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  #141  
Old 25.08.2020, 16:54
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Re: Do you think about your future/retirement etc?

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Btw, if you're interested in Ticino, they're called "Rustico".
You'll find some for sale here:
https://www.allekleinanzeigen.ch/hau...n.html?s=price
a search for rustico on a property portal should yield some results.
Some of these look like fantastic projects

I have renovated properties before, the oldest being 1668 almshouse so considering doing something like this would be perfect for me.

What parts of renovation are you not allowed to do? (assume connecting electrics to the mains, gas stuff ...) Anyone link another thread of info?
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  #142  
Old 25.08.2020, 17:25
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Re: Do you think about your future/retirement etc?

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Some of these look like fantastic projects

I have renovated properties before, the oldest being 1668 almshouse so considering doing something like this would be perfect for me.

What parts of renovation are you not allowed to do? (assume connecting electrics to the mains, gas stuff ...) Anyone link another thread of info?
You need a qualified electrician, although it's possible to run the cables yourself before it all gets connected, if the electrician agrees.
You'll also need a qualified sanitation engineer and, if you want a wood-burning stove, a qualified chimney sweep who'll have to check the chimney and install the stove.
Gas isn't an issue. If you want gas then it'll come in bottles.
I would imagine that installing photovoltaic panels would also probably need a qualified person, but I'm not sure.
And taking out insurance for the building works would be a good idea.

It is notoriously difficult, btw, to get accurate estimates for this kind of work, as so much won't be known until the work starts.
A lot of the other work you can do yourself if you know what you're doing.
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  #143  
Old 25.08.2020, 21:18
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Re: Do you think about your future/retirement etc?

I moved here from California for a job in 1987. Have worked and paid into the first, second and third pillars every year, with small breaks of a few months when between jobs or a half year break I took to travel in 1992.

Wife moved here 6 years after me, from the UK. After a rough 1-year start, she's been employed and paying into the 1st, 2nd and 3rd pillars every year since 1994. Cashed out my 2nd pillar in 2009 as a down payment for a house which has since gone up in value about 20%. Repaid that early withdrawal about a third. So my 2nd pillar is compromised, but we pay less than 500 CHFs a month on our mortgage because of it.

Two kids now, both in university. So we did everything by the book, and I am still staring down how to retire here comfortably. Everything balancing on how much longer I can hold down a job in this time of Covid (now 59). If I can keep a paycheck coming in for the next 3 years, we are good, looks like 6-7K of income in retirement. If not, the numbers don't look that good.

As a couple, you need 1.5 million stashed away in total assets to retire comfortably here. And that doesn't take into account long-term care which will wipe everything out in the end.
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  #144  
Old 25.08.2020, 21:52
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Re: Do you think about your future/retirement etc?

You know what?
This has been on my radar for a while, I may go feral and start eating tourists after a few years living there. But something like this may be an option...
https://www.timeout.com/london/news/...sidents-073120
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  #145  
Old 25.08.2020, 22:13
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Re: Do you think about your future/retirement etc?

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I moved here from California for a job in 1987. Have worked and paid into the first, second and third pillars every year, with small breaks of a few months when between jobs or a half year break I took to travel in 1992.

Wife moved here 6 years after me, from the UK. After a rough 1-year start, she's been employed and paying into the 1st, 2nd and 3rd pillars every year since 1994. Cashed out my 2nd pillar in 2009 as a down payment for a house which has since gone up in value about 20%. Repaid that early withdrawal about a third. So my 2nd pillar is compromised, but we pay less than 500 CHFs a month on our mortgage because of it.

Two kids now, both in university. So we did everything by the book, and I am still staring down how to retire here comfortably. Everything balancing on how much longer I can hold down a job in this time of Covid (now 59). If I can keep a paycheck coming in for the next 3 years, we are good, looks like 6-7K of income in retirement. If not, the numbers don't look that good.

As a couple, you need 1.5 million stashed away in total assets to retire comfortably here. And that doesn't take into account long-term care which will wipe everything out in the end.
Maybe I'm being too conservative, but for early retirement, I estimated needing over 5 million to account for AHV and wealth tax costs (assuming the assets are outside of a tax shelter).
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  #146  
Old 25.08.2020, 22:15
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Re: Do you think about your future/retirement etc?

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Maybe I'm being too conservative, but for early retirement, I estimated needing over 5 million to account for AHV and wealth tax costs (assuming the assets are outside of a tax shelter).
I think you may have just set a new EF poverty level.
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  #147  
Old 25.08.2020, 22:30
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Re: Do you think about your future/retirement etc?

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Maybe I'm being too conservative, but for early retirement, I estimated needing over 5 million to account for AHV and wealth tax costs (assuming the assets are outside of a tax shelter).
5 million? Crap, I need a sugar mama.
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  #148  
Old 25.08.2020, 22:39
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Re: Do you think about your future/retirement etc?

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https://www.expatica.com/es/finance/...anishwealthtax

The main residence exemption of €300k per person for primary residences can be combined for couples, so should cover most people‘s housing. Then it is €700k per person allowance. Pensions are exempt. So €2m per couple wealth excluding pensions before you are impacted. That should cover most people overall.

On top of that there are tax mitigation strategies if you plan ahead which can minimise your income tax liabilities.

Yes, we are strongly considering retiring to Spain, taking the equity from our Swiss place to be mortgage free and living off investment income and eventually pensions (Swiss pillar 1, pillar 2 and pillar 3 and perhaps we are eligible for something from UK NI contributions from our 20s).
Yes, there are different ways to minimize the Spanish wealth tax but in my situation, single, net worth > 2M€ and no intention to buy a property (to stay mobile), Spain seems to be a no go.
Can you tell us more about the tax mitigation strategies you are mentioning. Thank you.
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  #149  
Old 25.08.2020, 22:41
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Re: Do you think about your future/retirement etc?

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I'd marry for love, not for tax reasons!!
I have love side covered, it was just a joke

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Maybe I'm being too conservative, but for early retirement, I estimated needing over 5 million....
Meghan Markle, is that you?
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  #150  
Old 25.08.2020, 22:44
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Re: Do you think about your future/retirement etc?

This thread has been hijacked by rich Royalty! Can we keep focus on goat herding peasants like me?
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  #151  
Old 25.08.2020, 22:46
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Re: Do you think about your future/retirement etc?

My back of the envelope calculation was this:

Assume I want 60k a year post tax.
assume 30% tax rate:

60/.7 = 86k

let's assume 48k AHV payments a year for an unemployed couple (yes i realise this is probably an overly large amount)

86+48 = 134k

assume you can earn 3.5% on invested capital, but that you're taxed 1% wealth tax so net 2.5%:

134k / 0.025 = 5.4m capital sum required.

assuming only 2.5% return on invested capital gives:

134k / 1.5% = 8.9m

EDIT: even with AHV of only 4k to get to a nice round 90k a year gives 90/1.5% = 6m lump sum required.
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  #152  
Old 25.08.2020, 23:47
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Re: Do you think about your future/retirement etc?

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My back of the envelope calculation was this:

Assume I want 60k a year post tax.
assume 30% tax rate:
why do you assume 30% tax on 60k pa? Or is that outside of CH?

Quote:
let's assume 48k AHV payments a year for an unemployed couple (yes i realise this is probably an overly large amount)
would you get AHV if you don't live here?

Quote:
134k / 1.5% = 8.9m

EDIT: even with AHV of only 4k to get to a nice round 90k a year gives 90/1.5% = 6m lump sum required.
you can have an annuity out of your 2nd pillar, which comes at 4-6% of your capital, so having a million in the second pillar would already give you 4k a month, another 4k a month AHV and you're done, even without a 3rd pillar.
Or am I not seeing something properly?
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  #153  
Old 26.08.2020, 00:22
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Re: Do you think about your future/retirement etc?

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why do you assume 30% tax on 60k pa? Or is that outside of CH?

would you get AHV if you don't live here?

you can have an annuity out of your 2nd pillar, which comes at 4-6% of your capital, so having a million in the second pillar would already give you 4k a month, another 4k a month AHV and you're done, even without a 3rd pillar.
Or am I not seeing something properly?
1. just for simplicity. you could instead treat as 85k at zero tax

2. re annuity. this isn't possible until retirement. i was considering the early retirement case. i'm also somewhat doubtful that when i reach retirement age that it will still be as high as 4-6%.
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  #154  
Old 26.08.2020, 08:40
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Re: Do you think about your future/retirement etc?

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Yes, there are different ways to minimize the Spanish wealth tax but in my situation, single, net worth > 2M€ and no intention to buy a property (to stay mobile), Spain seems to be a no go.
Can you tell us more about the tax mitigation strategies you are mentioning. Thank you.
Life insurance wrappers and offshore bonds crop up a lot in my research. As usual if you have sufficient net worth for tax mitigation to make sense, you have sufficient net worth to pay for independent advice.
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  #155  
Old 26.08.2020, 08:45
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Re: Do you think about your future/retirement etc?

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My back of the envelope calculation was this:

Assume I want 60k a year post tax.
assume 30% tax rate:

60/.7 = 86k

let's assume 48k AHV payments a year for an unemployed couple (yes i realise this is probably an overly large amount)

86+48 = 134k

assume you can earn 3.5% on invested capital, but that you're taxed 1% wealth tax so net 2.5%:

134k / 0.025 = 5.4m capital sum required.

assuming only 2.5% return on invested capital gives:

134k / 1.5% = 8.9m

EDIT: even with AHV of only 4k to get to a nice round 90k a year gives 90/1.5% = 6m lump sum required.
Why are you calculating an annuity. You can deplete the capital. Invest in your kids’ education and let them generate their own wealth (or leave them the house). You would also only need to generate the AHV amount until AHV kicks in.
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  #156  
Old 26.08.2020, 10:35
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Re: Do you think about your future/retirement etc?

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Btw, if you're interested in Ticino, they're called "Rustico".
You'll find some for sale here:
https://www.allekleinanzeigen.ch/hau...n.html?s=price
a search for rustico on a property portal should yield some results.
Many Rustico's have been abandoned and the ownership is not clear. Many Ticinese lived in poverty around the 1900's and left, in some cases whole villages, for the USA. There was no market for these properties then, and as generations came and went they were forgotten.

People do take them over and renovate them, but I'd be wary in case someone else, a descendant, can prove ownership. I'm really not sure where the law lies in this regard?
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  #157  
Old 26.08.2020, 10:56
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Re: Do you think about your future/retirement etc?

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Many Rustico's have been abandoned and the ownership is not clear. Many Ticinese lived in poverty around the 1900's and left, in some cases whole villages, for the USA. There was no market for these properties then, and as generations came and went they were forgotten.

People do take them over and renovate them, but I'd be wary in case someone else, a descendant, can prove ownership. I'm really not sure where the law lies in this regard?
I would love to tackle some of these, of course as you say making sure you have correct title is important. Not sure if you can insure against it but obviously have a good lawyer is essential.

A lot of people are asking the question, stay here, can I afford too or live elsewhere. I am in that boat and with little money due to be decimated by divorce here ...

However it is definitely an option to see if you can stay here and possibly many benefits. In my case will have been here 20+ years when I retire, possibility to enjoy a simple life, closer to nature and maybe a project to renovate one of these Rustico's.

If I was to stay here the choices would be closer by, French speaking and a less risky option, however I love the Italian part of Switzerland and even learning a new language does not phase me. Travel too from a bit less convenient but ...

Definitely could make a great blog/thread retiring in Switzerland on a low budget.

Portugal I still like but with the UK leaving the EU that complicates matters plus I would in theory just be moving Canton if I moved to the Italian part of Switzerland

Last edited by magic; 26.08.2020 at 11:29.
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Old 26.08.2020, 11:14
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Re: Do you think about your future/retirement etc?

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Why are you calculating an annuity. You can deplete the capital. Invest in your kids’ education and let them generate their own wealth (or leave them the house). You would also only need to generate the AHV amount until AHV kicks in.
it's true that you can deplete capital. however, you're unlikely to squeeze out more than an additional 1% over taking the natural yield without running out of funds.

Last edited by Phil_MCR; 27.08.2020 at 09:59.
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Old 26.08.2020, 11:49
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Re: Do you think about your future/retirement etc?

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it's true that you can deplete capital. however, you're unlikely to squeeze out more than 1% over taking the natural yield without running out of funds.
If you get to 5M, 100k a year to cover your health insurance and living costs would only be a drawdown rate of 2%.

Assuming inflation of 2%, your capital growth would only need to be a very modest 4% per year for you to actually start making even more money in retirement.

If one was to retire on a more realistic 3M, and take the same 100K a year that would need 5.33% capital growth a year to maintain existing funds after inflation. Still very achievable in the stockmarket.

At 2M that's 7% - probably getting close to what you would expect from the stock market. A few bad years in a row and you might not recover and start eating your funds. If the first few years are good you would probably be ok. Broadly speaking getting into risky territory.

Personally, I am planning for a drawdown rate of around 2.5% (corresponding to 4M here) - but to live in a cheaper country than Switzerland when im retired, so I need less than 4M. I would generally advise that the drawdown rate is no more than 4%, ideally no more than 3.5%.
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Old 26.08.2020, 11:54
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Re: Do you think about your future/retirement etc?

Money aside, a point to add to the mix is, traditionally the wife outlives the husband by a good few years.
A lot of couples moving to foreign climes only have each other, or a tiny handful of friends, for company.
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