Could you FIRE in Switzerland, and then expat to another cheaper country to live? Or would you still stay in Switzerland, even the high cost of living?
I think I’ll use a hybrid approach. I want to travel anyway and there is no reasonable way for me to spend more than I do here lol
So I’ll take advantage of geographic arbitrage while paying my taxes here - ideally in Zug
I think a good approach is to plan as if you were going to stay in Switzerland permanently. That way, the high cost of living here drives you to earn and save more. It also gives you the choice of whether you want to stay in Switzerland or move abroad, as opposed to only having the option of moving abroad.
I do follow this strategy, but it might mean delaying FIRE by several years, depending on which other country one would consider.
FIRE in Switzerland means about ± 1-1.5M as a minimum.
With 1.5M in Germany, a few miles across the border, you’d have a very comfortable Lifestyle. You are basically playing in hard mode, if you want to retire here, where basically every square inch is HCOL.
So I plan to spend most my time here, but also a lot of it abroad in much cheaper countries. I still follow @Daniel s approach
For me, 1M is not nearly enough, given 4% withdrawal rate, living on 40k p.a. is no fun in CH. I think you need 1.5M, better 2M for a decent lifestyle.
I don’t see how one would survive with less than 2 million in Switzerland. My goal is something around 2.5 million and to retire in Switzerland. If I end up living abroad and saved “too much”, I’ll be happy anyway.
A big chunk of my expenses are linked to me not having a lot of time and going for more expensive options when I’d derive more satisfaction from enjoying doing things differently: growing my own food, not having to deal with work clothes, having a smaller car (my SUV is needed for work), walking/hiking more…
40K/year is plenty enough for a frugal single in Switzerland. 80K/year is more than most earn. The median disposable income (granted, that’s more room for discretionary expenses than with gross income but not 60% more) was very slightly above 50K in 2020. I live outside of the cities, though. Living in Zürich or Geneva may make things more difficult.
Edit: just to be clear, I’m mainly reacting to the notion that it would be unfathomable to envision even survival on 2M assets. We can all aim for the standard of living we want to but the wants of some of us are way above what most people manage to make do with (and way above what I’d need to allow happiness - my lean FIRE treshold is at 750K).
I live off less than 40K a year (and I do have hobbies, friends, a social life and holidays), so it must be possible…
Idk why I’d need 80K in the case of 2M @ 4% to live a happy life, when there are people in Switzerland that earn less while working 100% lol…
EDIT: I also said minimal, I am aware that everyone has his own living standards and all. But 1M in Gemany is really comfortable FIRE, while it is barely manageable in CH.
Oh and just imagine how easy it is to earn SOME money. And every cent of that is basically pocket change, so Idk. I think I could start plugging the cable at 1M and then cruise into FIRE by working less. That’s also more tax efficient etc…
I guess then you’re pretty young in your early/mid 20s or so I guess. Yes, at this age you can live like that and most people don’t even have another choice. But at some point in life you don’t want anymore live at home with parents or share a flat with someone, or live in a cheap 1.5 rooms rattrap. Also, when travelling around in young age and then you come home you maybe don’t mind temporarily crush on the couch of a friend or so, but when you’re a bit older, that may change.
Personally, I’m not sure yet whether I will stay in Switzerland or move somewhere else. But if I stay in Switzerland I calculate at least with 2.5m CHF required before I even would think about RE. With 3m I would probably sleep better, with 4m I would consider myself to be on the safe side I guess.
My lifestyle drastically changed over time. I grew up very poor, when I started my career and had my own money I lived a very excessive lifestyle (overcompensation), then I started to be extremely frugal, and now I change back a bit to somewhere in the middle. I don’t have an excessive lifestyle and I’m a penny pincher in things when I don’t see the reason why I should pay or should pay more for something that doesn’t provide more value to me. On the other hand, I’m married, I live in a big flat with more rooms than we actually need, I have a nice car, etc. I just want to say I don’t mind to spend money for things I really enjoy and that provide value to me, e.g. drive 1st class instead 2nd class, I eat out 2-3 times a week, when I’m in the office I don’t bring anymore my own food and rather enjoy something nice in a restaurant with colleagues. I also go for a beer now and then. I have a few hobbies that cost money and need yearly subscriptions that are not so cheap. On the weekend I like to go hiking or just some other nice excursions - the mountain railways cost extra and is quite expensive in CH. If you do that regularly it’s expensive, especially if you’re not alone. I also read many books and spend quite some money on education / courses I want to do even if it has nothing to do with my profession.
All that I couldn’t do with a low salary. I’m not even saying it’s many materialistic things you need that make one happy, I could probably also go to Japan and live in a Zen monastery with nothing at all just doing meditation, housework, garden work and cooking all day long and would probably be even happier. But I’ve chosen a life and I want to live that life in a good way without having to look always oh can I really spend that money now or should I stay at home today because I spent already so much yesterday etc. I would rather not RE than having to reduce my quality of life after RE.
Long story short, I wouldn’t extrapolate current costs, lifestyle and living standards to a FIRE number assuming those variables don’t change over time. Lifestyle, living standard, amenities etc. change over time and maybe one day you may want a family and children so you automatically need more. Things that were acceptable in a younger age become impossible to bear once a bit older.
@Patron I agree to your points and share your view on lifestyle, hence my comment that living on 40k/yr is no fun.
Of course it’s doable and can be enjoyable as mentioned by @CHRad but it really comes down to your personal situation, especially if family/kids come into the picture. With 1M you are certainly on the Lean FIRE side of things in CH.
Inflation and erosion of buying power should also be factored.
In Switzerland the inflation was reported to be quite low over the last 10-15 years (although the feeling of real inflation is different, when adding eg the health insurance cost that is not included in CPI index).
With just a 3% real inflation over 25 years, in principle you’ll need about 100k revenue to get the same buying power as with 50k today.
The target FIRE number needs to be reviewed regularly !
With regards to the 4% rule, inflation is already factored in, although it is based on US data. The rule states that one can withdraw 4% of the starting amount of the portfolio annually for 30 years and adjust that amount on inflation. Also note that this will only give you a success rate of 95%, meaning that you still might end up broke. 3.25-3.5% are essentially safe for an unlimited amount of time.
You are right however that we need to pick a sensible starting value of the portfolio and adjust it until we are FIRE.
As far as I can remember, @thepoorswiss did some simulations using swiss data once. But I could be mistaken on that one. Love these kind of posts btw if you are reading that!
Back to topic: I think FIRE in Switzerland is doable, mainly due to the fact that salaries here are way higher than in many parts of the world. Personally, I aim for 60k withdrawal at 3.5%, meaning roughly 1.7M. This is around double of what I spend right now, meaning I could cut down my spending if the market doesn‘t behave as we all wish. Flexibility in spending is one of the biggest factors regarding the success rate, and I plan to take advantage of that.
Indeed, I did
A few points when using Swiss stocks and Swiss inflation:
- Historically, having only Swiss stocks (100%) has not been performing well
- The history of the dollar (gold standard, Bretton Woods) makes it very difficult to do backtesting since it was either flat or falling wildly
- Historically, we would have been better off with Swiss inflation than US inflation
- Best results were achieved with no more than 20% of Swiss stocks. Having more means a lower withdrawal rate
Guys I just gave a rough number - if you really want to FIRE you can do it with 1M, if not then that’s fine and you wait a couple more years. I don’t plan to retire below 2M either, because I want to have enough cushion to cut down spending in down markets. 1M is too tight for me as well, but if you live off of less than 3K a month, 1M might be perfectly reasonable - and saying that a life without money is not enjoyable is - at least for me - not really the case. Most of my money goes to savings anyway, so if that part goes away, I could basically survive on social security lol.
My point was that FIRE in Switzerland is basically hard mode, almost every country on this planet is cheaper and a lot of them are more friendly for capital holders. Switzerland and it’s safety, infrastructure and beauty has a premium one needs to pay - or at lest be aware of it when going for FI.
Awesome! I’ve been looking for it and for the data you’ve used, great work, thanks!
In the assumed returns, I’d already calculate in average inflation rates. So you don’t go with 8%, but with 5 or 6%. But you are absolutely right.
Although inflation doesn’t really work like that. You couldn’t do much less with 40K 30 years ago than today, but certain specific things are a lot more expensive today (good hardware f. e.). If you don’t play AAA Games or have no interest in the newest tech, you might as well haven’t noticed any inflation in CH. Travel abroad f. e. has even become cheaper.
Another data point to add: I’m in my late 30ies now, living in Zurich and my 2021 expenses were ~38k.
My expenses peaked around my late 20ies / early 30ies, when I was enjoying things as I could afford them and then gradually went down. One part of the reduction came from the fact that with time I genuinely started enjoying stuff that doesn’t cost much (got tired of eating at restaurants and started to enjoy cooking, got into fitness and started to prefer cooking so that I can fully control the composition of my meals, hiking, hanging out at the lake). Another reduction came from getting into a relationship - sharing of expenses/rent and more fun experiences which don’t cost money.
For reference, the median gross salary in Switzerland is about 6665 CHF/month (or, I assume about CHF 80’000 a year, before social security contributions). And that doesn’t even account for families with non-working persons and their expenses.
While many people would complain that they’ll feel a bit underpaid, and wish for an improved lifestyle, I don’t think that more than half of the population would, in earnest, say they can’t live a “decent” lifestyle.
I think a lot of people associate Switzerland with Zurich, or at least Northern Switzerland, where yes, the cost of living is higher. And whilst the cost of living is generally higher than the neighboring countries, there are many places in Switzerland where costs are cheaper. In Southern Switzerland for example, Ticino, the cost of living can be 20-30% less than Zurich for example, and you still border Italy where you can easily pop into for everyday items where the costs are substantially cheaper.
I am always amused when people mention the cost of living as a negative. I understand why. But it is also the reason why the country operates as it does, why the trains run, more or less on time, why things are generally clean and orderly and people enjoy a relatively comfortable life regardless of their income. I understand this can be to the hindrance of the FIRE system, but cheaper cost of living does not always mean better.