton (and Republic of) Ticino, let me know!

-BB

 

[undecyphered]

Hello and welcome to the forum from another couple in Switzerland (Lugano in our case--for the last 15 years). It looks as though you are doing well and enjoying what this great country has to offer, which is quite a lot. We early retired (from my job here) in 2015 and take advantage of the easy travel to the rest of Europe especially. We just returned from a week in Vienna (Wien) via train and plan to return at some point for a month-long stay, which is a preferred way to really get to know a place.

We began our FIRE journey in 1992 (at my age 37) long before that acronym ever was devised. And never thought we'd retire in such an expensive place. But you get used to things, right? We managed it on a single salary and a frugal lifestyle, even in this alpine nation. Now we have enough to live comfortably and travel extensively. Our only recurring concern is the USD/CHF exchange rate, since most of our investments are in the US. A strong Swiss franc is a problem when they trade (as they do now) for about 0.91 for every 1.00 dollar we bring over. But it's great for travel abroad, so a bit of a silver lining in that cloud. We budget a fair amount below 0.91, just to be safe.

I would take slight issue with two of your statements. First, I don't think of Switzerland as "socialist" at all. We definitely pay for just about everything and enjoy a low-ish tax rate in this very capitalistic country. Not that I have any problem with true socialist economies here in Europe. They have distinct advantages and disadvantages, as do those with capitalistic bents. To each their own. That said, I find that Switzerland is pretty well organized for retirement in terms of pensions, savings plans, retention of health care policies, and a safety net for the less advantaged. But agree that it's better not to be poor here.

Second, I don't think that finding a place to live in Zurich is particularly easy. The housing situation is quite competitive there, no? That's my understanding at least.

All that said, it's great to have another Switzerland-based member on the forum! And if you are ever in Canton (and Republic of) Ticino, let me know!

-BB

Hello Bryan,

The USD / CHF exchange rate can be an issue indeed. When it comes to currencies, I prefer to adopt a rather diversified strategy, and accept the fact that what is gained on one side (cheaper travelling in your case) will be lost on the other (more expensive domestic expenses). My belief being that the only big mistake would be trust a single currency 100%, only to see it tumble for any of the myriads of reasons this could happen (exploding US debt, for instance ?).

When I mentioned "socialist" Europe, I actually did not have Switzerland in mind but all of the other countries. As you mention, Switzerland is rather on the capitalist side, although in my opinion a rather balanced kind of capitalism offering a few safety nets / collective safeguards, not rampant capitalism as can be seen in some Asian countries (or to a lesser extent in the US).

As for the second point, I would agree that finding a place to live in Zurich city is not particularly easy, although far from being as complicated as finding a place to live in, say, Paris. But the good thing with Zurich is that it has quite attractive (and large) suburbs that can be reached by public transportation within a reasonable time. Thus I find the target area much larger than say Geneva, whose suburbs are either harder to reach or really crappy. But of course, it is much easier to find a place in other more "rural" cantons, and where I am currently living, I could find one in less than a week.

I love Ticino (nature, lake, food!) although I find it a little bit humid for me in the summer. But I guess that'd be a sweet option for my retirement...

 

[FIREd]

Geneva is a very compact city with an extensive public transportation system. I don’t know any part of the city which is hard to reach. But real estate prices are crazy here, that’s a fact. And I know many people who have left the canton upon retiring. They usually move to the Valais or Jura cantons, though personally, I’d probably choose Fribourg.

 

[REIJM]

Welcome to the forum. Once the daycare expense drops off, you'll have another 30,000 CHF to invest annually, which will make a big difference.

All I can say is that you live in the most beautiful country my wife and I have every seen. We spent some time in in Luzerne (absolutely loved it), Interlaken (beautiful, but VERY touristy. We did like nearby Lauterbrunnen though when we visited there one day), and Lugano (we took a train up for one day from Como in Italy to do a bit of hiking, then spent the afternoon down on the lake. It was gorgeous).

 

[walkinwood]

Welcome!
$3K tax a month on $22K/mo income seems pretty reasonable for a European country. I've always believed that taxes were much higher there. Does this include your part of the contribution to your social security pension or does your company pay that in full?

Thanks for giving us a small insight into the financial aspects of life in Switzerland

 

[undecyphered]

Welcome!
$3K tax a month on $22K/mo income seems pretty reasonable for a European country. I've always believed that taxes were much higher there. Does this include your part of the contribution to your social security pension or does your company pay that in full?

Thanks for giving us a small insight into the financial aspects of life in Switzerland

Hello,
The $3k only includes income tax because "social taxes" (for unemployment insurance, social security pension, insurance to receive your salary in full when you are sick, parental leave, etc.) are already taken away from my gross salary.
On top of the salary, we also have 30 days of paid vacation and around 10 days of public holidays - those are not included in the social taxes but I guess impact the salary level (i.e., we would be paid more had we not such a vacation system in place). Personally, I prefer the vacation time over the money.
$22K/mo is net, i.e. after such social taxes have been paid. They amount to around 8% of the gross salary I believe, but this fluctuates by canton and can hover around 6% in the better-managed German-speaking cantons.