ERE in Austria (not Australia)

[Frosti85]

Hi.

Just a short introduction:

I'm a 32 year old male Austrian, and I want to do ERE when I become 40 years old (or before that)

Net worth right now is ~20k € (~2 years of expenses)

Austria is an extreme socialist country.

we get a pension here from the government, which is quite large (~60% of maximum income in a 20 year range), but with the caveat that you can only access it when you are 60 (if you try to get it before you will get a heavy penalty % wise) or older

also the social security net here is extremly good.

if I would lose my job now, I would get ~80% of my last income for 1 year, and after that 50% for unlimited time.

So I could do ERE basically right now by becoming a parasite to the government, but for moral reasons I dont want to do that.


Questions now:

- how would you consider future government guaranteed income streams in your net worth / ERE planing ?
(question here is also how much to trust the government not to fuck this up)

- I really like the permanent portfolio concept, but maybe with the big social security net in austria it would make more sense being
much more aggressive with growth investments ? (stocks, p2p lending)

[wolf]

Hello.

- not at all

- yes, I think so too.

I live in Germany. So almost similar position as you.

[BlueNote]

Welcome!

With a golden safety net like that I'm surprised I don't hear about more Austrian early retirements .

[Gilberto de Piento]

- how would you consider future government guaranteed income streams in your net worth / ERE planing ?

For planning purposes I pretend like United States social security and my company pension will never pay me anything. I agree with you about the morality of living off of the government and wouldn't want to be a freeloader on other people's taxes, though I do plan to take out my fair share when the time comes even though I hope to not need it.

- I really like the permanent portfolio concept, but maybe with the big social security net in austria it would make more sense being
much more aggressive with growth investments ? (stocks, p2p lending)

Treating the gov't money you will receive as stable does seem like it would allow you to take more risks with your own money. Judicious use of gov't money could be very beneficial in providing a safety net. That said, I'm risk averse so I'd really want to know all the details before advocating for a something like this.

[Frosti85]

Ok so I have decided to plan with the possibility that I wont get any pension / social security from the government in the future.
(it's very unlikely right now but things can change fast)

if I will get it, it's good, but I also want to be prepared in case not.

only change I will make to my investment plan is to be a little bit more aggressive (because even if I lose my job & my entire assets, I probably will still not end up on the street)

my asset allocation will be:

- 6 month of expenses in cash (little bit stored at home in case of banking system interruptions)
- at least 1-2 years of expenses gold in offshore account (i use perth mint for this)
I want to have at least enough so in case my country gets totally fucked I have enough to leave and reestablish myself in some other country
- maybe some bitcoin (very unsure about that, I consider it very speculative right now.. but that could change in the near future)


with everything above that, I will aim for an allocation like this:

maybe 60% stocks 20% p2p and 20% bonds

very unsure about government bonds, they look not very good right now, but in case of a stock market crash could be a good hedge ?

[Stahlmann]

Interesting topic name

from guys from more "generous" countries in EU:
https://imgur.com/a/Vu6GK9K
on the other hand, there are accounts of guys who forgot to sign up for welfare.

hmm.
is it based on seniority of employment or 2 letters in your passport?

[nomadscientist]

if I would lose my job now, I would get ~80% of my last income for 1 year, and after that 50% for unlimited time.

That seems like a great deal. Can you get a well paying job for 1 year and then choose to never work again? Say, 60k EUR as a programmer or something -> 30k for free for life?

[Stahlmann]

this is prolly citizenship/passport based and there are some caveats to this.
sooner or later this gonnna be cut.

but somebody on 1 JAFI in terms of spending and very smart on earning side could be very lucrative way to boost savings.

also earnings are more rather "flatted" in A (sure programming is prolly exception to this).

[nomadscientist]

If it works like Germany, it should be a state-backed insurance scheme that has a minimum working time but not citizenship requirement (IIRC Germany was 2 years).

In principle EU countries can remove EU citizens who aren't and don't intend to work, but I doubt it ever happens. If you have a worse immigration status than non-Austrian EU citizen, it might be more of a problem. Permanent resident is probably OK.

In Germany's it's ~80% for a year or so and then it defaults to a subsistence level pay. I think it can also default to subsistence level before that if you don't engage with the jobs office or refuse valid work they find for you. So, less practical unless E-RE. The Austrian system seems to permit fat FIRE.

Sure, there's no guarantee that the system won't be changed. It probably will. But at 30k/year you could even be building investments with your welfare payments.

[Stahlmann]

My German tutor aged 30-35 said that his colleague (who stayed in DE) received 7 yrs "vacations" time for "recovery" with almost his normal income. This route is also (at least to say) crazy. It must be said that tutor wasn't type of "This country is land of milk of honey, money are flowing all over you" and tricks to game system aren't taught in "gasterbeiter".. eckhm expats home countries.

[Flurry]

That seems like a great deal. Can you get a well paying job for 1 year and then choose to never work again? Say, 60k EUR as a programmer or something -> 30k for free for life?

Nope, it's not paid forever. You get 55% of the net income (after taxes and social security contributions it's not that high) for 20-50 weeks (depending on how many years you contributed to social security and how old you are). But that's not gifted as you paid it yourself with your contributions to social security. After that there's "Notstandshilfe" (emergency assistance) in some cases but you should better count on the guaranteed minimum income (917€/month for singles, 1375€/month for couples) but of course you have to consume all your assets before you get a single cent and in most cases your partner's income. Oh, an the employment agency tries to find jobs for you, which suck most of the time but you have to attend the job interviews. Not that much fun and certainly not milk & honey. Working is certainly better than that, especially as the society (justifiably) considers it as parasitic.

[The Old Man]

- how would you consider future government guaranteed income streams in your net worth / ERE planing ?
(question here is also how much to trust the government not to fuck this up)

- I really like the permanent portfolio concept, but maybe with the big social security net in austria it would make more sense being
much more aggressive with growth investments ? (stocks, p2p lending)

For the USA we have Social Security. For me my full retirement age is 67. I could access it as early as age 62 with a decreased benefit or delay access to age 70 with an increase in the benefit. Social Security is currently insolvent and will be unable to pay out all payments in full beginning in 2037 when the trust funds are exhausted. At that time benefits would be payable at an estimated 76% of current benefits.

Reforms are guaranteed. Social Security taxes are likely to increase. For people at the bottom of the benefits ladder I would anticipate no change in benefits. For the middle class I would expect to see substantial reductions.

I use my expected Social Security as a safety net. The 4% Rule has a 95% success rate as it is currently formulated. I use it to cover me for the 5% failure rate. I also plan to use it to fund any long term care that may be needed. For this purpose to maximize my benefits I am delaying accessing my benefits until age 70. Delaying also facilitates making ROTH IRA conversions.

For your investment strategy you should do whatever allows you to sleep at night. Stock investments have experienced 50% drops in the past. If you can stomach that then you can be aggressive.

[thrifty++]

Nope, it's not paid forever. You get 55% of the net income (after taxes and social security contributions it's not that high) for 20-50 weeks (depending on how many years you contributed to social security and how old you are). But that's not gifted as you paid it yourself with your contributions to social security. After that there's "Notstandshilfe" (emergency assistance) in some cases but you should better count on the guaranteed minimum income (917€/month for singles, 1375€/month for couples) but of course you have to consume all your assets before you get a single cent and in most cases your partner's income. Oh, an the employment agency tries to find jobs for you, which suck most of the time but you have to attend the job interviews. Not that much fun and certainly not milk & honey. Working is certainly better than that, especially as the society (justifiably) considers it as parasitic.

That makes a bit more sense. I was shocked initially reading the OPs initial opening. It sounded too good to be true. In NZ you get an unemployment benefit but thats only $250 a week pre tax which, given how ridiculously expensive life is here, will be lucky to even get you basic rent on a room in a shared house. And to get that you have to have zero assets and also have a 13 week stand-down after losing your job.

[Eureka]

Frost85, I suggest you look more into the requirements for receiving Austrian unemployment benefits. If everbody could get 50% of past salary for an unlimited period of time, a huge amount of people would of course do so (parasites or not) and the tax burden for the working population would reach impossible levels.

I am in Denmark, which is often compared to Austria in terms of how socialistic our welfaresystems are, and here the goverment is constantly making it harder and more restricted to receive benefits if you are an ablebodied person who does not work. We have rules similar to those Flurry described and on top a lot of conditions like you are not allowed to leave the country, that you have to demonstrate that you are actively seeking employment (by uploading your job applications etc), that you have to attend mandatory training courses on how to write better job applications, do internships in industries where they need employees aso aso.

Thus, it not only a question of morality but even more about how much you want to be in charge of your time/life.