$4M to retire in Germany (for US CItizen)

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sss2009
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Joined: Fri Dec 25, 2009 1:27 am

$4M to retire in Germany (for US CItizen)

Post by sss2009 »

If one (US citizen) has 4M USD to retire in Germany, how much can a safe withdrawal be (before and after taxes).
Portfolio: 1M in 401k (total sock market fund)
3M after tax at Vanguard (1M in total stock, 2M in VWIUX, tax exempt intermediate term bond fund)

How would you go about managing this money?

SS
livesoft
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Joined: Thu Mar 01, 2007 8:00 pm

Re: $4M to retire in Germany (for US CItizen)

Post by livesoft »

I think it would be no different than retiring in the US, so sustained withdrawal rate would be 3% to 4% depending on expected number of years needed.

The only thing about managing investments is that a place like Vanguard will kick you out since you do not reside in the USA.
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bampf
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Re: $4M to retire in Germany (for US CItizen)

Post by bampf »

Generally a 4% withdrawal rate is considered safe with a 60/40 asset allocation. There isn't really enough information to give you more guidance on your questions. @4% you can reasonably expect that ~$160K US is safe.
Topic Author
sss2009
Posts: 91
Joined: Fri Dec 25, 2009 1:27 am

Re: $4M to retire in Germany (for US CItizen)

Post by sss2009 »

Yes I would like more help, please :happy
What additional information should I include?

SS
jebmke
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Re: $4M to retire in Germany (for US CItizen)

Post by jebmke »

livesoft wrote: Wed Jan 13, 2021 9:33 am I think it would be no different than retiring in the US, so sustained withdrawal rate would be 3% to 4% depending on expected number of years needed.

The only thing about managing investments is that a place like Vanguard will kick you out since you do not reside in the USA.
so, you're suggesting that the money doesn't know where you live? :P
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livesoft
Posts: 74457
Joined: Thu Mar 01, 2007 8:00 pm

Re: $4M to retire in Germany (for US CItizen)

Post by livesoft »

jebmke wrote: Wed Jan 13, 2021 10:03 amso, you're suggesting that the money doesn't know where you live? :P
That's a good way to look at it.
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Topic Author
sss2009
Posts: 91
Joined: Fri Dec 25, 2009 1:27 am

Re: $4M to retire in Germany (for US CItizen)

Post by sss2009 »

...but the taxation is different as compared to US, hence the question of how to manage and if SWR should be different
livesoft
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Re: $4M to retire in Germany (for US CItizen)

Post by livesoft »

sss2009 wrote: Wed Jan 13, 2021 9:54 am Yes I would like more help, please :happy
What additional information should I include?

SS
Do you live in Germany now?

Are you age 20? Or age 80? Age matters.

How much do you spend now annually and where do you live now?

Will you draw SS benefits? How much will they be?

I am positive that there are many Germans that are retired and living in Germany with less than $4 million in assets.

I am positive that there are many non-Germans that are retired and living in Germany with less than $4 million in assets.
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Topic Author
sss2009
Posts: 91
Joined: Fri Dec 25, 2009 1:27 am

Re: $4M to retire in Germany (for US CItizen)

Post by sss2009 »

Do you live in Germany now?

Are you age 20? Or age 80? Age matters.

How much do you spend now annually and where do you live now?

Will you draw SS benefits? How much will they be?

I am positive that there are many Germans that are retired and living in Germany with less than $4 million in assets.

I am positive that there are many non-Germans that are retired and living in Germany with less than $4 million in assets.
[/quote]

In USA now, planning to move soon (late this year or 100% next year).
Early 50s age (spouse mid 40)
Yearly expense ~120K USD
I did SS benefit at age 62, and it was about 1600 USD per month
Last edited by sss2009 on Wed Jan 13, 2021 10:56 am, edited 1 time in total.
Tylenol Jones
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Joined: Mon Sep 14, 2009 6:54 am

Re: $4M to retire in Germany (for US CItizen)

Post by Tylenol Jones »

Here's a link so you can compare living costs in the cities of your choice. Capital gains and dividend taxes are probably higher in Germany than in US.

https://www.numbeo.com/cost-of-living/
Valuethinker
Posts: 41711
Joined: Fri May 11, 2007 11:07 am

Re: $4M to retire in Germany (for US CItizen)

Post by Valuethinker »

sss2009 wrote: Wed Jan 13, 2021 9:29 am If one (US citizen) has 4M USD to retire in Germany, how much can a safe withdrawal be (before and after taxes).
Portfolio: 1M in 401k (total sock market fund)
3M after tax at Vanguard (1M in total stock, 2M in VWIUX, tax exempt intermediate term bond fund)

How would you go about managing this money?

SS
A major constraint will be your need to keep open US investment accounts. Unfortunately this means you will face full currency risk as there are not (AFAIK) any products which are hedged to Euros.

As a US citizen abroad, you will face PFIC on any non US domiciled funds.

In Europe, if you make fixed income investments there (direct ownership of govt bonds, bank savings products - these will avoid PFIC) then you will receive 0 interest rate or negative yields (safe govt bonds in Eurozone).

That's quite a real constraint - negative returns on fixed income assets (after inflation).

You are going to have to maintain a dynamic asset management strategy, seeing what returns you have achieved.

My guess is your Safe Withdrawal Rate, at c. 2%, would allow you to increase that by inflation every year and avoid the risk of outliving your savings. You might get away with 2.5%. That is $80k-100k a year. That is consistent with annuity rates for 65 year olds (with a 60 year old spouse), inflation linked, in the UK (i.e. £100k of premium buys about £2k pa of annuity income).

I don't know what the situation is re German health insurance if you are not working. Some countries specifically block older people coming into their country who might have large healthcare requirements in the future. So you have to get that sorted out.
Last edited by Valuethinker on Wed Jan 13, 2021 11:54 am, edited 1 time in total.
Topic Author
sss2009
Posts: 91
Joined: Fri Dec 25, 2009 1:27 am

Re: $4M to retire in Germany (for US CItizen)

Post by sss2009 »

I don't know what the situation is re German health insurance if you are not working. Some countries specifically block older people coming into their country who might have large healthcare requirements in the future. So you have to get that sorted out.
Thanks livesoft, valuethinker for your time and reply.

Yes, I will find that out soon. From my preliminary search, I will have to buy private insurance. It is not as expensive as in US.

I am not too concerned about future investing right now, as I am not too sure if I will have any further income. If I do, that would be used up for living expenses.
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