I am curious to hear about the approaches the Belgian people take to be FI.I like to work with baby steps/goals to FI
1 buy an apartment, check
2 optimise down payment to 3050€ / year (for max tax advantage), check
3 a 13K unlucky emergency fund (I'm not superstitious or am I), check
4 get a Financial Adviser degree (for an investment strategy and the confidence 2 follow it), check
5 have more money in different accounts then debt, 2017?
6 have the ability to pay off debt without touching the pensionfund & emergency fund, ...
7 invest 250K in etf's (in today's money) for FI, ...
8 work for 8K(if still possible) of untaxed income yearly , ...
I only put my next goal on a timeline for motivation purposes.
I am also thinking you need about 20 years of working to achieve FI in Belgium.
Taxes on wages are high and that hampers the build up of a sizable stash in the beginning. But once the stash is a certain size the no capital gains tax comes into effect in Belgium and that does help.
We also have social security which you should take into account.
I see the lower end of Fi at 325.000 euro. 300.000 euro at 4% SWR gives you 12.000/year or 1.000 euro per month. You can add 500 euro a month of minimal unemployment money you can get in Belgium which then brings you to an average monthly income of 1.500 euro. And that is an amount you should be able to live of comfortably (if you got your mortgage or rent cost around 500 euro/month) in Belgium. The 25.000 euro extra should cover living expenses for two years, assuring you can survive a market downturn where it is best to not draw on your stash. Vandevelde below 60 euro a share gives you a dividend pay out of around 4% by the way.
425.000 euro is better since then you get there with a SWR of 3% and there are quite a few companies paying netto dividend at around the 3% mark …
A bigger issue I find is that for a pension you need a minimum of 30 years work or ‘gelijkgestelde periodes’ (unemployment thus). This makes the extreme early retirement as done in the USA (quit working after 15 years, work 0 hours afterwards and then when one is over 65 still be eligible for social benefits) pretty impossible in Belgium. Reaching FI after 20 years means that you have been a pretty decent employee for those 20 years, which means that the RVA and VDAB are going to expect you to get another job pretty swiftly and if not it will raise issues. Issues you will want to avoid.
You could select not to go on unemployment but after 20 years of paying into the system I do not find this a very attractive idea (it also means your stash would need to be higher off course) and even at getting the 500 eur/month unemployment you will still be paying taxes, you have just reduced your tax bill to almost zero. After 20 years of paying a lot of taxes I am not going to feel bad about paying just 1% or 2% taxes for the next 40 to 50 years …
Tax calculations: gross dividend of 16.500 euro gives you an after tax dividend of 12 045 and you pay taxes of 4 455 euro.
Your yearly income is 12 045 dividend + 6.000 unemployment benefits (12 x 500euro/month) = 18 045
Lets say you spend 12 000 euro of that at an average VAT rate of 15 % (probably higher as most stuff is at 21%) = 1.800 euro in sales taxes + the 4 455 euro dividend taxes = 6 255 of taxes payed in a year against the 6.000 euro you received in unemployment money.
So you see, as a FIRE person you are not mooching of the system. Not collecting unemployment would mean still paying 27% taxes, year, after year, after year. Euh, no thanks.
Which still leaves us with the RVA/VDAB who are probably not going to stand idle by and let you collect unemployment uninterrupted for 20 or more years. Once after 55 years I think you are pretty safe but that would still leave a gap of 10 years to fill (probably only 7 in my case but one can dream right?). I have been thinking of going into security and then just do seasonable work during the festival season. When I was a student I very much enjoyed working back stage for festivals and rock show (did Metallica, Eric Clapton end Led Zeppelin, but also the Spice girls and Elton John, lol) so I do not think I would mind doing security for Rock Werchter, Tommorrowland and such. It is also a sector where they are always looking for people and several people do it as a side gig so it is pretty normal there for a guy to say he just does the summer festivals and such. When the RVA starts making inquiries you just pick up enough work to no longer qualify for unemployment and then after a few months you stop doing the work again but this way you are off the radar of the RVA/VDAB. Should be possible to fill the 10 year gap with like 8 months of unemployment and 4 months of ‘working’ a year. It will raise your tax rate to about 10% probably but hey, if it keeps the RVA quiet this seems preferably to having to do some menial interim office job for 6 months or even a year now and then, 16 years in and I am getting really tired of it…
I really should get of my lazy ass and start that blog, but hey I have sloth in my name for a reason …
Also very curious for nomorewaffles: he started really young and is doing almost everything right, I have hopes he will get there after only 15 years!!