French, 58, willing to retire in France in coming years

[jmf11]

Hello,

I'm 58 and working as engineer in an international research program in France since 2015. I will have worked:

• 19 years in the normal French system, giving access to a partial retirement pension after 64,
• 15 years in international context, with a pension fund in the package.

My wife is older than me and retired about 5 years ago. We have a daugther who is studying Medecine. She starts to be financially autonomous and should not need much more help from us.

My wife pushes me to stop working, so that we can enjoy time together. I try to crunch the numbers. Pension funds are not that common in France, were most people have a stable pension when retiring. They don't have to consider the longetivity question. I discover that I'm a bit less comfortable than expected to FIRE, even if estate seems to be sufficient.

I have a relatively simple way of living as long I can practice my hobbies: hiking, windsurfing, RC gliders, Electonics… nothing very expensive. My wife likes to travel and would like a bigger house (more expensive). South of France, near the sea for sailing (let's 30 minutes drive) is not the cheapest place in France.

Numbers:

• Income 100k€/year
• Current pension plan value 500k€
• Retirement pension after 64: 13k€/year (aside of the pension plan)
• My wife retirement pension: 30k€/year
• We are renting our accomodation (small but very cheap for the area and good location): 7.3k€/year. We should move after retirement (no precise plan)
• Estate: 1500k€: 70% shares ETF 30% bonds and liquidities (most of it in "Assurance vie")
• Experience shows that I'm not a top investor. I switched to passive strategies in the last years,
• Additional 600k€ bitcoins (to deduce 30% flat tax at conversion to fiat money ; entered early by curiosity)
• I have to do a much better assessment, but spendings for the household should be around 50-60k€/year
• I would be happy not to die with zero, but to transmit to my daughter some estate in the end.

I had done some simulations with Blackrock LifePath. Then I discovered FIREcalc and appreciated the functions of the tool. I need to determine wether some specificities have to be considered when considering retiring in France (Europe).

Thanks for accepting me here.

Best regards,

JM

 

[zangbao]

Based on your numbers, I dont think you have a money issue. Unless you buy a house that is far more than you can afford. You probably need to figure out what else is bothering you before you retire.

 

[MarieIG]

Welcome to the Forum jmf11.

Another forum resource is Frequently Asked Questions (which you would obviously have to adopt to your situation). Perhaps you will feel more secure after you have budgeted for the new residence and factor in a more concrete budget for post retirement.

Good luck and we hope to hear more from you.

 

[Koolau]

Welcome to the Forum. We look forward to getting to know you and following your retirement journey.

 

[DrRoy]

You are in good shape for Euro 60K/yr. That is in 6 years though. What income can you get now? Even without your 13K/yr, you could still do E60K, but I wonder if that is reasonable, given that you spend E100K now. A bigger house and travel will cost more. That being said, I also support the concept of retiring early enough to enjoy it.

 

[jmf11]

My target would be to retire in 3 years, at 60. So 3 years without the 13k€/year retirement pension. So I would need to get enough from my Estate. We don' t spend 100k€ per year at the moment. Only around 50k€. So objective is to maintain a similar type of life, with much more free time.

The bigger house should be in the range of 400-600k€ (not the dream house by the sea which would need something more like 1200k€).

My first question is if FireCalc is roughly applicable to Europe (except the taxes part): input amount in Euros and interpreting the outputs as euros instead of $.

Are there some known precautions to take when when using Firecalc for Europe?

In parallel, I have to go through all the potential taxes and regulations (we are super strong here in France). Facial amounts may shrink too much wen considering taxes and fees.

JMF

 

[Dtail]

I believe that Firecalc is US returns centric modeling, but others can chime in.

 

[oiseux]

Bonjour et bienvenue. We are Americans who have bought in the south of France as well. You seem to be well set on your goal and could leave now, as long as the new house purchase and any large purchases like a boat don't get too out of hand. Your main expenses are quite low so you must already enjoy quite a bit of discretionary income. It seems the main challenge is the bridge income between now and 64, since you will need to spend capital for the new home plus much of the capital you said has been reseved in assurance vie.

On the FIRECalc I too believe the modeling relies on the US market and historic events like the Great Depression to develop the Monte Carlo cases. I think there are models available that use other indexes.

 

[jmf11]

Main thing I have to check are all applicable taxes and real net worth "after taxes", which may depend of the spending Stream. No big boat ahead: I prefer small ones.

I looked for a FIREcalc stampted OK for Europe, but I didn't found anything obvious. All seem to reply on US statistics. I wonder if there can be important differences out of taxes: inflation history/rates between US and Europe? Very different achievable investment returns over long periods between the 2 areas? I can by SP500 or World ETF as same conditions as CAC40 or European ETF.

And FIRE calculations can only be understood as guidelines, not precise predictions. But I see that some small changes on some parameters can have significant impact.

 

[MichaelB]

Hi JM, and once again welcome to our forum.

Your questions about FIRECalc are interesting. It is most useful for people with US based portfolios, incomes and retirement plans. It still can be useful for someone in your situation, as long as you understand how it works.

FIRECalc is a modeling tool, and in its simplest form has two key aspects. First, it collects the history of inflation and investment returns from equities and fixed income in the US.

Second, it applies all the different historical combinations to a retirement plan you input to test how the plan would have fared in each of those scenarios.

The first part, historical returns, have limited application outside the US. The history of asset performance and investment returns in France is different and likely to continue to be different in the future. This limitation affects you.

The second part, which is applying your plan assumptions (pensions, assets, portfolio, expenses, ages, etc) is just as useful for you as it is for every other user. It’s very difficult to do this by yourself on a spreadsheet, and the output can be valuable. It highlights the weaknesses and potential plan failures.

You do have an option with FIRECalc to compensate for the US data focus, which is to use the MonteCarlo simulator function instead of historical data. You can find this option on the “Your Portfolio” tab, the last option, “a portfolio with random performance”. You would need to use your own assumptions for portfolio return and volatility, but the outcome is still quite valuable. Doing this helps you identify the conditions needed for a successful plan, and it also helps identify the conditions that lead to plan failure.

I would suggest familiarizing yourself with that option and then focusing on developing realistic assumptions.

 

[jmf11]

Thanks for this proposal. I'm going to explore it. Ca I consider that the parameters of the MonteCarlo simulator are sort of also "key drivers" behind the historical data, and that comparing those between US and Europe could give some hints about "how far" is FIREcals for Europe.

JMF

 

[FIREd]

FIRECalc may or may not be applicable for a retirement in France... It depends how your money is invested. Net equity returns are much lower in France than they are in the US in my experience. There are few low-cost investment options (fees), investing is often done through an intermediary (more fees), and taxes on capital gains can be high. It all weighs on your returns. And I remember seeing a study on historical equity returns by country and France was already quite low to start with, though it is easy to diversify internationally nowadays. So, personally, I don't use FIRECalc to guide me through ER.

 

[Koolau]

JM so sorry you don't seem to have investment options similar to those available to us. I often give thanks for the opportunities I've had to earn, save and invest in such a way that I was Financially Independent by age 51.

It does appear you have a good handle on your total savings and, most importantly on your spending in retirement. Here, we have pay-per-hour Financial Advisors (Called Certified Financial Planners). Do you have any similar resources available to you to help you decide if you are near ready for retirement? What we have to guard against here is the "Financial Planner" who is really a sales person OR the Financial Planner who only works for a percent of your investments under his/her management. I advise only to use one who charges by the hour.

Best luck and keep us posted on how you progress toward Early Retirement.

 

[jmf11]

I learned that I was not a good stock picker or market timer. Acknowledging that fact after some years, I turned to passive/lazzy investing. I had a lot of reading in the first years. Also about long term statistics. Equities returns are lower in Europe that in the US on the long term. We can however access major international ETF. So most investment options are opened here. But, I believe, with more fees than what is achievable in the US, which makes a big difference. I will have something like 0.8% contract + 0.05% fees per year on the SP500 ETF, or 0.8+0.25% on an Emerging countries ETF. Not low. Minimum with one of last contracts will be at 0.5+ETF fees.

The capital appreciation will be taxed 30% when you take the money. Not that nice. And those taxes may increase in the future (we don't have the $ and French debt gets heavy to deal with. Not that many options).

On the positive side, you can have a good Health cost coverage with the state system + 1700€/year.