Grog and all, thanks for addressing the spend, I appreciate the feedback and thoughts. Indeed, we like our lives but also there is some diminishing returns on spending and we could cut without sacrificing much/any life quality.
Maybe starting with the end in mind - we budget 100k/y spend in retirement, but must say we havent even figured out which country to live in… so it could be less. The 3 years of travel is to do that while we can, it is a long time dream to slow travel around the world, we are talking backpacks and simple accommodation, not luxury cruises. Certainly we do not want nor do we need a 4K rent in retirement, right now this is pure convenience to work, very HCOL around here, even for Switzerland. And if you retire in Portugal or somewhere else, the spending could be MUCH lower (although the tax implications could cancel any savings, I have come to appreciate the lack of capital gain tax on stocks in CH )
We are a family of 3, 1 kid at college-age (so health insurance for 3 adults, and yes, that is the price in our Canton, shocking, we have max deductible even and used Comparis to find the cheapest).
What I will do over the weekend is to go through ACTUAL spend for last 12 months to get the real picture. Honestly, these numbers are my best estimates (except rent, health insurance).
And Grog on charity… (now I am inviting for punches I know)…you are right on the observation. We do not give anything for charity. Growing up in a high tax socialist country our engrained culture is probably “Government takes care of that, that is why we pay such crazy high taxes”
I am swiss and I’ve always believed that as well (say 90% of the cases). I believe if you come from a country that actually cares about people or not. (I’m looking at you USA)
Which is not really better in terms of taxes. You pay less taxes if you earn below 120k, but above Basel-Stadt is better. It’s better in terms of dividend taxation though (60% of dividends will be taxed vs 80% in Basel-Stadt). Talking about dividend payments from your own company.
Taxation is one thing although yes, the gemeindes of Riehen and Bettingen in Basel Stadt are more attractive than most of the gemeindes of Basel Land. Basel Stadt gemeinde of course has higher taxation.
I am also referring to other costs such as for e.g. health insurance premiums, price of property, price of concluding the sale of property, taxation on inheritances, taxes on dividends (as you mentioned), etc.
In general, one would come out better in Basel Land from an overall cost of living perspective.
I definitely would have shifted earlier, but I had a restricted permit for almost 8 years and now I’m too close to the minimum requirement of 12 years before applying for naturalisation.
For 150k net income, you save 2’721 (Riehen) or 3’401 (Bettingen). In general, both Basel-Stadt and Basel-Land are not the best cantons for saving taxes. Therefore, Zug and Schwyz are much better.
The difference between Basel-Stadt and Zürich-City are not that big btw, especially if you are earning 150k or more.
Budgeting 100k/year is ok. It’s a luxurious retirement, but you are free to do so. You mention to be 50-55 in 3 years, so right now 48-53. In 12-15 years you are going to receive AHV, up to what 45’000 per married people? Are you including it in your calculation?
That means your stash needs to generate 55000 chf per year starting from 12 years in the future. The rest will come from AHV. You can generate 55000 with a 2% withdrawal rate (just dividend of ETF) with a stache of 2’750’000 chf. So your goal should be to have in 12 years 2.75 millions. You now have 3.6 millions.
You now need to survive 12 years generating 100k from your non-retirement stache (2.25 milion chf). That is a withdrawal rate of 4.5 %. Is not completely safe, but then in 12 years you are going to receive AHV, +all the cash from second pillar + third pillar + foreign pension fund. So even if with 4,5% you are on the risky side, and you withdraw from your principal, you will fill up the gap with the money from the pension funds.
Congratulation! you made it. You can walk away from your job today. Every day you stay on the job will not help you further, it will only reduce the amount of free time between now and death.
and in that free time you can even work and do some project based stuff at your will.
Just a reminder that was said in some point and is inside my calculations for ER:
If you are not working and living in Switzerland you must pay the AVS (AHV) until the age of retirement. You and your wife.
I took in consideration because is not too much but depends of your fortune, age, etc. Could be something you must think about. There are online calculators to estimate.
Of course, if you quit Switzerland, problem solved.
Thanks Grog. Well, retirement benefits such as AHV is for us an upside. We will not get anywhere near the maximum you mention.probably more like 20 k per year in total, although we have to make that calculation still. We have lived and worked in too many countries (which has been amazing life experiences we will never regret but not good for retirement!)
Well, could we retire now, today? Maybe. But financal capacity to do so is one aspect, being ready and having prepared what to do instead turning on that PC every morning is another. Covid taught me that there is a risk to just have one day follow the other if no stimulus. We are not there yet mentally. We also actually like our jobs, it gives us purpose (really!), we work on stuff that improve people and patients lives for real. Also, like to ensure our child on the right educational path before… we could not just start travelling tomorrow even if what we wanted.
The growing urge is that we become acutely aware of is that life holds no certainty. One may get cancer tomorrow or a serious accident. And every day our capacity - and even more scary - the itch to see the world and adventure is diminishing.
Such is the dilemma and perspective for us on FIRE. I imagine many of you have the same (internal) dialogues?
If the work still feels meaningful, than it is another story. But is all flowers and unicorns? You work for big Pharma.
Were you ever part of projects that got cancelled for financial reason or other? Even if they were meaningful projects? It happened to me in my last job at a mulitnational firm. It was frustrating.
[old text, rude from me, I didn0t want to imply he had to do it. Sorry, written too hastily: Never once did you had to cancel a project that could impact people life just for some economic justification?]
Fact is, life does not stop if you are financially indipendent. You can start your own business, you can stop working, you can do stuff that impacts people life.
I’m interested to know what are your thoughts on your child and higher education. Is he interested in university? Are you going to pay all thw stuff or asking him for contribution as “education”? I’m wondering what I’m going to do with my daughters, if it comes to that. I worked and studied at the same time, and lived very frugally. My parents only payed my krankenkasse. It was not easy, but educational. Should I do the same? Or is it selfish if I have the means to let my daughters study without working?
Kind of rude to question someones work without knowing what they actually do.
While it might be true that pharmaceutical companies sometimes refrain from doing good because of financial reasons, you have to remember that the vast amount of good that they do do is because of “economic justifications”.
Thanks all for the input. Our pillar 2a has minimum 1% and a historic 2.5%, why I use 2%. It does not make a big difference in the next 3 years anyhow, while yes, the 5% on ETFs does. So that could throw the target off.
A tax-saving tip: if you can buy into the pension 2 while in Switzerland, it will save you income tax. Your buy-in into pension 2 will be taxed if withdrawn within 3 years; after that time you can take it out when living in a tax-favorable country. Just make sure to transfer it to a Freizügigkeitskonto in a canton with low taxes for your amount.
I’ve just made a quick simulation on each canton’s taxes calculator and it said I would still pauy about 4-5k more in Lausanne than in Basel-Stadt.
But then I realized that Basel-Stadt’s calculator deducts some stuff from the Nettolohn in order to calculate the taxable income whereas Vaud’s asks for the taxable income. I made the numbers match and, magic! Almost identical results, 1.5k more in Basel-Stadt!
And just for self deprecation: 19k less in “high tax Zürich city”.
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