Author Topic: European mustachians, what's different from US?  (Read 41308 times)

ydnls

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European mustachians, what's different from US?
« on: March 20, 2014, 03:46:25 AM »
Hi,

I'm trying to reach financial independence, living in Europe.
Tax rates in Europe are much higher than in the US, but social protection is much better. What's the impact of that of MMM's calculations? Have any european mustachians reached FI from their own revenues? What lessons you you have to share?

Thanks

ydnls

SMP

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Re: European mustachians, what's different from US?
« Reply #1 on: March 20, 2014, 03:56:57 AM »
The main idea of Mustachianism has a big impact. Credit cards are not so often used (at least my)...
The big difference is, that you can't chose where to put your money, your pension contribution goes to the guys who are retired now, and you hope that there will be someone who will pay for you if you are retired. That's the point in Germany. Furthermore you have some possibilities to sove some money for your retirement. There are some benefits, but you can't use the money before you are 62 years old.
No real option for an mustachian.
You have to save the money for your own, trying to get good funds with a low TER, but you have to pay 25% taxes on the interest/increased value.
It's not so flexible here.
I just started working 5 years ago, found out about MMM one year ago --> I am not FI or FIRE yet, but a have a goal.

Thegoblinchief

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Re: European mustachians, what's different from US?
« Reply #2 on: March 20, 2014, 06:23:14 AM »
Replying so I can track the thread, as despite being American I am quite curious.

Falconer

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Re: European mustachians, what's different from US?
« Reply #3 on: March 20, 2014, 07:03:10 AM »
Very good question indeed.

Prairie Stash

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Re: European mustachians, what's different from US?
« Reply #4 on: March 20, 2014, 09:11:00 AM »
Canada (in this case similar to Europe) - Free Health Care

You can eliminate a lot of debate and worry about rising costs.  I skim the threads about HSA, insurance plans etc.  It seems a lot of people spend a lot of money on health.  Here it's possible for the chronically ill to achieve FI.

In MMM budget you see monthly health care costs, your budget can eliminate it.

daverobev

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Re: European mustachians, what's different from US?
« Reply #5 on: March 20, 2014, 09:26:32 AM »
Hi,

I'm trying to reach financial independence, living in Europe.
Tax rates in Europe are much higher than in the US, but social protection is much better. What's the impact of that of MMM's calculations? Have any european mustachians reached FI from their own revenues? What lessons you you have to share?

Thanks

ydnls

Honestly - Europe is not a country. There are differences - huge differences - from country to country (let alone, say, the South East of the UK to the Midlands or North East). In some countries apparently you can deduct mortgage interest from your income. Some countries use the Euro and are tied to that for the time being; others do not. Some have a crazy cost of living (Scandinavia), some are very reasonable (Eastern European ones).

More specific, please..

Generally, health care is going to be free, but petrol will be expensive. Houses will be more expensive than some places in the US, but cheaper than the hot spots (LA, NY). But I'm sure you could pick something up in rural Poland pretty cheaply.

Dumb blonde

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Re: European mustachians, what's different from US?
« Reply #6 on: March 20, 2014, 11:13:50 AM »
In the Netherlands housing is ridiculously expensive. If you rent a house you'll have to do your own painting, flooring, landscaping etc, but on the other hand a renting contract usually is indefinite. That also means that landlording is not easy, there are lots of rules and regulations involved.

Healthcare is not free: around 100 euro per person per month, the first 250 euro you spend on healthcare each year are not covered (some costs not included). We pay 350 euro/month for healthcare for our family of 5. When our youngest reaches 18 in a few years it will be around 550 euro/month.

Pensions are also highly regulated. One cannot access the money before 65y.
Taxes are supposedly around 25% higher than in the US.

On the positive side: as a nation we bike everywhere. Between the 5 of us we have 7 bikes. I recently purchased an e-bike and hardly use the car anymore. Kids get around by themselves around town from age 12. One car will do for most families. Creditcard debt is almost non-existent. Education is cheap and public transport is very well organised (although complaining about the major rail company is almost a national hobby).



Albert

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Re: European mustachians, what's different from US?
« Reply #7 on: March 20, 2014, 12:46:09 PM »
There are few generalities compared to US: more expensive petrol, much cheaper (some places free) education, free or less expensive health care, higher taxes (with exceptions). Other than that conditions wary enormously.

I live in Switzerland and here: low taxes, high consumable prices, high salaries, expensive health care (with subsidies for poor people), free education, mandatory pension plans, very high property prices.

Non-wasteful lifestyle with significant savings still possible in all but the poorest countries of Europe.
« Last Edit: March 20, 2014, 12:47:57 PM by Albert »

daverobev

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Re: European mustachians, what's different from US?
« Reply #8 on: March 20, 2014, 01:59:08 PM »
I must say: I love the NHS. Flat out love it. It's not perfect, but what is?

I do NOT love the new(ish) tuition costs. I am a strong believer in more apprenticeships, university places for only those that will make something of it... and those should not have to pay... but if you DO want to do something that has no practical use, I guess paying for it is ok.. but the dialog has to be there so people know what they are signing up for before they commit to decades of student debt.

Cassie

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Re: European mustachians, what's different from US?
« Reply #9 on: March 20, 2014, 11:21:58 PM »
My DIL is from Poland and wages are low in comparison to prices.  she is very frugal and her & my son live on 20k here while he attends college f.t. and they are better off then in Poland.

Grog

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Re: European mustachians, what's different from US?
« Reply #10 on: March 21, 2014, 01:14:02 AM »
Hi everyone, I'm a young Swiss ingenieur (28y) and I just started with the whole idea of eraly reitrement. As a student in Switzerland you learn being frugal since studying in city like Zurich where a rent for a small single room in a shared flat cost the equivalent of 900$ its kind of difficult.
Some differences and similarities with the US stories:

- No students loan. Studying at a top university like ETH Zurich cost 680 Swiss Francs per semester. This is really cool.

- Life expenses are as high as it gets. My parents were really frugal, had 4 kids,
and they barely manged to get by with only one teacher salary. We never had any "real" vacation for example.

- Low taxes. I pay around 8000 swiss francs with a net income of 67000 swiss francs. There are a looot of things you can subtract from that income. But health is not considered.

- Health insurance is not public and you have to choose an insurance. You can freely change insurance with any kind of existent condition or sickness, they have to take you. At the moment I pay 190 chf per month and I will have to pay the first 2500 chf myself. There is no cheaper options out there, but families get a lot of help from the state.

- everyone my age is renting, no way you can buy a house or a flat (although the negative mortgage interest can be taken out from your net income for taxes). In my hometown, a rural village with no service lost in the mountain of the italian speaking part of switzerland a 3 room flat cost like 300'000 chf. In the cities you can't find anything for less then 600'000 chf.

- there are many financial services (is still is Switzerland, isn't it?) and online brokers and you don't have to pay taxes on stocks transaction or increased values and so on, only on the dividend you get.

- most of the people are frugal at heart, the one of the italian speaking part at least. The cool thing is you can freely say "no I'm saving money" and people will not judge you or think you are cheap. But we live in luxus and many just decide to spend it all, anyway.

- Public transportation is tremendous. I don't own a car and don't plan too, you can easily live without. I'm part of a car sharing plan (we are such a small country) with car at every station and parking lot and I move using only PT + car sharing, and I get my heaviest grocery sent at home buying online.


DaKini

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Re: European mustachians, what's different from US?
« Reply #11 on: March 21, 2014, 03:46:08 AM »
What i miss most here in germany is the flexibility in the retirement plans you US people have.

I feel this is the result of a kind of vicious circle:
Especially in germany financial basic education is close to zero for most people. Money things is no topic for most citizens. Only about 15% of all citizens do have stocks, the bulk of the populations savings is tied up in insurance contracts and checking accounts (thats why everyone complains about the low interest rates here). Germans are really risk averse in financial things, they usually do not tolerate book-losses and this is one major cause that they avoid the stock market. "Risk" is usually perceived in terms of gambling in the casino like "bet on red and loose it all", only very few people understand that risk in the stock market is something different.
This all (kind of) forces the government to handle the personal financial things for retirement for most people. They in turn sit back and let the government decide which only strenghten this circle.
This i believe is also the main reason there are no options to efficiently perform thinks like you can with IRAs and friends. The only ones winning here are the insurance companies.
[edit] Also kids are "educated" to put their savings in "ultrasafe" accounts, risk aversion (and together with this the idea "financial things is hard so go to the experts for advice"-thing) is thus institutionalized in the early childhood. Also, they are tought to save for later consumption, not to generate passive income. Sad, very sad.

Once i took full responsibility over my personal financials, i educated myself and now think FI it is easily doable here for the average emoloyee. There are situations here however where FI is never in the cards because of the high living costs.
Everything here is rigged for you to stay working until your late 60s.

It is hard to speak about personal finances, money is  a little no-no to speak about if its at the personal scale, especially if it involves the question "what you can afford". What, you didnt flew into vacation last year? are you poor!??!?
Sometime in the near past my brother-in-law asked "wehre do you get 5% interest these days!??" (and he was talking nominal yiald, not real numbers). I did not tell him that even after the last market correction i was quite above that number. It feels impossible to talk about such things with most people and this lack of basic financial education is the cause for most peaople to live financial unstable lifes.


How is basic financial education in the US?


[edit]: I fixed some typos and added the short sentence about how our kids are forced into this bad system.
« Last Edit: May 10, 2014, 02:19:57 PM by DaKini »

Fiador

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Re: European mustachians, what's different from US?
« Reply #12 on: March 21, 2014, 05:15:38 AM »
I am an european( spanish) mustachian 40 yrs old who lives in Dubai ( UAE) and plans to retire in Mexico in 4-5 years.
I will shortly explain the difference between the 3 countries.
- Spain
free healthcare and decent free schooling
Expensive housing
Huge taxes and more taxes after dividend or stocks gains
Poor return on rental houses
Good happy living. oLe
- Uae ( Dubai)
no taxes of any kind
Great income while working but your visa depends on your work status, no work no visa
Housing market is experiecing a booming again and rents are huge, currently paying 3,000 us a monthfor a 2 bedroom flat
It is not an option to retire here, but it is great to live nad work here and save 65% of the imcome with no taxes

- Mexico
Plan to retire there, affordable housing and living
Schooling and healthcare must be private as public s&cks
Good return on house rent
Taxes simlar to uS, but planning to have an offshore account to avoid pesos account

Squirrel away

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Re: European mustachians, what's different from US?
« Reply #13 on: March 21, 2014, 05:27:38 AM »
I've already said this on another bit of the forum but I am always shocked at the difference in house prices between the US and UK, particularly as I live in a part of the country that has high house prices. It seems like mustachians in the US have a lot of choice about where to live and can choose between several nice sounding areas if they are flexible. The US is a lot bigger though I suppose.

I must say: I love the NHS. Flat out love it. It's not perfect, but what is?

I do NOT love the new(ish) tuition costs.

I agree with both points. I'm very grateful to have the NHS despite it's faults.

daverobev

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Re: European mustachians, what's different from US?
« Reply #14 on: March 21, 2014, 07:30:20 AM »
I've already said this on another bit of the forum but I am always shocked at the difference in house prices between the US and UK, particularly as I live in a part of the country that has high house prices. It seems like mustachians in the US have a lot of choice about where to live and can choose between several nice sounding areas if they are flexible. The US is a lot bigger though I suppose.

I must say: I love the NHS. Flat out love it. It's not perfect, but what is?

I do NOT love the new(ish) tuition costs.

I agree with both points. I'm very grateful to have the NHS despite it's faults.

Compare London with New York, Los Angeles, Vancouver, Toronto and it doesn't look quite so crazy, though. My cousin lives in Loughton, tubes in every day, and it's affordable.

MissRyk

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Re: European mustachians, what's different from US?
« Reply #15 on: May 10, 2014, 08:32:07 AM »
Unfortunately, it looks like US - mustachians have it easier to retire early. Main reason being high taxes in Europe & language barriers limiting possibilities to move around & much less options to invest your money.

I live in Luxembourg.
Pros:
- good salaries, especially for people working in Finance
- good social security system, good healthcare (80% of costs reimbursed by the state and many companies have additional healthcare plans for their employees)
- small city, easy to get around (around 100 k people only)
- close to main European destinations (Paris, Amsterdam, Brussels)
- help for families (lower taxes, subsidies)
- multi cultural: 3 main languages (FR, DE, LU) and you can be perfectly fine speaking only English

Cons:
- high property prices (2 bed apartment around 400 k EUR). You can get housing for half of this price or lower if you decide to cross the boarder and live in France, Germany or Belgium but that means... commuting. Mustachians no no.
- not much culture around, boring at times
- country strength is built on favorable tax rates (VAT, CIT), but rest of the Europe doesn't like it. EU is trying to remove those differences and once they do, the biggest competitive advantage will disappear. This also makes the decision to buy a house around difficult.
- expensive groceries, restaurants with bad service.
- bad level and really expensive services

We are consider moving from here... but are they any cities in Europe with affordable prices and good job opportunities ..? My guess would be Geneva, maybe Berlin, but I don't think they are many options, at least until Europe recover from crisis.

Albert

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Re: European mustachians, what's different from US?
« Reply #16 on: May 10, 2014, 11:42:57 AM »
We are consider moving from here... but are they any cities in Europe with affordable prices and good job opportunities ..? My guess would be Geneva, maybe Berlin, but I don't think they are many options, at least until Europe recover from crisis.

Good job opportunities perhaps (depends on your profession), but affordable prices no way. It's a horrendously expensive place particularly if you want to live in Switzerland instead of commuting from France.

Ayanka

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Re: European mustachians, what's different from US?
« Reply #17 on: May 10, 2014, 01:21:33 PM »
As mentioned before, there are huge differences within 'Europe'. Generally the countries in the north-west of Europe are doing ok. They feel the crisis, but managed to keep the amount of extra homeless people and drama under control. This is not true for the rest of Europe. In the south of Europe (Spain, Portugal, possibly Greece), they had a lot of extra homeless people and had to open some kind of storehouses for them to sleep in. There are very few jobs there, so a lot of people have a really hard time living. (2 of my colleagues come from respectively Spain and Portugal). However in Portugal and Greece, they seem to be on the long road to recovery, when it comes to national debt that is. For the east of Europe, it depends largely on the country, some of them are still suffering from the collapse of the USSR and have never had the financial means to really recover. Even Poland and some of the 'richer' countries are having financial trouble and the crisis didn't make it better. This is the citizens, not the countries themselves btw.

I live in Belgium, so I will discuss that more in detail :). Belgium has 11 million in habitants and if I count right 5 different governments, so please don't shoot me if I make a mistake because they changed something in the walloon part of the country. We have very cheap healthcare (about 250 Euro a year for me, at age 25). The general healthcare is organised via the government, but the costs for hospitalisation can still run up, up to a maximum amount, after which all costs are for the government. Because it is so cheap however, a lot of people have another hospitalisation insurance, so they avoid that risk. This is included in the 250 Euro. The hospitalisation insurance is also frequently offered by employers.

Our education system is really cheap, the costs are maximaly 1000 Euro a year for college, if you don't have a state grand. This doesn't mean the same as in the USA however, it is solely dependent on income (of the parents) as they are expected to pay the costs for their childrens college. The parents do however get 'child support' which is also a governmental subsidy to have children, it depends only on how many children you have and their ages, not on how much money you make.

Our retirements are at this moment funded by the government (aka other people working and paying tax), but they are stimulating your own savings, only to take out at age 65 of course. So far things are going good, I am wondering whether that will be true for the future though.

The disadvantage is that in order to pay for that, we have relative high taxes in compared to the USA, the average tax rate on a median income would be 33%, but it works with scales, the highest being 50%. The BTW (=VAT) is between 6% (on food) and 21%. I always thought this was high, till I read what the taxes in the USA are and what health insurance is, all in all, we are paying about the same, but I prefer what I get through the system here.

Oh yes, I forgot, unemployment is not limited in time, and an amount a Mustachian could live on (and perhaps even save a little).

On monetary sentiments, I never knew we thought the same as the Germans, so look to the post of Dakini.

Thank you for reading through my story, sorry for the length of it.

DaKini

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Re: European mustachians, what's different from US?
« Reply #18 on: May 10, 2014, 02:21:01 PM »
May i politely repeat my question from above:
Quote
How is basic financial education in the US?

As my post is refferred here, i added a short sentence and fixed typos :)

zataks

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Re: European mustachians, what's different from US?
« Reply #19 on: May 10, 2014, 02:27:30 PM »
May i politely repeat my question from above:
Quote
How is basic financial education in the US?

As my post is refferred here, i added a short sentence and fixed typos :)

From my experience with public education, limited or nonexistent.  I remember learning how to do the simplest of American tax forms (1040ez) in final year of high school government class.  Also I vaguely remember discussion/definition/outline of the different kinds of credit accounts.

Christof

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Re: European mustachians, what's different from US?
« Reply #20 on: May 10, 2014, 02:47:15 PM »
Tax rates in Europe are much higher than in the US

Actually, no. Taxes are different... In German we tax income and spending, but not property. In many states in the US either income or spending is taxed at a low rate, but property is taxed high. I pay 0.07% in property taxes, but 19% in VAT (similar to sales tax) here in Germany.

Hence, in Germany you are better of owning a house but not earning a lot more than you spend when being FI and not spending much. Then you end up paying hardly any tax (probably less than in the US) and have cheap healthcare if you are in the public insurance system.

DaKini

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Re: European mustachians, what's different from US?
« Reply #21 on: May 11, 2014, 01:20:09 AM »
... however getting a house in the first place is very costly here.

Alfred J Quack

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Re: European mustachians, what's different from US?
« Reply #22 on: May 11, 2014, 04:31:41 AM »
In the Netherlands housing is ridiculously expensive. If you rent a house you'll have to do your own painting, flooring, landscaping etc, but on the other hand a renting contract usually is indefinite. That also means that landlording is not easy, there are lots of rules and regulations involved.

Healthcare is not free: around 100 euro per person per month, the first 250 euro you spend on healthcare each year are not covered (some costs not included). We pay 350 euro/month for healthcare for our family of 5. When our youngest reaches 18 in a few years it will be around 550 euro/month.

Pensions are also highly regulated. One cannot access the money before 65y.
Taxes are supposedly around 25% higher than in the US.

On the positive side: as a nation we bike everywhere. Between the 5 of us we have 7 bikes. I recently purchased an e-bike and hardly use the car anymore. Kids get around by themselves around town from age 12. One car will do for most families. Creditcard debt is almost non-existent. Education is cheap and public transport is very well organised (although complaining about the major rail company is almost a national hobby).

It's a matter of perspective. Rental houses in NL are among the cheapest when compared to Germany/Belgium/UK when compared to income available. Now that the government is allowing a realistic rent-increase after limiting it for years to the CBS calculated inflation (which does not include healthcare cost increases and such).
The paint your own walls comment is arbitrary though, this mainly applies to social housing meant for minimum income renters. When you rent in the public sector there are plenty rentors that ban you from painting your own walls :P

Buying a house is much more expensive though, largely due to the local market (supply/demand v.s. low number of competitive mortgage suppliers). Also, tax-support on mortgages is a factor which keeps prices higher than average.

Other cons in my opinion:
- Extremely high taxes on fuel
- 21% VAT (only 6% on food and primary services though)
- Student loan system introduced because of cutbacks (previously you could get exempted after getting your degree)

Pros:
- Social housing system for those that otherwise truly could not rent a house
- Healthcare, though this is subjective since the cost has increased by a lot and the coverage decreased by about the same
- Social security, un-employment benefits and such are still quite good even though cutbacks have been made.

LSK

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Re: European mustachians, what's different from US?
« Reply #23 on: May 11, 2014, 05:10:23 AM »
I guess it cannot be stressed enough that Europe is not a country. When I read some of the replies here, I see none of them that is accurate for Denmark for instance. We have many of the same things, but still with variations that is big enough that it would seriously impact any kind of FIRE calculations.

For instance in Denmark healthcare is 100% free, except dental which is subsidized. Subsidized daycare, good infrastructure, tight social security net, 37~ hour work week, education is free - Hell, you even get money to educate yourself after you turn 17. Plus tiny things like how you can borrow music and movies digitally from the public libraries, so you won't need cable TV or Netflix. Public "workshops" where you can go and use the industrial-scale tools to create your own stuff and so on.
The taxes are high 36~% and up, but what really matters is not the percentage, but what you get for your money.
All of these things will have an effect on when and how you can become FI and RE.

One of the reasons why I think it might be difficult to truely achieve financial independence here is that the system is very efficient and built up around 1 way of life - Work from your twenties to your sixties and retire. That one road have been paved and made quite pleasant compared to many other places in the world, but it also means that the system is less supportive of taking a different road.
Examples of this would be our higher taxes on capital gains and investment laws that make it hard to follow the suggested MMM-way. Pension-schemes that are very favourably subsidized, but that you cannot start spending before you reach the goverment mandated retirement age of 60-something and so on.
It is difficult to trade money for time, as it is not the norm that you can work lower than 37 or more hours a week, unless you have a physical or mental disability.

So basically I think you might get a more specific and perhaps useful answer, if you tell us which country you are in.

Christof

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Re: European mustachians, what's different from US?
« Reply #24 on: May 11, 2014, 09:17:17 AM »
... however getting a house in the first place is very costly here.

A house that is ready to move in located in an area with good paying jobs or is a tourist destination. Absolutely. But if you don't mind a fixer-upper, in a foreclosure or a remote location there are tons of houses available in the range of 10K-35K in Eastern Germany.

Iconoclast

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Re: European mustachians, what's different from US?
« Reply #25 on: May 11, 2014, 09:21:59 AM »
My hypothesis: it's more difficult to reach FI here in Europe because of the taxes, but once you become FI, you can use a lot of the (state)systems that are in place to help people with a lower income: low cost health care, tuition etc.

Currently I'm paying 52% tax on my salary, 1,2% of my total investment portfolio and 0,6% of the value of my house per year. That is a *lot* of taxes! I work in the Netherlands but live in Belgium, close to the border, so I often have a choice where to buy my gas and groceries etc.
I hope that when I reach FI (if I ever quit working, because I like it a lot for the time being) in about ten years, I can use the system to work for me, instead of just bankrolling it. :)

Last but not least, the infrastructure for biking in Europe is great here. Lots of parking spots for bikes, dedicated bike lanes etc. You can get anywhere on a bike, provided you can take it from a physical point of view. At least a part of my tax euros is used well!

Jack

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Re: European mustachians, what's different from US?
« Reply #26 on: May 11, 2014, 10:03:16 AM »
My hypothesis: it's more difficult to reach FI here in Europe because of the taxes, but once you become FI, you can use a lot of the (state)systems that are in place to help people with a lower income: low cost health care, tuition etc.

That sounds to me like it might be a good idea for an American to work in the US, then retire to [southern, eastern, or rural] Europe. Would such a thing be a viable strategy?

Daleth

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Re: European mustachians, what's different from US?
« Reply #27 on: May 11, 2014, 12:21:14 PM »
My hypothesis: it's more difficult to reach FI here in Europe because of the taxes, but once you become FI, you can use a lot of the (state)systems that are in place to help people with a lower income: low cost health care, tuition etc.

That sounds to me like it might be a good idea for an American to work in the US, then retire to [southern, eastern, or rural] Europe. Would such a thing be a viable strategy?

Certainly. Depends on the country, though; you'll have to google the immigration requirements for each country you're interested in, as they're all different. It is not uncommon for there to be a visa/residence card path for foreigners who have enough money to live on, i.e., who want to retire there and do not need to work at all.

Paul der Krake

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Re: European mustachians, what's different from US?
« Reply #28 on: May 11, 2014, 12:41:38 PM »
That sounds to me like it might be a good idea for an American to work in the US, then retire to [southern, eastern, or rural] Europe. Would such a thing be a viable strategy?
This is more or less what we plan on doing. Work in the US for 15-20 years, and then alternate between both sides of the pond. I'm not even sure I want to raise children here, so that might even happen earlier than that.

iris lily

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Re: European mustachians, what's different from US?
« Reply #29 on: May 11, 2014, 12:49:22 PM »
Well let's see:

Our energetic, entrepreneurial cousin from Switzerland came to the States to go to school, stayed here, earned craploads of money (essentially selling snake oil) and became FI at about age 50. Somewher ein there he married a first time and that may be how he was able to stay here in the US. don't know. Later he gained a Hollywood-pretty (2nd wife) young wife and two perfect children, and went back to Switzerland to live with fistfulls of cash. He had purchased investment properties over there.

I think, if one has the citizenship opportunities, that the U.S. is the place to make money but going elsewhere afterwards may be the way to go. If one can tap into the social programs offered by European countries after the wad of cash have been made, go for it. I don't really know if Europe has managed to find a way to tax net worth. Have they?
« Last Edit: May 11, 2014, 12:52:44 PM by iris lily »

Paul der Krake

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Re: European mustachians, what's different from US?
« Reply #30 on: May 11, 2014, 12:59:42 PM »
I don't really know if Europe has managed to find a way to tax net worth. Have they?
France has something to that effect. Most countries have abandonned it though.

Christof

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Re: European mustachians, what's different from US?
« Reply #31 on: May 11, 2014, 01:23:16 PM »
I don't really know if Europe has managed to find a way to tax net worth. Have they?

Cyprus seized 10% of all money in bank accounts above a particular threshold for the bailout. In Germany we used to have a tax on net worth and it's coming up regularly. Most people here are qctually in favor of such a tax. You are just not supposed to accumulate wealth to live off it. And why would you if you can work until 67 and get some lousy benefits in retirement...

Ayanka

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Re: European mustachians, what's different from US?
« Reply #32 on: May 11, 2014, 02:09:45 PM »
We don't have a tax on net worth, but we do have income taxes. Depending on the country it might go from they make up an income and tax you on that (Greece) to it is considered income and we tax you on it. If your money comes from stocks etc and it is not considered income at the American side, the tax would be 25% inhere. Plus a 6-21% VAT when you spend it. E.g. they did change it for electricity, but before it was taxed at 21%. There are very few things taxed at 6% I think only food and some really basic necessities.

Coming from the US with a carload of money to retire here might be a good idea, but I personally wouldn't do it on a Mustachian level. Don't forget that the EU is a lot better in changing things fast when things go wrong economically. If the country you happened to retire in needs money, they might invent about anything, why not a net worth tax?

Left

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Re: European mustachians, what's different from US?
« Reply #33 on: May 11, 2014, 02:12:39 PM »
That sounds to me like it might be a good idea for an American to work in the US, then retire to [southern, eastern, or rural] Europe. Would such a thing be a viable strategy?
So, by estimate how much does it cost to live in europe? I mean aside from the rural areas? I'd assume that is is like the US? South being Texas, Rural midwest COL? The difference being the QOL, the social nets?

While I'd planned on retiring to Taiwan, I could see myself living parts of the year in Europe too. If the costs are similar and all, why not? I didn't worry about the investments/taxes since I'd be more of a tourist than resident
« Last Edit: May 11, 2014, 02:14:33 PM by eyem »

Christof

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Re: European mustachians, what's different from US?
« Reply #34 on: May 11, 2014, 02:33:48 PM »
First of all, rural in Europe is different from rural in the US. The European Union is less than half the size of the US, but has 70% more inhabitants. There are areas where you are far away from other people in a sparsely populated area, usually in a desert or mountains. But for most parts rural means 30 miles from the next big city.

Costa vary widely... London or Munich are expensive. Where I live in Germany I would consider 20,000 Euros to be plenty for a family of three if you have savings, are eligable for public healthcare and don't work.

Albert

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Re: European mustachians, what's different from US?
« Reply #35 on: May 11, 2014, 03:24:13 PM »
That sounds to me like it might be a good idea for an American to work in the US, then retire to [southern, eastern, or rural] Europe. Would such a thing be a viable strategy?
So, by estimate how much does it cost to live in europe? I mean aside from the rural areas? I'd assume that is is like the US? South being Texas, Rural midwest COL? The difference being the QOL, the social nets?

Impossible to say, the difference could be as big as between rural Mississippi and Manhattan. Where I live about 40,000 $ a year for two adults would be an absolute minimum. Maybe even more since as a foreigner who hasn't worked here you couldn't claim any state assistance.

Albert

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Re: European mustachians, what's different from US?
« Reply #36 on: May 11, 2014, 03:27:40 PM »
Also talking about rural as already mentioned above there is nothing similar to Idaho or Nebraska in Europe except the very far north (Northern Sweden and Finland). Probably not anyones idea of retirement destination. If you move to retire here (I'm sure possible if your finances allow it) it's for culture not for being far from other people.

Albert

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Re: European mustachians, what's different from US?
« Reply #37 on: May 11, 2014, 03:30:03 PM »
A house that is ready to move in located in an area with good paying jobs or is a tourist destination. Absolutely. But if you don't mind a fixer-upper, in a foreclosure or a remote location there are tons of houses available in the range of 10K-35K in Eastern Germany.

No doubt there are, but what are you going to do there? Not exactly a hotbed for well paying jobs… You could get a house even cheaper than that on the far Eastern fringes of EU.

Daleth

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Re: European mustachians, what's different from US?
« Reply #38 on: May 11, 2014, 04:08:26 PM »
A house that is ready to move in located in an area with good paying jobs or is a tourist destination. Absolutely. But if you don't mind a fixer-upper, in a foreclosure or a remote location there are tons of houses available in the range of 10K-35K in Eastern Germany.

No doubt there are, but what are you going to do there? Not exactly a hotbed for well paying jobs… You could get a house even cheaper than that on the far Eastern fringes of EU.

Well, we're talking about retirement here, not working in Europe. The visa/immigration requirements are going to be totally different if you're planning to retire there (i.e., not work) vs. if you're planning to move there and work.

CarDude

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Re: European mustachians, what's different from US?
« Reply #39 on: May 11, 2014, 04:33:25 PM »
A very interesting thread. I look forward to more replies, particularly from folks in France or Spain.

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Re: European mustachians, what's different from US?
« Reply #40 on: May 11, 2014, 10:28:46 PM »
But for most parts rural means 30 miles from the next big city.
I had no idea that rural Europe meant well, not farm land/empty space. Aside from 30 miles to next city, I can drive 30 miles or more and not see another house where I am. Hundred(s) to next "big" city. So I guess the COL isn't the same then :S.

I guess in this respect, I would be better associating Europe's lifestyle as more like Taiwan/South Korean (two places that I've been that's different than US)? I found Australia to be similar to the US except about a decade or two behind in fashion/trends. Brisbane has a good public bus system but I didn't visit enough of the country to tell if it is wide spread or just in that city. Though they do have a better healthcare system. But I probably couldn't retire in Austrilia as cheaply, seems like it just cost more there

meadow lark

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Re: European mustachians, what's different from US?
« Reply #41 on: May 11, 2014, 10:50:37 PM »
I would say the public education about finances is pretty sad in the US, too.  However, if someone is at all interested it is very easy to find the information.  You just have to be motivated to find it, and most people aren't.
  Social security, which would start at 67 for me, would be enough to live on, but with zero luxuries.  So we invest for the extra things we will want. So it is a lot of people investing who know nothing.  Pensions from employers are very rare now.
 Health insurance is always a big issue, of course.  For instance, our plan which is subsidized by my job costs me $1500 a year to cover 2 people, and the first $3500 of coverage I have to pay.  And I have a pretty good job working for a hospital and insurance company!
  The US has extreme differences in COL depending on where you live.  I live in a very poor and rural state (New Mexico) but I live in the downtown of its largest city (about a million people) and our house cost $105,000 (333 sq meters.) If I wanted to live in a condo I could find a decent one for $55,000.  My wife and I make together about $155,000 a year working full time in very middle class jobs as nurses so it is a good ratio of pay to housing.  We are frugal though, and most of our friends pay more for their 800 sq meter houses!

Iconoclast

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Re: European mustachians, what's different from US?
« Reply #42 on: May 11, 2014, 11:08:17 PM »
Some folks here have expressed an interest in moving to Europe, be it on a permanent basis or not. There is a friendship treaty between the U.S. and the Netherlands that basically permits to set up residency in the Netherlands when you start a business there:
http://en.wikipedia.org/wiki/DAFT_%28treaty%29
It more or less allows you to bypass the regular immigration proces.

I'm not sure whether the treaty would apply to the Dutch islands in the Caribbean as well.

expatartist

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Re: European mustachians, what's different from US?
« Reply #43 on: May 11, 2014, 11:16:36 PM »
Re. taxes in retirement, Italy - which is desperate for more tax revenue - has recently tightened laws which taxes residents' foreign assets. http://www.expat.hsbc.com/1/PA_ES_Content_Mgmt/content/hsbc_expat/pdf/en/global_tax_navigator/italy.pdf

And I believe Spain too. http://www.janetanscombe.com/news/new-rules-on-resident-foreign-assets-reporting.html
http://costablanca.angloinfo.com/information/money/general-taxes/spanish-wealth-tax/

If you're considering being tax resident in the Mediterranean during retirement, please ensure you check updated laws for your COL calculations.

DaKini

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Re: European mustachians, what's different from US?
« Reply #44 on: May 12, 2014, 12:49:37 AM »
... however getting a house in the first place is very costly here.

A house that is ready to move in located in an area with good paying jobs or is a tourist destination. Absolutely. But if you don't mind a fixer-upper, in a foreclosure or a remote location there are tons of houses available in the range of 10K-35K in Eastern Germany.

I know as i ocassionally read the "Versteigerungskatalog" :)
This is no option until you can work remotely or are retired however. Besides that, i cannot let go from the alps, much of my life enjoyment comes from hiking and such, so i probably would stay here in south bavaria even if i retired.
Maybe some remote place in austria is an option, tough.

Moonwaves

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Re: European mustachians, what's different from US?
« Reply #45 on: May 12, 2014, 08:46:47 AM »
You have to save the money for your own, trying to get good funds with a low TER, but you have to pay 25% taxes on the interest/increased value.
I'm a very, very junior mustachian and have only just started to even think about trying to invest (other than basic pension plans, mostly through work) and still haven't managed to get further than trying to get over the 25% CGT here in Germany. Between that and the less than 1% interest on "ordinary" savings accounts, it just all seems so far away from what MMM talks about. But I'm having a generally whinypants kind of a week so I'm sure there are just things I haven't figured out yet.

Have a meeting tomorrow to see about getting a company-matched pension contribution. I did hear about this when I'd been here nearly a year (here just over five years now) but since I was drowning in debt and convinced I wouldn't be staying working for this horrible company for much longer, I never bothered. And then because I had mentally dismissed it, in the years since then I haven't even bothered reading the emails that come round once a year. For whatever reason, this year I did read them properly, only to discover that with my 5+ years of service, I can get up to 30% match from the company. Face-punch definitely required.

Anyway, in general I think lots of people have already made the main point, which is that there really are big differences between the various countries in Europe. Part of the reason I moved, even though I part financed my move with a credit card, which was terribly non-mustachian of me, was that I just couldn't seem to get ahead in Ireland. And since I was lucky enough to move just a couple of months before the financial crisis started I didn't even have to deal with the potential redundancies and minimum 10% paycuts my former colleagues had to go through. Germany definitely still has far more of a cash than credit culture, which is great. Although I live in one of the most designer-y cities in the country, for the most part the label-lovers stick to just one or two areas and the normal people are generally very down-to-earth. And, hey, in the pubs beer often costs less than water, so it can't be all bad!

MissRyk

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Re: European mustachians, what's different from US?
« Reply #46 on: May 12, 2014, 01:02:59 PM »
Sourds ŕ bit, my fellow mustaschians, like we should all move to US, get as much money as possible and come back to Europe for retirement .. :-)

How about investments? What European Mustaschians invest in?

Chuck

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Re: European mustachians, what's different from US?
« Reply #47 on: May 12, 2014, 02:42:17 PM »

How is basic financial education in the US?

Basic financial education in the United States is terrible. You get a basic rundown of what a share of stock is, but there are many, many things that my teachers didn't even begin to cover.

If you do not have a formal financial education in college, or you are wise enough to take several mid level courses on the subject to supplement your major, you need to self educate like myself and many others here have.

The tragedy of all this is that the lesson people need to learn is so simple: Buy index funds, not penny stocks. That's it. And it took me 7 years out of high school to learn that lesson.

beltim

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Re: European mustachians, what's different from US?
« Reply #48 on: May 12, 2014, 03:11:35 PM »
  The US has extreme differences in COL depending on where you live.  I live in a very poor and rural state (New Mexico) but I live in the downtown of its largest city (about a million people) and our house cost $105,000 (333 sq meters.)

A 3500 square foot house only costs $105,000 in downtown Albuquerque?!?

Able was I ERE

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Re: European mustachians, what's different from US?
« Reply #49 on: May 12, 2014, 07:41:27 PM »
Sourds ŕ bit, my fellow mustaschians, like we should all move to US, get as much money as possible and come back to Europe for retirement .. :-)

How about investments? What European Mustaschians invest in?

A related question.  Are IRAs or 401ks still tax-advantaged if you live in any European country?   

I've heard rumors for example in Austria and Germany that capital gains and dividends are taxed in IRA and Roth IRA accounts  like as in non-retirement accounts---the account is treated like a regular taxable account for tax purposes because there is no treaty that recognizes an IRA as a retirement account. 

Which would mean that if you live in Europe before retirement, then move back to the US, you would get double - taxed : once in Europe when the gains occur, and once on income received from withdraws in the US.

Anyone know the real details for any European country?   Hopefully I've got it all horribly wrong and you can set me straight.