FIRE ambition and life choice(a)

[Tama]

Hi all,

First of all - thanks to original forum creator and rest of members - all the material has really helped us. I would love to get your views on my below line of thinking:

1. Background / context: 38 year old, married with 1 kid. Very lucky to have joint household income of ~400k per annum. Assets of ~1 mio CHF in VT IB ETF + ~350k in pillar 2 and 3 combined. Savings rate of ~200k per annum (last 2 years). While earning is good, jobs are quite stressful with 60+ hours. Post retirement, ~100k per annum expenses should be enough. High taxation Canton

2. I was thinking that with 5 more years of work, we should be at ~2-2.5 mio CHF assets (equity + pillar 2/3) and at 4% withdrawal rate, can look at early retirement based in Switzerland

3. Some of the upsides would be: wife continues to work if she wants, pillar 1 pension, unemployment coverage for 2 years post retirement

4. I link some of the life choices to number of additional work years:
   Continue international schooling: +1 year
   Save for potential US college education: +2 years (400k)
   Buy a camper van and nice car: +1 year
   Buy primary residence: +3 years (2 mio price with 33% equity stuck)

Would love to get your inputs on whether this is a sane / realistic way of thinking.

[xmj]

Sane enough but consider there’s jobs where you earn more and do less hours per week

[Brndete]

@Tama

Post retirement, ~100k per annum expenses should be enough

What’s your expenses today?

@Tama

at 4% withdrawal rate

Some might argue for a long period 4% isn’t safe enough. Did you consider taxes or AHV contributions on the cost side? Eventually AHV rent on the income side?
In a bad situation, could you go back to work, or trim the spending to, say 80k?
Someone (Your_Full_Name, I think) posted a quite detailed spreadsheet in another threat, including all that stuff, with plenty of other discussions around withdrawal rates etc.

@Tama

unemployment coverage for 2 years post retirement

There’s no coverage if you retire. I hope you don’t suggest to “get fired” and then unsuccessfully pretend to find find something new to get the benefits.

@Tama

Continue international schooling: +1 year
Save for potential US college education: +2 years (400k)

That’s debatable, but of course very much up to you (and the kids, of course). Public schools are just fine, unless there’s a language barrier, of course.

Switzerland has some excellent universities, so do our neighboring countries, for a fraction of the cost. I’m aware the US has even more excellent ones, I studied there myself, but would question if it’s worth 2 years extra in a miserable job or 400k.

If your kids are excellent candidates (no offense meant, I’m sure they are ), they can get a scholarship. I’m also aware these are often need-based, but you hopefully get the idea.

@Tama

Buy primary residence: +3 years (2 mio price with 33% equity stuck)

Buying property is not just an extra expense, it’d lower your expenses, as well. Would that be part of the required 100k?

Given you plan to retire in a few years (which is quite manageable with those numbers), buy property and face high taxes, are you already considering buying into your 2nd pillar?

I’d still check all assumptions more detailed, both on the asset / income side and the spending side, and make sure there’s some safety margin included.

[dom.swiss]

Planning looks good from a purely financial point of view. I would consider testing retirement alongside a (potentially) working wife and a kid in school by taking a sabbatical in the next 2-3 years. Consider psychological aspects of retiring early and come up with a plan what to do with your time. Also, does it make sense to retire in Switzerland when family and friends might be somewhere else?

[ravig1986]

@dom.swiss

Planning looks good from a purely financial point of view. I would consider testing retirement alongside a (potentially) working wife and a kid in school by taking a sabbatical in the next 2-3 years. Consider psychological aspects of retiring early and come up with a plan what to do with your time. Also, does it make sense to retire in Switzerland when family and friends might be somewhere else?

Thanks. Fair point on sabbaticals - will definitely try that out. During the few months earlier between jobs I was quite ok - but always had the next job lined up.

We are not originally from Switzerland - but really like the country and have even managed to develop a good friend circle.

[ravig1986]

Thanks a ton @Brndete for the detailed reply. Difficult to use quotes on phone.

1. Current expenses are less than 100k (~90k) excluding pillar 1 / taxes / international schooling.

2. Not considering pillar 1 contributions or payouts in above. Yes, 4% for long term is a bit of a concern, I read many forum threads - didn’t get a clear answer - will look for this spreadsheet thread as well.

Delicate balance between being risk averse vs working more years than required.

Given my field and age, would be difficult to join back workforce or work partially - so it’s a binary decision. Taxes haven’t considered - I assumed mainly wealth tax - maybe I should make my own spreadsheet. Difficult to reduce expenses as they are mainly fixed (rent, insurance).

3. clear on unemployment coverage

4. clear on public schooling and US education - it’s a choice as of now and we don’t have a strong view either ways. We have been struggling with this decision for quite some time.

5. house purchase would be a big lifestyle creep compared to current rent we pay. Just the interest and maintenance would be comparable to current rent - hence the equity wrote off. Yes, doing the pillar 2 optimizations.

Overall - fully agree - I need to do detailed number crunching on my own. Thanks a ton again @Brndete

[ronn1]

This is actually a really rational and balanced framework. I like that you’re quantifying additional work years for specific life goals, it makes it much easier to weigh what’s truly worth it versus what might just be lifestyle inflation. Given your savings rate and household income, reaching 2 to 2.5 million CHF in five years is totally reasonable.

The only thing I’d be mindful of is how stress and burnout might compound over those extra years, especially if you’re in high-demand roles

[Brndete]

@ravig1986

Not considering pillar 1 contributions

Depends on how many income you expect from your assets, how they’ll split into taxable vs. vested benefit. Together with income tax, it might add up to some 10-15k year. Not too much, but to be considered if you calculate tightly and don’t want to reduce spending.

@ravig1986

We have been struggling with this decision for quite some time

Fair enough. Eventually, the kids and universities will want to have a say, as well If it’s an option, you’d need to plan for the cost. The choice, I guess also depends a lot on where they want to live afterwards. I assume your Ivy league, MIT etc. degree and network is worth more for a career in the US.
Could be interesting for them to also check out exchange and partner programs local universities have in their field for a mix of both.