FI too hard in Switzerland?

#1

Hi fellow mustachians

So I have been doing some back of the napkin calculations on potential FI dates for our family and I feel a little discouraged…

I have lived for several years in each place: Scandinavia, Spain and now Switzerland so I have estimated COL based on my experiences.

This is what I came up with:

Switzerland - time to FI: 26 years (when I’m 61)
Scandinavia - time to FI: 13 years (when I’m 48)
Spain - time to FI: 3,5 years (when I’m 38)

Maybe I need to build the frugality muscle even stronger or find ways to earn more… am I missing something here? anyone in a similar situation? 26 years to FI is just too much :frowning:

Words of encouragement wanted :slight_smile:
Thanks

#2

That seems like a long time. I arrived in Switzerland from Portugal 5 years ago, and although I had a very good salary by Portuguese standards and was relatively frugal, it was only after arriving in Switzerland that I saw our NW really pick up (my projected time to FI is around 16 years, but that may drop a bit in the future). Even though the family combined salary grew 3x-4x, our tax rate here dropped by 10% compared to Portugal, so I’m a bit surprised by the time to FI in Spain (unless you can earn the same salary in any of those 3 countries).

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#3

Why do you have to FI in the same country where you earned the capital? If 3.5 years for Spain was at their local salary levels, it’s going to be even faster with swiss salaries. And you can probably retire in a country like Thailand right away if you wanted to

#4

Can you provide some more infos about how you calculated ?

#5

Thanks @pombeirp @hedgehog and @weirded

A bit more info:

  • all amounts are after taxes
  • all based on earning in switzerland and accumulating the stash here
  • the ideal would be to be FI(RE) in switzerland (spending just a few weeks abroad every year)
  • We are a family of 4 (two young kids)
  • Our income is highly different from year to year (self-employed)
  • 25 x yearly household expenses = stash to be enough
  • Saving in Switzerland approx 60K per year

I’m basing the calculations on the following:

Switzerland:
Household income minimum: 80K CHF

Scandinavia:
Household income minimum: 40K CHF

Spain:
Household income minimum: 25K CHF

I’m not sure these are very accurate since I did not have any children while living in Scandinavia or Spain but they are a rough estimate.

Does this make sense? anything obvious that I’m not seeing here?

Thanks!

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#6

Switzerland is clearly one of the countries with the highest cost of life.
If you grow your stash in Switzerland, then there is no doubt that you will reach FI quicker if you retire in almost any other european country.

That being said, I think one of the biggest traps of Switzerland (and I was previously victim of that too) is that since people tend to earn much more money than anywhere else in Europe, they don’t feel they should be as frugal as if they were living in other countries. No matter what you do, your time to FI is extremely sensible to your saving rate. I am going to make a back-of-napkin calculus but if you save annually 60k out of (80+60 =140k) in Switzerland, then your saving rate is around 40%. With a 4% SWR and returns from investment around 5-6%, then your time to FI is indeed between 23 and 25 years. (see formula here : http://thegreatescape.ch/language/en/saving-rate-sinew-war/).

On the other hand, and I don’t want to be judging here (i am in a different situation, and although I don’t have kids yet, it will come soon), 80k CHF as a minimum after tax income seems very high => that makes 6600CHF/month after taxes!
Could you please detail how you came with this amount?

I guess housing is a big factor ( the one i am struggling personally the most with), but it would be nice if you could detail a little bit more of your budget :slight_smile:

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#7

thanks @Julianek

so the household budget in FIRE mode is roughly something like this:

housing incl. operational costs 1500 (own house) - changed after revision @hedgehog
groceries 1200
insurance 800
transport SBB, bike maintenance 200
travel abroad (family in multiple continents) 250
clothing, kids stuff 300
gifts to family 200
entertainment (books, spotify, gondolas, etc.) 200
medical 200
safety buffer, splurge etc. 500

Total 5350

This is the “loose” budget, we could probably cut down 1-2K CHF if really needed but I prefer to have more safety margin. I imagine the costs going up as well: hobby/crafts projects, more travelling, kids teenagers activities? etc.

cheers

#8

are you planning on “retiring” in Switzerland or in Portugal? why are you suprised by the FI date for Spain? (It would mean that we would move there once the stash is at that size, not before) I also experienced 4x salary increase and additionally lower taxes in Switzerland (compared to Spain) but since the cost of living is so high, it doesn’t matter much…?

#9

2200 on housing? That’s extreme. This kind of prices only exist near big cities here and it’s a luxury to retire in a city. Living in your own house/apartment in a small village in the middle of nowhere (like GL) would cost you a small fraction of that price. Groceries are expensive everywhere here, but if you choose to live near the border to France or Germany, you can shop there, prices are much cheaper for everything. In fact, why not even retire there directly? Quality of life is similarly high, but everything costs a fraction of what you’d pay in CH.

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#10

@hedgehog good idea to retire close to the border of France or Germany!

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#11

@mrs_oberland My first choice is Switzerland (if only due to the fact that kids will naturally want to stay here when they’re older), but if the stash isn’t enough we could retire to a nice place in the south of Portugal.

Retiring in a region like Jura is interesting, especially if you don’t especially like big cities and prefer nature. I do think about proximity to health care, especially as we get older. But it is true that you can get a house there for a cheaper price than what I pay for an apartment in the Fribourg canton (currently ~2000 CHF for a 4.5 pièces).

The reason I was surprised by the FI date in Spain is that I thought those estimates were with the salaries you had in each of those countries, but if that’s with your income here, then no surprise there.

I also have a family of 4, and I think our expenses are a bit lower (~4000 CHF/month) - the rent is really the limiting factor at this point. It helps that we rarely do stuff that involves services here in Switzerland (except for the supermarket). As an example, we bake our own bread at home, change and store our own winter tires, don’t really buy stuff we don’t need at the supermarket, are into the zero-waste philosophy, you get the picture. This is the first year that I’m calculating savings rate, but I think we’re on target to reach almost 60% by the end of the year.

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#12

@mrs_oberland it seems to me quite a huge gap between the three countries. Even tough you decreased Switzerland at 65k, it’s still 40k difference between Switzerland and Spain. Are you sure ?
Given your list of planned expenses, how can you do it all in Spain with a little bit more than 2k/month ? I guess some expenses (transport, travel abroad, clothing etc) won’t be so different between the 3 countries.

Then: the more yo advance with age, the less you’ll have to take into account for child care (they won’t be children anymore… :wink:)

I’m in the same boat (2 kids, 11 and 8) and my expenses are sadly still quite high (nearly 6k/month, mortgage included). I guess for a frugal couple in CH it’s “doable” with 4k/month… with the same amount you’ll be probably better - as others suggested - on the other side of the border, especially if you want to be not to far away from the “kids” (who might want to live here, if grown here). A big hit here in CH will be - for sure - health related expenses… which might be covered, for a fraction, from a privare insurance in one of the surrounding countries.

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#13

good point, that doesnt add up.

#14

mrs_oberland, an alternative to full FI in Switzerland is to reduce your working hours to 80<->20% whenever you can afford it.
That’s my plan b if I decide to continue living in CH instead of being 100% FI in another European country.

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#15

Precisely, most people still work on FI anyway because it’s kinda stupid to just sit down and do nothing. So, during the transition period to full FI, one could work 20%-50% (for instance, when kids are at school) and then enjoy the rest of the day with family and friends. Alternatively, one could still work full time and prolong the unpaid leave during the year (though this option is probably sustainable only with more flexible occupations, like software engineer, freelance writer, etc).

My initial plan is to take one or a half year off, just a year before my kid will go to school, to go for a round the world trip. Hopefully, I’ll manage to save enough to be able to live from 4% of my investments abroad during that trip. Then, when I’ll come back, I’ll continue to work and save for full FI here in Switzerland or in some other European country.

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