Podcast Summary: Navigating Retirement in France

Episode: Navigating Retirement in France
Release Date: February 24, 2025
Host: Jill Schlesinger, CFP®
Platform: Audacy
Description: In this episode of "Jill on Money with Jill Schlesinger," host Jill Schlesinger engages with listener Tim, who has transitioned to retirement and relocated to the south of France. Together, they delve into the financial intricacies of retiring abroad, the challenges of managing assets internationally, and the balance between saving and enjoying retirement.

1. Introduction to the Episode

Mark, co-host of the show, welcomes listeners and introduces the guest, Tim, who has recently moved to the south of France. The episode aims to explore the financial aspects of retiring in a foreign country, specifically France, highlighting real-life experiences and practical advice.

2. Meet Tim: A Retiree in France

Mark (01:44): "Welcome to the Jill on Money Show. This is the program that attempts to help you make better or at least less bad financial decisions."
Mark sets the stage for the conversation, emphasizing the show's mission to assist listeners in making informed financial choices.

Tim (03:57): "I've always wanted to live here. My mother was French before she became American. I grew up in the US but spent all my summers in France with my grandparents, and it just felt like the place for me."
Tim shares his personal connection to France, revealing a lifelong aspiration to live there, influenced by his French heritage and childhood experiences.

3. Tim’s Financial Landscape in Retirement

a. Sources of Income

Tim (05:31):
Tim explains his primary sources of income post-retirement:

• Deferred Compensation Plan: "We have about 60 dwindling down to 40 grand a year from that." This income will last approximately eight more years.
• Bank Accounts and Interest: "There is about $110,000 coming in from just bank accounts... $1.9 million in a brokerage and about $1.8 million in banks." These funds generate substantial interest, providing ongoing income.

Mark (07:10):
Mark clarifies the structure of Tim's finances, ensuring accurate understanding: "Are you saying you have $110,000 in interest coming from bank accounts?"

Tim (07:23):
Tim confirms, highlighting that his taxable accounts generate significant interest, separate from his IRA and Roth IRA holdings.

b. Investments

Tim (08:24):
Discussing his investment strategy, Tim notes: "Out of that money, only about $100 grand is in, like, BTI. Pretty much it's cash."
This indicates a conservative approach, with the majority of his taxable accounts held in cash equivalents.

Mark (08:37):
Mark probes further into the investment allocation, understanding the balance between cash and investments.

Tim (08:51):
Tim provides specifics:

• Traditional IRA: $2 million
• Roth IRA: $1.3 million

c. Real Estate Holdings

Tim (09:15):
Upon relocating, Tim sold his U.S. apartment and purchased an equivalent property in France: "We have an apartment that I paid €600,000 for, which is about what I sold my old apartment in the US for."
This move was facilitated by favorable exchange rates and strategic timing.

4. Living Expenses in the South of France

Mark (09:59):
Mark inquires about Tim's annual spending: "You have a lot of money coming in. What do you spend on an annual basis living in France right now?"

Tim (09:59):
Tim breaks down his expenses:

• Basic Household Expenses: "$1,200 a month"
• Discretionary Spending: "$1,100 a month"
• Total: Approximately $2,500 per month

Mark (10:46):
Reflecting on Tim's frugal lifestyle, Mark highlights: "Even if in eight years, okay, you've exhausted that, you're not really even spending that interest that is being generated from the bank account and the taxable cash account, right?"

Tim (10:44):
Tim comments on his minimalist approach: "I'm just not a spender."

5. Balancing Saving and Enjoying Retirement

Mark (12:55):
Mark addresses the psychological aspect of spending in retirement: "It strikes me that so many of you have a hard time figuring out how to enjoy the fruits of all of your labor."
He encourages listeners to find a balance between saving and enjoying their wealth.

Tim (13:20):
Tim acknowledges the need to treat himself: "We could probably travel more... Maybe I will treat myself to a Diet Coke when we do go out."
This statement underscores the challenge of allowing oneself to spend after years of saving.

Mark (14:58):
Mark offers practical advice: "I would encourage you to try to travel and do a little more spending... maybe put some amount of money in that account and then say to your wife, look, we don't spend any money. But why did we come to do this if we're not going to travel?"
He suggests creating a separate budget for discretionary spending to ease the transition.

Tim (15:04):
Tim considers Mark's suggestion: "I'm a bucketed kind of thinker, so I was actually thinking of doing that, like, just open an account and say this was already accounted for. This is fun money."

6. Estate Planning Challenges in France

Mark (16:12):
The conversation shifts to estate planning: "Do you have your estate documents done?"

Tim (16:12):
Tim admits he hasn't finalized his estate plans due to French inheritance laws: "In France, there's a 60% tax on assets in a trust... I'm waiting to talk to a French lawyer about the right way to set that up."

Mark (17:02):
Mark emphasizes the importance of estate planning: "You just don't want to saddle your spouse who's younger and more likely to outlive you with that responsibility."
He advises Tim to consult with a French estate attorney to navigate the complexities.

7. Final Insights and Recommendations

Mark (19:02):
Mark encourages Tim to embrace his new lifestyle: "Go spend some money on a therapist. Yeah, exactly. Good idea."
He playfully suggests ways for Tim to become more comfortable with discretionary spending.

Tim (19:26):
Tim plans to manage his finances strategically: "I'm thinking about moving all that cash into a tax-free money market account... also thinking of buying the Schwab to get qualified dividend income instead of ordinary income."
Tim demonstrates proactive financial planning to optimize his income while minimizing taxes.

Mark (21:29):
As the conversation wraps up, Mark offers support to listeners in similar situations: "If you're just really kind of freaked out about this idea that you used to make money and save money, it's really hard to spend money, get in touch with us. We are very good at walking you through the ways to get you to the place you want to get to."
He invites listeners to seek guidance in balancing saving and enjoying their retirement funds.

Key Takeaways

1. Strategic Financial Planning is Crucial: Tim's approach to managing his deferred compensation, bank accounts, and retirement funds showcases the importance of diversified income sources in retirement.

2. Balancing Saving and Spending: Transitioning to retirement involves not just accumulating wealth but also finding ways to enjoy it without compromising financial security.

3. Navigating International Financial Laws: Retiring abroad presents unique challenges, especially concerning estate planning and taxation. Consulting with local experts is essential.

4. Psychological Aspects of Retirement Spending: Overcoming the fear of spending after years of saving is a common hurdle. Creating separate budgets for discretionary spending can aid in this transition.

5. Maximizing Tax Efficiency: Tim's consideration of tax-free accounts and qualified dividend income illustrates strategies to optimize income during retirement.

Notable Quotes

• Tim on Moving to France:
  "I've always wanted to live here. My mother was French before she became American."
  (03:58)

• Mark on Estate Planning:
  "You just don't want to saddle your spouse who's younger and more likely to outlive you with that responsibility."
  (18:32)

• Tim on Spending in Retirement:
  "I'm just not a spender."
  (08:15)

• Mark on Enjoying Retirement:
  "It's so weird that so many of you have a hard time figuring out how to enjoy the fruits of all of your labor."
  (21:14)

Conclusion

This episode of "Jill on Money with Jill Schlesinger" provides a comprehensive look into the financial considerations of retiring abroad, using Tim's experience as a case study. From managing diverse income streams and navigating international tax laws to overcoming psychological barriers to spending, the conversation offers valuable insights for listeners contemplating a similar move. The hosts emphasize the importance of proactive planning, seeking expert advice, and finding a healthy balance between saving and enjoying one's retirement.

For more information and personalized advice, visit jillonmoney.com and explore other episodes of "Jill on Money." Subscribe to the "Money Watch" podcast for additional financial insights.