FIRE Movement in Switzerland: Retire at 40?

Your goal is to retire at the age of 40. What led you to that idea?

In 2013, my wife and I were contemplating buying our own home. One Sunday we wrote out all the numbers. We needed 140,000 francs as a down payment, but even with our pillar 3a savings we only had 45,000 francs.

From that time on, I developed an interest in financial topics. I browsed through various blogs and forums in search of ways to save money. As I did that, I came across many personal experiences shared by people in the US, describing how they managed to retire at 35 to 40. That was the trigger for me.

Since that time, my goal has been to never have to work for money again from the time I reach the age of 40. To be independent and spend every day of my life doing what I really enjoy.

And do you believe that reaching that goal is probable?

I readily admit that the goal of retiring at 40 is an ambitious one. But it is possible. According to our calculations, we as a family will have to save more than 2 million francs by then.

To reach that goal, we live very simply and optimize our spending. We also have started side projects in addition to our regular jobs. Another important factor is that we invest all of our savings. The more money we have invested, the more we take advantage of the compounding interest effect.

Suppose you could reach your goal: Wouldn’t you get bored without working?

After two weeks of sipping cocktails on the beach, it would get boring. But we have many different interests which we would like to pursue. Writing books, travel, helping a friend with his humanitarian project, continuing to blog. We want to be able to do those things without having to worry about how to pay the next bills.

What is the main goal of the FIRE movement which you belong to?

FIRE is the abbreviated form of financial independence, retire early. The movement began in the US. Books considered to have laid the foundations for the movement include Your Money or Your Life published in 1992 by Vicki Robin and Early Retirement Extreme, published in 2010 by Jacob Lund Fisker. These books inspired multiple blogs, including the leading Mr. Money Mustache blog from Peter Adeney. This blog was the inspiration for the title of my own blog, Mustachian Post. There are currently more than 2250 English-language blogs dealing with FIRE topics.

Is there also a FIRE movement in Switzerland?

FIRE is definitely a niche topic in Switzerland. But the number of people who want to retire before 65 has increased significantly.
When I started Mustachian Post in 2014, practically all FIRE blogs were US-based. The retirement topics dealt with could not be directly applied in Switzerland.

In the meantime, several other Swiss blogs dealing with FIRE have appeared. These include Retire in Progress, Financial Imagineer, The Poor Swiss and Road to FIRE. I think that is great, because each blog brings a different perspective on FIRE to the table.

I recently began a survey of my 2500 newsletter subscribers. Just 100 participants state that they want to retire early. The rest simply want to optimize their wealth in order to enjoy more leisure time.

The cost of living in Switzerland is very high. That makes early retirement unrealistic for all but a wealthy minority.

I see things differently. I regularly cite the thoughts of one of my readers, who explained that they can get by on 3000 francs per month living in Zurich. As it happens, Zurich is one of the most expensive cities in the world.

Even though they only earn 4000 francs per month, that reader can save 1000 francs per month. That means they can save 26% of their income – much more than the Swiss average of 5-12%.

Still: For most people in the world, the goals of the FIRE movement are an unimaginable luxury.

It is a fact that the FIRE movement is primarily realistic in wealthier, developed countries. If you hardly have enough food to eat, you obviously have to think about survival above all.

But the perspective and principles of the FIRE movement are also beneficial for a broad audience. They include entrepreneurship, financial discipline and continuing education. Of course, this is only possible if you have a safe environment and access to education.

The goals of the FIRE movement are not easy to reach, but they are easy to understand.

Why do you blog under a pseudonym?

That’s a good question. As followers of my blog can attest to, I publish all information about our personal wealth and expenses. We also want to protect ourselves as a family – and our children in particular. A friend and fellow blogger in the US who blogs under his legal name has even received death threats. There is also another reason: Talking about money is taboo for some people in our circle of family and friends. We want to respect that.

In your blog, Mustachian Post, you write about your financial experiences in Switzerland. What are the most unexpected ways to save that you have encountered?

Regardless of which country you live in, housing, transportation and groceries are the most important budgeting points.

The most surprising savings are those shaved off recurring costs. If you save just 100 francs per month on health insurance premiums and can invest that money at a 7% annual return, you will have saved around 16,580 francs in ten years.

Some concrete examples of how we optimized our budget:

• We take homemade lunches to work with us, which saves us 400 francs per month. That adds up to 4800 francs per year.
• We optimize our car insurance and save on our car. That saves us 2554 francs per year. Instead of our previous two cars, we now share one car.
• We migrated to cheaper mobile and Internet plans, which reduced our telecom costs from 325 francs per month to 105 francs per month.
• We changed our health insurance and raised our deductible to 2500 francs. That saves us more than 100 francs per month (we had already optimized our health insurance before the switch, otherwise the savings here would be much higher).
• We migrated to free bank accounts and credit cards. That saves us around 400 francs per year.

What are your best tips for people who want to become financially independent?

A Chinese proverb says it best: The best time to plant a tree was 20 years ago, the second-best time to plant a tree is now. I recommend a frugal lifestyle on the one hand and investing savings on the other. The magic of compounding interest makes time your closest ally. Thirdly, I recommend continually educating yourself, both financially and professionally.

What are the primary benefits of the FIRE lifestyle?

Quite simply, the FIRE lifestyle makes us happier. Many people would think the opposite is true, and associate living frugally with going without. But we practice greater awareness in the way we live and the decisions we make. That results in less stress – particularly with regards to money. By abstaining from consumerism, we can focus on the things which are really important. For example, we spend a lot more time in nature.

Are there any disadvantages?

The biggest disadvantage is that a frugal lifestyle can lead to family strife, and this forces you to make many compromises. But that is mostly a short-term problem. In our case, we were able to adapt over the long term.

The coronavirus crisis may trigger a major recession. How should investors respond to this crisis?

From a financial perspective, as seen through the lens of the FIRE movement, these kinds of crises are always opportunities. Over the long term, markets will climb again. When markets plummet, investors have a chance to invest at a discount. But I do not recommend trying to actively beat the market or find the perfect time to invest. Nobody can know when the ideal time to invest is.

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Mustachian Post has published the book "Free at 40 in Switzerland". You can order the book here.