Reader Case: Can I Move to Spain?

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When we first left Canada in 2015, we thought travelling internationally was a luxury that we could only afford to do for a short time. Little did we know that it would become our unfair FIRE advantage since it can be used to control your living expenses using geographic arbitrage (in non-pandemic times, at least).

So this subject line immediately piqued our interest. Spain is one of the Europe’s favourite retirement destinations because of the sunny weather, friendly locals, and surprisingly affordable cost of living.

So can geographic arbitrage rescue our reader? Let’s find out!


Hello: 

I have read your book Quit Like a Millionaire and I have been inspired. But I’ve met with 2 financial advisors and they both tell me I need to keep making my current salary until I am 50- but based on what I’ve learned in your books I think I should be able to cover my expenses for the next 7 years of so and my current investments should cover me until I retire. The big difference between what I’ve read and my financial advisors advice is they have $10k/ year for health insurance between the age of 50-62 when I can get on Medicare in the US. And then they have budgeted $60k/ year for end of life care for the last 3 years of my life. 

I feel like they are being too cautious. Here is what I hope to do. I hate my job. They have continuously been cutting people for the last few years as they are hit with round after round of layoffs. And I just lost my best friend- my dog. In the last 6 years I have lost every major relationship in my life and had a health scare while working in a hostile work environment complete with sexual harassment. I feel like I deserve a break. I love biking- I biked 10,000 miles last year while working full time. I very rarely drive my car that my financial advisor tells me to keep. So- I want to take a year off and move to Spain on the non-lucrative visa and spend some time biking around Europe. I should mention I am a US citizen living in Minneapolis and I am 33 years old. 

I am looking to give up my income for a year- and I don’t think when I return I need to continue making the same income. If I start working towards Spanish citizenship I could significantly reduce the health care costs in retirement- do you agree with my assessment? I believe I can at least maintain my monthly spending in Spain- I can spend less on rent, but more for insurance- I think it’ll work out. And food will be much cheaper. And selling my car would reduce some other expenses. 

Here are my finances: 

  • Your gross/net annual family income: $135,000
  • Your monthly family spending- ~$40,000
  • For any debts you have, please include: No debts
    • The interest rate
    • Your minimum monthly payment
    • The outstanding balance
  • Any fixed assets you have (house, car, etc.): 2014 Ford Fusion Hybrid (can sell for ~$6k last I checked)
  • And investments or savings you have (cash, bonds, stocks, etc.)
  • 401k: $302,000
  • HSA: $12,158
  • Roth IRA: $30,100
  • Company Stock: $31,000
  • Taxable Brokerage Account: $183,000
  • Cash: $30k

Thank you,

DreamingOfSpain


First of all, I’m not at all surprised that the financial advisors told you that you need to work until you’re 50. Financial advisors hate the FIRE movement because a) we give away all our investment advice for free and b) we advocate for low-cost ETF-based investing, which doesn’t require a financial advisor. So we basically argue that financial advisors are useless. Understandable why they would hate us.

They also tend to be advocate that their clients save up way more money than necessary. Sometimes it’s because the financial advisor is more risk averse than the client, but I think most of the time it’s greed. Fee-based financial advisors are paid a percentage fee of their client’s assets, so the bigger their client’s bank accounts are, the more money they get paid every year.

So looking at the same numbers, what do we see? How far is DreamingOfSpain from her dream?

Let’s MATH SHIT UP to find out!

SummaryAmount
Income$135,000 (gross), $100,000 (net, assuming single filer and maxed-out 401k)
Expenses$40,000
Assets$302,000 (401k) + $12,158 (HSA) + $30,100 (Roth) + $31,000 (Company stock) + $183,000 (taxable) + $30,000 (cash) = $588,258
Debt$0

Right off the top of the bat, we can see that DreamingofSpain has options here. $588k in savings at the age of 33 as a single person? That’s pretty damned impressive right there. She’s done a great job of converting her high salary into an impressive net worth at such a young age. Great job!

However, is it enough to retire? At her current spending level, no.

Expenses of $40k require a FIRE portfolio of $40k x 25 = $1M to finance. At $588k, she’s more than halfway there, but not at the level she needs to be to fully retire.

How much longer does she need to work? Given that she’s able to save $100k – $40k = $60k per year, it will take her…

YearBalanceROISavingsTotal
1$588,000.00$35,280.00$60,000.00$683,280.00
2$683,280.00$40,996.80$60,000.00$784,276.80
3$784,276.80$47,056.61$60,000.00$891,333.41
4$891,333.41$53,480.00$60,000.00$1,004,813.41

…4 years.

Her financial advisors also advise building in $10k a year in insurance costs into her budget. That seems a bit pessimistic since the ACA would kick in if she were to leave her job, but let’s just take this at face value and add it to her FI target. $10k a year x 25 = $250k more she would need to save, and she would get to this number in…

YearBalanceROISavingsTotal
1$588,000.00$35,280.00$60,000.00$683,280.00
2$683,280.00$40,996.80$60,000.00$784,276.80
3$784,276.80$47,056.61$60,000.00$891,333.41
4$891,333.41$53,480.00$60,000.00$1,004,813.41
5$1,004,813.41$60,288.80$60,000.00$1,125,102.22
6$1,125,102.22$67,506.13$60,000.00$1,252,608.35

…6 years.

The last point her financial advisors made, which is to budget more money for end-of-life long-term care, is probably not necessary since by the time she’ll need this, her portfolio will have grown so large that she can draw down on her principal when that happens.

FU Money

In any other scenario, I would write that 4-6 years isn’t that bad, and that our reader should consider sticking it out in her job until she hits full FI.

Except for this line:

In the last 6 years I have lost every major relationship in my life and had a health scare while working in a hostile work environment complete with sexual harassment. I feel like I deserve a break.

Uh…yes. You most certainly do.

Nobody, and I mean nobody, should ever have to put up with sexual harassment in the workplace, and fortunately, you have options.

60% of the way to Financial Independence might still seem like a long way off, but financial freedom isn’t an all-or-nothing deal. You gain progressively more freedom and more ability to stand up for yourself at work as you make progress towards your goal.

If our reader was in massive amounts of mortgage debt, then that choice becomes extremely difficult. But DreamingOfSpain has nearly $600k in the bank. Even if she doesn’t retire, that’s more than enough runway to look for another job, one that, you know, won’t treat her like a piece of meat. She can tell her workplace to go F themselves tomorrow and she’ll be fine. She doesn’t have to put up with that shit treatment for a single second longer.

Can She Afford the Spanish Lifestyle?

But what about her dream of moving to Spain? She may not be able to retire in the US, but will geographic arbitrage save the day?

From personal experience, $40k of spending in the US seems a bit on the high side for a single person, but it seems downright excessive in Spain. According to Numbeo, if our reader were to move to Madrid, the average cost of rent for a 1 bedroom apartment close to the city centre is about €1000, and the estimated cost of food/transportation/entertainment for a single person is an additional €700, for a total monthly cost of €1700.

This translates to about $1860 USD, or $22,320. That’s a little over half of DreamingOfSpain’s current budget!

At that spend level, she will only need $22,320 x 25 = $558k in her portfolio. She has $588k now, so she’s there now!

And that’s living in Madrid. If she were to move south to a smaller city like Malaga, her cost of living would drop even more. There, total cost of living drops to €1469 a month. That’s about $1600 USD, or $19,200 a year. That amount would only require a $19,200 x 25 = $480k portfolio to support.

So does her plan seem plausible? Absolutely.

Spanish Citizenship

But what about the part about working towards Spanish citizenship? What was that about?

OK so here’s the part where I re-emphasize that I am in no way an immigration lawyer, and in no way qualified to give legal advice.

That being said…

Spain has something called a non-lucrative visa (which we wrote about here) that can be used to live in the country for up to 1 year. You have to prove sufficient means, meaning a bank statement with a big enough balance. And it’s called a non-lucrative visa because you’re not allowed to work.

At the end of 1 year, you have two options: renew it, or convert it into a work permit. This lasts for 2 years.

After that, you renew it for another 2 year period.

And after that, you’ve now been in the country of Spain for 5 consecutive years, which permits you to apply for permanent residency.

This flow actually works out pretty well for DreamingOfSpain, because she can quit her toxic workplace now, take a year off cycling through Europe. After that year, she will have a 3-way decision to make:

  1. She decides she hates it in Spain, and goes back to the US. She gets a new job, and works towards full FI.
  2. She decides she likes it in Spain, and continues living there, in which case she renews her non-lucrative visa.
  3. She decides she likes it in Spain, but wants to go back to work. Apply for a job, then convert your non-lucrative visa into a work permit.

Whichever she chooses will be the right choice for her, but at the very least she will have taken a year off cycling through Europe.

That sounds exactly like the kind of break she deserves.

Conclusion

Toxic work situations are, unfortunately, increasingly common these days. And that’s when the power FU money really comes into play.

Having that much saved in the bank gives our reader the ability to plausibly say “I don’t have to take this shit anymore,” storm out the door, not look back, and her financial life won’t fall to pieces. If anything, she gets to take a 1-year cycling trip around Europe. That ain’t bad!

How our reader chooses to handle this situation is her decision and hers alone. But she’s marching into battle with the best weapon of all:

Options.

Oh, and again, EVERYONE CONSULT AN IMMIGRATION LAWYER BEFORE YOU DO ANYTHING STUPID.

Thank you and good night.


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48 thoughts on “Reader Case: Can I Move to Spain?”

  1. Great article! Thank you for sharing the breakdown of this – I hope she can quit her job and move to Spain. I also travel full time and use geo-arbitrage to my advantage… life is so much more affordable not living in America.

  2. Not 100% sure, but I don’t think you can qualify for Medicare until 65, not the 62 that the financial advisors are saying. Something to double check.

    Enjoy your work Millennial Revolution!

  3. Commenting from Calpe, Spain where we’ve fallen in love with the area. To the person who wrote in, I’m so very sorry for what you’ve experienced. Reiterating what Millennial Revolution said, you -don’t- have to take it for a second longer. If your brain is anything like mine, it will try to convince you of 579 ways this could go wrong and be the worst decision you’ve ever made, but it’s much more likely that biking around Europe and living the slow life here will be healing to you. I’d bet that your path, whatever it is, will become clear during your ride.

    1. Question. She is 33 and most of her net worth is tied in her 401(k) which she would roll into an IRA if she leaves the job. She can’t access that until 59 1/2. So…what does she do if she goes to Spain?

      1. See the 5 year Roth Conversion pipeline work-around. It’s how most people in the US make FIRE work and allow access to tIRA accounts before 59.5. You pay tax on tIRA when you convert to Roth, but if you’re spending is low the tax will be very low. All you need is 5 years of spending in accounts that aren’t traditional IRA (i.e. Roth and brokerage accounts and savings). Roth earnings cannot be withdrawn without penalty and tax, but the deposit amount can be.

      2. She has at least one year of expenses covered by her cash position. She also has plenty more in her taxable brokerage account. She’s good for a very long time during which she can potentially do Roth conversions of her 401k balance. She’s in a great spot financially (and personally) for this type of geo-arbitrage play.

      3. Good point, she does have a good chunk though in here savings/taxable account over 200k that would last her a few years if approximately 22k a year which is what she would need approximately in Spain. Meanwhile her income is so low it would be a good time to do roth conversions every year to convert her 401k to an after tax roth so she can access her contributions/conversions before 59 and a half one she meets the 5 year conversion rule (wait for 5 years after you do conversion to access roth conversion).

  4. I just wanted to point out DreamingOfSpain’s statement in the first paragraph where she mentioned getting on Medicare at 62. I don’t believe that is correct. I think it is 65 unless you are disabled. It is moot to this case study if she is living in Spain, but just for other’s info.

  5. I will look into a non-lucrative visa further but do you know off-hand if it permits work online outside of Spain (as opposed to work for financial remuneration that occurs online or otherwise within Spain)?

  6. That part about ACA being active when a job loss occurs. Yes it does but you still have to pay for it when jobless , it’s not free. So about $800 a month for health insurance is about right that you pay for while unemployed.
    This is a case of “grass is greener other side “ syndrome . When overseas you also have to pay health insurance and costs in Spain are going up like everywhere. That average rent price in Spain gets you and average apartment with noisy neighbours, no air conditioning, no views . Travel and hotels around Europe are not cheap.

    This is more a call for help in someone going through adjustment and stress at work in their life. Going to Europe won’t solve that . The same feelings and events will reoccur in Europe unless you can learn to adjust and adapt to the stresses at home .
    I’d stick with your job and use the health insurance you have to see a stress coach or psychologist

    1. On the contrary, going to Europe may be just what she needs.

      At the age of 47 I “ran away” to the south of France to escape a relationship breakdown/separation, discriminatory work environment, family issues etc etc. Best thing I ever did. It did not solve any of the problems, but it gave me the time and the space to rest and regroup. When I returned to Canada 12 months later I was so much stronger (mentally) that I was able to make decisions and take action to put myself in the really good spot that I am in today.

    2. I think we’re both regular followers on this blog. I’m a millennial age physician. I noticed that, like every doctor over 50 I’ve ever known, your general response to these articles is to eat one shit sandwich after another for most of life and ask for some more with a smile. You’re right of course, “you flee along with yourself. You must lay aside the burdens of the mind; until you do this, no place will satisfy you” said Socrates. I get it as a concept, though it’s extremely difficult to put into practice. Was there anything in your career that you wouldn’t tolerate, and did you take any actions?

      1. LOL, it’s not an age thing bro, it’s reality . The reality of life for generations before and in the future is : “ life is hard then you die “. So work hard, save , enjoy your life as nobody owes you a living . Always expect the unexpected as the unexpected will always occur.

        1. I get it. Nearly an exact quote from this paragon of the nineteenth century I recently re-read for the second time: “he had lived too little as yet to know that nothing is more imminent than the impossible, and that what we must always foresee is the unforeseen.” Is there nothing better to hope for or expect than the brutal existence of the past? Wouldn’t you even like a different flavor of shit sandwich?

          1. LOL. I like the many flavours of mine. But not to worry , my friend , you’ll get the opportunity to eat many more and in the future so get used to it

  7. ” … in the country of Spain for 5 consecutive years, which permits you to apply for permanent residency.”

    By what criteria would they assess your application?

    Would becoming a permanent resident in Spain affect your Medicare eligibility?

    If not affected, once you’re covered by Medicare, would you mind flying back to the U.S. every time you need medical care?

    1. Why would you ever want Medicare or US healthcare while living in Spain? It’s much cheaper to get your health care needs met in Spain, and the quality of health care there is pretty decent. See here for example: https://www.schengenvisainfo.com/europe-health-insurance/spain-health-insurance/ you can buy into the Spanish public health insurance system for 60 euros / month as a retired expat under 60. Or get private insurance for 50-200 euros / month, or a combination of the two.

      1. Would those options be available to her before she gets permanent residency (and without a work visa)?

  8. Heck yes! This is refreshing, I hope she pulls that ripcord TOMORROW. If my wife and I didn’t own a house in an area we love this would totally be our plan; as it is, we expect to spend significant chunks of Schengen time kicking around the country when our place is paid off and it’s not gorgeous spring/autumn season at home. €3 bottles of rioja and a solid public transportation infrastructure? Yes please.

  9. Great article, and if DreamingofSpain wants to cycle in Switzerland I can host her, and maybe cycle together if she’s not a pro😄

  10. I haven’t been there, so I can’t say for sure, but that cost of living estimate for Spain seems too low. I know health insurance outside the U.S. is much cheaper, but it’s not free. And how much does it cost to apply for the visa?

    I spent 2 months in Mexico last year and I found it’s not as cheap as people say it is. And it’s hard to get that low cost of living as a newcomer. It really takes about a year to really get to know a place and get the best deals for rents, etc. Maybe the FI crowd is better at hacking to get that low cost of living faster, but it’s not a sure thing.

    That said, this woman definitely needs a change. And maybe biking around Spain for a year is exactly what she needs. But she shouldn’t count on her current savings to be enough to live the FI life in Spain. She definitely has plenty of FU money, but FI money? I don’t think so.

  11. This sounds like a great plan and pretty feasible.
    I moved to Portugal last year and would say – healthcare is realistic on this budget. If willing to live in local places you can probably live well. Peace of mind and lifestyle 1000% worth it, once you go I doubt you’ll look back! One critical additional piece to include is tax planning – this makes a huge difference, you could easily be paying 25-30+% (depending on income sources and Spain’s specific rules) so this should be accounted for before making a long term move.

    1. We’ve lived in Spain for two years, and we love it, and this reader should absolutely do it! Another thing to take into account for tax planning – Spain has a wealth tax, and ALL assets are included. That includes every single savings account, including retirement accounts. And the limits are quite low in some regions of Spain. So that’s another thing to consider.

      1. Andalucia removed the Wealth Tax starting in 2023, which has made this part of the country even more enticing.

  12. I say go for it. Go to Spain for a year and see where life takes you. What’s the worst that can happen? You’re young and you can always find another job. Change career if your career isn’t a good fit anymore. Don’t limit yourself with the sunk cost fallacy.

  13. Great article. A couple of points:

    1. You state her expenses are $40,000 monthly. Presumably those are her annual expenses?
    2. Another potential option is she has European ancestry is to look into citizenship by descent, which many EU countries allow. It doesn’t have to be Spanish. If she has, say, an Irish or Italian grandparent, she may be entitled to Irish or Italian citizenship. And if she were to attain that, as an EU citizen, she could live in Spain indefinitely without restriction.

    D Unit

  14. Great plan! Go for it! I moved to wonderful, amazing, inexpensive Portugal. Just make sure the required in-country time for the visa is met while biking around Europe. Im not sure for Spain but we must be in-country for 6 or 8 months per year in Portugal (depending on where you live- only 6 months required in the Azores.) I pay €41 a month for full health insurance. There is cheap travel all over Europe from here. Life in Europe is not always easy but it is fascinating!

  15. On the non-lucrative visa she will be allowed to remain outside Spain for maximum 10 months in the 5 years that is required to get the long-term residence visa. At 33 years of age, her private health insurance in Spain should cost around 100 euros per month and it will cover almost everything except medicines and dental care. A private insurance is mandatory if you are applying for the non-lucrative visa. She cannot buy into the Spanish public health insurance system on a non-lucrative visa.
    Spain has recently launched a digital nomad visa open to non-EU nationals who work remotely for non-Spanish companies and this may fit her profile better. https://www.euronews.com/travel/2023/01/30/always-wanted-to-move-to-spain-a-new-digital-nomad-visa-could-let-you-stay-for-5-years

  16. I’m originally from Spain. The costs of living used in this post are on the on the very high end. Those are only seen in the very center of Barcelona and Madrid, and it’s mostly foreigners that would be able to afford such high costs. The average Spaniard doesn’t make 1.7k a month. You can live on half of that money if you are open to live in areas that are farther from big cities (and if you are lucky and patient, you can even find way better deals for a room in big cities), while public transport can still get you to the city in a reasonable time. Public transport in Europe works wonders compared to the almost-non-existing public transport in the US.

  17. I can’t speak for Spain, but I’m an American living overseas (Taipei, Taiwan, where I’m a permanent resident). My name is neither John D. Rockefeller nor Jack Ma. I’m a professional educator–the Mexican joke is “pobresor” (pobre = poor in Spanish), which I have often translated as “poorfessor” when I’m presented at professional events over here. Living outside of CONUS (US Army-Speak for the Continental United States) has been a total game-changer for me. My apartment’s rent–in the capital of the country–is around $700-something USD-equivalent. I have gotten some SERIOUS medical care for about $3 USD with National Health Care. Today, I’ll commute to one university on a YouBike (rental) for almost nothing while enjoying the sunshine and taking a Pimsleur Vietnamese lesson (long story!) on my iPhone and then to another university via the cheap and excellent MRT system.

    If expat life in Spain is anything like mine, I’ll say that the writer has some great options. I’d advise the writer: 1) consider working in Spain and getting some locally-generated income to protect your excellent cash cushion even more. Remote work can be a possibility, and teaching English as a Foreign Language is always a possibility for a native English speaker; 2) start studying Spanish as the schedule permits. I have had excellent results with Pimsleur and I also used a “The Rough Guide” Mandarin Chinese phrasebook my first time over here and it served me well.

    Enjoy!

    Dan V
    Enjoying the view from my inexpensive apartment in Asia

  18. Regarding the hostile employer and sexual harassment: sue the shit out of those fuckers, win your case, and then retire Fat-FIRE. You need to see a few employment lawyers ASAP. There are very short time limits to bring cases, such as 30 days after separation. I’m not a lawyer but I had a toxic work environment at one point, and in some ways I regret not suing them. You’re not doing anyone any favors by letting this type of behavior pass. They wont appreciate your courtesy, they’ll just think you’re weak, and the behavior will just be inflicted upon the next person.

    1. Yes, you would probably get in trouble telling them to stop it or you’ll break their wrist the next time they touch you. Also they probably won’t even stop if you ask them if they would say such things to their sister or mother because they probably do. There are a lot of jerks out there.

  19. I have always seen the gross spending times by 25 to get a persons FI amount but what if you are older…say 50… do you still use 25x your expenses to get your FI number?

  20. One thing to note – I believe once you are no longer a US resident, you can no longer do Roth conversions. So if expat life is a long term plan, keep that in mind. (I’m a US expat now living in Canada and through all my research that’s the conclusion I’ve reached.)

  21. so sorry about your dog, dreaming of spain. i’m really pulling for you and hope you take the leap of faith to move to europe. your finances look stellar.

    hugs from st paul, mn.

  22. Go for it! We were absolutely exhausted by the end of 2022 with work stress, pandemic job losses, loss of family members, isolation, downtown Toronto madness and moved to Italy for at least a year. The cost of living is higher than we anticipated as everything has gone up with the pandemic and war in Ukraine (utilities and gas especially) but we don’t regret the decision. It’s a great time to recuperate mentally and physically, regain focus on your priorities, plan your next steps job wise and financially. Living abroad takes lots of administrative effort and it’s not without its challenges but ask the thousands of expats in Spain, Italy, etc and they’ll tell you why it’s worth it. There are lots of groups on Facebook if you want some views from US expats now living in Spain.

  23. BEAST MODE 10k miles in a year on the bike –> better ensure your nest egg is gonna last b/c you’ll be living a long ass time – KUDOS, studly!

  24. I’m living in Malaga and the ballpark expenses quoted are too low. Rent in the city and surrounding area is climbing monthly as more people are discovering the benefits. In particular Europeans who can now work remotely are flocking down here, driving up rental prices. I’m meeting more North Americans too who are shunning the traditional Florida/Arizona retirement destinations.

    There are lots of cheaper places not far away, but you need to go in land and you need a car. Good luck to DreamingofSpain!

  25. Hello,

    I am a dual Spanish-US citizen and I FIREd a couple years ago, then decided to move back to Spain. In general terms I agree with the analysis, however living costs should be carefully revised before making any decisions. I would say big cities like Barcelona and Madrid are more expensive now than what is described in here. Good luck and good job!

  26. I am sorry but the numbers are a little hard to digest. How does someone with 60k savings add 100k to their net worth every year? As a DINK couple we make and save a whole lot more. However, with the last two years the market has been a complete rollercoaster going down. Why is sequence of risk not factored in? What if the market stays flat for the next 5 years or even falls from the current levels? Can she still retire in 4 or 6 years? I am not seeing the logic here.

  27. Spain sounds wonderful! Looking at a trip soon now that I have got my British passport (dual citizenship) sorted. Its a shame about the whole brexit thing as I believe it used to be very easy to travel through the EU on a British passport but I guess I will find out next year!

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