Which European country is best for Limerick people to retire to?

I’VE been watching the excellent Cheap European Homes TV programme on RTE for the last couple of weeks. And for me it’s a great watch. Two great presenters with Maggie Molloy and Kevin McGahern and great participants looking to purchase a property abroad.
One of the episodes featured a person who not only wanted to buy a foreign property but also wanted to relocate and live in the country permanently. However, she recognised that if she wanted to make this happen, she’d need to earn an income because a lot of her savings was going on the property purchase.
And if there was one slight criticism of that particular episode it was not telling her or the viewer what the cost of living was likely to be because that would influence how much she’d need to earn, how many days a week she’d have to work for and was the income possible with the skillset she had and were there jobs in the area she wanted to live in that would pay the amount required etc.

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And in fairness that isn’t the programme's brief either, their brief is to find them a cheap European home and that’s exactly what they do.
Anyway, the programme I’m referring to reminded me of a meeting I had in June of last year, with a now client of mine.
She connected with me because she wanted to figure out how much she needed to retire. And here’s the thing, she didn’t want to retire in Ireland, she was open to retiring in a different country altogether.
And the primary reason behind her ask was because her work was quite stressful and she wanted to dial back the pace she worked at or could she even stop altogether.
Her work involved quite a lot of travel over the years and she worked in many different countries, and she accumulated some excellent savings over that time period, but the question she was mulling over was, was it time to cash in the chips and take it easy or did she have to work some more? And if she did, how much longer? And she wasn’t sure about any of this, which is why she was looking for my help.
Her big unknown was, had she saved enough to walk away from work?
And what influenced the answer to that question depended on where she wanted to live. And how much did it cost to live in different countries? And how much was she likely to spend etc.
So, I set out to answer her questions and just to let you know she was single and aged 42.
And as I said she was very open about where she wanted to live. Obviously, safety and housing and the cost of living were all going to be big factors in her decision making, but she was open to exploring what different countries had to offer provided they met the criteria she set herself. And having travelled all over the world she had a good idea of what and where she liked and I asked her what those countries were.

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Because I didn’t want to go off and start telling her how easily she could retire right now if she didn’t have a problem living in Equatorial Guinea. From a financial perspective I wanted to identify countries where she spent time in before and would be happy to live in them long term.
And just to point out, I was being tasked with looking at countries from a cost-of-living perspective and how much she needed to have to live there and perhaps never have to work again. She would have to consult with others about crime rates, taxation, political stability, housing, banking, climate, language, health care, culture and so on.
What’s important to know before I go any further is that the current value of her combined savings and pension funds amounted to €475,000.
Okay, the first country we wanted to look at was Denmark.
And according to data taken from the website Nasdaq.com, a comfortable living standard in Copenhagen is c. $2,800, which is about €2,500 per month. And this amount could be lower or higher, it’s really down to lifestyle preferences but let’s stick with this number for the time being.
So, if this lady wants to retire in Copenhagen, she’ll need a pension and savings fund of c. €750,000.
Which means she’s €275,000 short. So if she wants to live in Denmark she can’t retire there just yet.
The maximum amount she thinks she could save each year in total (including her employers contributions) was €27,600 which means she’d be able to retire and live in Denmark, but not for another 10 years.
And just to point out that I’m arriving at the fund size she requires for every country based on her withdrawing 4% from her savings/pension fund each year to fund her cost of living.
At that rate her savings would last 25 years, but her savings continue to be invested and if they earn 1% each year which they absolutely should and that would be a poor return, they’d last for 33 years and if they earned 2% per year, again this is a conservative number, they’d last for 50 years. And these amounts don’t factor in any future state pensions that would be paid.
Okay the next country we looked at was Slovenia.
And again according to data taken from the website Nasdaq.com, a comfortable living standard in Slovenia is about €1,400 per month. And again I’ll repeat myself but for the last time when I say that this amount could be lower or indeed higher, it will be down to lifestyle preferences.
So, if this lady wants to retire in Slovenia, she’d need a pension fund of c. €480,300.
Which means she’s only €5,300 short so if she wants to live and retire in Slovenia, she could and do so immediately.
Next up was Japan.
A comfortable living standard in many cities in Japan is €2,000 per month.
So, if this lady wants to retire in Japan, she’d need a pension fund of c. €600,000.
Which means she’s €125,000 short so if she wants to live in Japan and using an annual savings rate of €27,600, that will mean she’d be able to retire in Japan in 4.5 years.
Our next to last country we looked at was Portugal.
A comfortable living standard in many cities in Portugal is €1,400 per month.
So, if this lady wants to retire there, she’d need a pension fund of c. €420,000.
Which she had already so she could retire to Portugal immediately and never work again.
And finally, we wanted to look at Italy.
A comfortable living standard in many cities in Italy apparently is about €1,700 per month.
So, if this lady wants to retire in Italy, she’d need a pension fund of c. €510,000.
Which means she’s €85,000 short so she’s just three years of saving away from retiring to Italy.
I was able to summarise for her what these countries of her choice looked like from a retirement perspective, and they were:
Country - Immediate Retire Option - Time away from retirement
Denmark - No - 10 years
Slovenia - Yes 0 0 years
Japan - No - 4.5 years
Portugal - Yes - 0 years
Italy - No - 3 years
The key factors in determining when someone can retire are based on (a) savings accumulated to date (b) regular monthly/annual savings rate (c) return on investment/pension funds (d) what your annual spending will be and (e) where you are going to live.
And the big factor that is often missed when planning for retirement is what your annual spending is going to be and where you live and the lifestyle you want because they will all influence the end number you need.
The cost of living in Dublin for example is going to be more expensive than what it would be if you live in the beach resort of Parga in Greece.
If you wanted to live in Parga, you’re looking at needing a fund of about €450,000, whereas in Dublin it’s likely you’ll probably need €1,350,000.
And when you see these numbers it’s probably unsurprising that more and more people (c. 27% of people over the age of 55 said in a recent survey said they planned on retiring abroad) are beginning to explore the possibility of retiring abroad because they may end up having a higher standard of living which is being funded by a lower savings pot.

Liam Croke is MD of Harmonics Financial Ltd, based in Plassey. He can be contacted at liam@harmonics.ie or www.harmonics.ie