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|Subject: Retiring to Scotland||Date: 1/5/2004 5:41 PM|
|Author: WeeBeastie||Number: 1705 of 5016|
On another thread, mazske asked if I would put together a detailed post on my decision to retire back to Scotland, including the pros and cons.
I should begin by saying that I'm Scottish, so it wasn't that I had to scout the world for a place to retire to (otherwise I might have ended up in New Zealand!)
I was planning to retire here in the US at age 43 (ten years time), but I was going to push my DH out another 5 years or so to secure health benefits in retirement (he works in education and had great retirement benefits – if you stick around until retirement age!).
One day while working on a Sunday, DH called me to whine and made some comment about retiring to Scotland. I was floored as I thought he'd never consider such a thing. He said he would go back to Scotland if we were retired as we could get away to get some sun whenever we wanted. That led to a very frenzied two days of me running calculations, researching stuff on line (house prices, car prices, taxes, US-UK income tax treaties etc) and I couldn't believe that we could retire in five years. So that was how the decision came about.
The pros and cons of retiring to Scotland specifically would be:
1. Free healthcare. Well okay, it's not free it's government provided. I figured that the costs of healthcare in the US were the biggest obstacle to ER: not necessarily because of the cost right now, but the unpredictability going forward. In the past few years we've seen huge premium increases across the industry. I'm very conservative and didn't like the thought of having to return to work, and healthcare was the biggest random quantity in my equations.
2. Lower taxes. Yes really. <swoon> I have calculated that we will live on approx. $35K a year (no mortgage) and will not pay any income tax if I manage our withdrawals carefully. NO income tax. We will pay property tax and VAT (similar to sales tax). The property tax will be less than we pay here and I imagine VAT will be a little more. The rate is much higher than CA sales tax, but a smaller basket of goods are subject to tax.
3. Travel. It is so much easier and cheaper to travel the world from Britain. I remembered all the last minute holidays that would see in travel agents' windows and went online to see if they still existed: $126 for a week in Cypress/Spain/Greece for flight and accommodation. Many of these deals include breakfast or sometimes breakfast and dinner. Unbelievable. Being RE'd means that we would be able to go at fairly short notice.
4. Property sale. This isn't so much a pro of moving to Scotland, rather than out of the Bay Area. My original FIRE plans had us staying in the house we're in for ages. My conservative estimates suggest that if we sell our house when we retire we will realize about $500K in equity. We can buy a cheaper house elsewhere, and while Scotland isn't necessarily the cheapest property-wise we will still have around $150K to add to the coffers, giving an extra $5,250 pa of income (at 3.5% withdrawal rate). Releasing this money from the house makes the income target we need in retirement easier to achieve.
5. Family Our family all still live there. This is a big thing, and I know it would make the difference for many people considering moving away. However, we already moved away so I guess that's why so I left it until last.
1. Property prices. They are high and houses in Britain are teeny. I currently live in the Bay Area and would be unable to afford a comparable house in Edinburgh, even while working. Oh, but I won't be working. I don't need to live in a commute area. We have decided to live in a fairly rural area, out of the major commute belts. We need to be walking distance to a pub <blush> and we'd like open aspects. We expect to pay around $360,000 (in today's money) for a house around 1,800 sq ft.
2. The weather. Rains a lot, and actually the climate is the reason we moved here! However, when you don't HAVE to go to work and you can get away for some sun very cheaply (see 3 above), it's not so much of an issue. We both like observing the weather in Scotland – it's very changeable and I really like the thought of enjoying a cup of tea in our double glazed conservatory overlooking hills of sheep with dark grey clouds building up on the horizon. And it's not so much that the weather is particularly bad in Scotland: it's just that you never know what you're going to get. When you have a summer where it rains almost every day, it really seems to drag on you. Of course, there are many nice summers, but one can never tell what the weather will be like.
3. Football. Or soccer as you call it here. Soccer is absolutely entrenched in the culture over there, more so than anything I can think of here. It is impossible to ignore it and neither of us care for it that much. Everybody talks about it. All. The. Time. Oh well.
4. Car wear and tear. While Scotland isn't particularly cold by US standards, there is often ice on the roads which means they're gritted often in the winter. This causes cars to have a much shorter life than what we enjoy here in California. However, used cars are cheaper there to compensate.
There are others on the REHP who have retired away from the US, rather than retiring back to their home country. I think they probably did it for cost of living reasons. Taxes and healthcare not withstanding, the cost of living for Scotland is probably a little lower than here, but I would imagine for most of the US it may actually be higher.
I will be happy to answer any further questions anyone may have.
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