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The ratio of savings:spending lets me know when I can retire early. Using exaggerated figures, if I earn 100k in the US, save 10k a year but I spend 90k, then

by verbify 10y ago

The ratio of savings:spending lets me know when I can retire early. Using exaggerated figures, if I earn 100k in the US, save 10k a year but I spend 90k, then it's going to take me longer to retire than if I earn 35k in Europe, spend 30k and save 5k. Because in the US, it'll take 9 years to save enough to live off one year, while in Europe it'll take six years to do the same. Of course you can move to a cheaper country when you retire, but you'll have to rebuild your friendships, adjust to the culture, etc.

zhte415 10y ago
You are taking the exactly correct way to think about savings: asset-liability matching, and being realistic about it (not imagining you can move to a new place because 'retired', so do, but many can not do so successfully).
- kobeya 10y ago
  But many can, and do. To each their own.
  - zhte415 10y ago
    Indeed. But shouldn't assume the can, because that kind of assumption something many cannot survive. Sensible planning is asset-liability matching.
brianwawok 10y ago
But the win in that game is to save 10k per year in the US, then retire in Europe. Get full retirement in half the time. Many do that within the US with cost of living games. Work in SF for 5 years saving 200k a year. Move to Flordia and be set living in 40k a year for life. (Or some variation thereof)
- verbify 10y ago
  That works for some. But there is a loss of social capital and cultural capital in moving. Over a few years it's possible to build a new friendship circle (although I'm told that gets harder as one gets older). Additionally, while a basket of goods might be cheaper in Florida, as Rumsfeld said, there are unknown unknowns. Perhaps Florida is more expensive than you might think because the cost of air-conditioning is expensive. And while lots can go without it, as a non-native, you might find the heat unbearable. I'm using this as an example of why it's difficult to estimate the true costs of living somewhere until you've put down roots there. Furthermore, when you're on 100k a year and saving $10k, spending $400 on a new phone is a negligible expense. If you're on $30k, and saving $6k it is a bigger proportion of your savings. If you plan on moving, you're going to readjust your standard of living and your creature comforts. Obviously your strategy can and does work, but counting on a move working out and being able to reduce living costs is a riskier strategy (with a potentially bigger payout), and it comes with its own costs.
  - deleted 10y ago
    [deleted]

by verbify 10y ago

zhte415 10y ago

You are taking the exactly correct way to think about savings: asset-liability matching, and being realistic about it (not imagining you can move to a new place because 'retired', so do, but many can not do so successfully).

kobeya 10y ago
But many can, and do. To each their own.
- zhte415 10y ago
  Indeed. But shouldn't assume the can, because that kind of assumption something many cannot survive. Sensible planning is asset-liability matching.

brianwawok 10y ago

But the win in that game is to save 10k per year in the US, then retire in Europe. Get full retirement in half the time. Many do that within the US with cost of living games. Work in SF for 5 years saving 200k a year. Move to Flordia and be set living in 40k a year for life. (Or some variation thereof)

verbify 10y ago
That works for some. But there is a loss of social capital and cultural capital in moving. Over a few years it's possible to build a new friendship circle (although I'm told that gets harder as one gets older). Additionally, while a basket of goods might be cheaper in Florida, as Rumsfeld said, there are unknown unknowns. Perhaps Florida is more expensive than you might think because the cost of air-conditioning is expensive. And while lots can go without it, as a non-native, you might find the heat unbearable. I'm using this as an example of why it's difficult to estimate the true costs of living somewhere until you've put down roots there. Furthermore, when you're on 100k a year and saving $10k, spending $400 on a new phone is a negligible expense. If you're on $30k, and saving $6k it is a bigger proportion of your savings. If you plan on moving, you're going to readjust your standard of living and your creature comforts. Obviously your strategy can and does work, but counting on a move working out and being able to reduce living costs is a riskier strategy (with a potentially bigger payout), and it comes with its own costs.
- deleted 10y ago
  [deleted]