Retiring in France with a dollar income?

Question

We are thinking of moving to France in a couple of years. We will be retired with an income between $80k - $100K per year, but are concerned about the strong euro versus the dollar. since transferring two million would result in a loss of about half a million, switching to euro-denominated investments may not be a viable solution. Can anybody offer any advice, suggestions, comments about cost of living comparisons of the feasibility of this plan?

All answers are appreciated
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I might add that I am somewhat familiar with costs in France, since we go there once or twice a year. Still, staying in hotels and eating in restaurants is different from living there. I suppose my question deals more cost of living, such as how much of a sacrifice would it be to live on 60,000 euros per year as opposed to 80,000 dollars, and also advice on how to achieve the best use of my investment capital, i.e., keep it in dollars or move it into euros.

Thanks,

Rex

I appreciate the answers I've received, but none has really helped. It's fine to tell me about living conditions in France, but as I said in my previous details, I go to France once or twice a year; my wife is French, and we have family over there. I know how the French live.

I'm primarily concerned with the exchange rate. Yes, my portfolio is also diversified and earns in various currencies, including euros. Yet, to transfer two million dollars at today's rates would net less than a million and a half euros. Forget about ranch-style homes, that means less purchasing power just buying butter and eggs, doesn't it? If I'm wrong, please explain.

Thanks

A pound of iron may weigh the same as a pound of feathers, but it doesn't have the same value. Purchasing power makes a difference between two million dollars in pesos and two million in euros, if one is in Mexico with the pesos and France with the euros.

When I was in France last July, I quite often paid 4 euros for a coke in a restaurant. In the same class of restaurant in Los Angeles, I would pay between two to three dollars. @ 4 euros per coke, 60K euros would buy me 15,000 cokes; @3 per coke, $80K would buy me 26,667 cokes. Using a cup of coffee in this equation, I often paid 2 or 2.25 euros in France, and $1.5 to $2 in Los Angeles. Two goes into 80K 10,000 more times than it goes into 60,000.

This would translate into a lower material standard of living, which is what I'm questioning.

Of course, this is not scientific; some items, such as cheese, are much better value in France, not to mention just better. I will get a better measure of prices in France this summer.

One more point on material standard of living, and cost differences between the euro and dollar. I drive a Mercedes CLK, which, as it is equipped, sells for about $58,000 dollars in the USA. The same car in France sells for about 58,000 euros, which at today's rates is about $77,700, or a cost of almost $20,000 more dollars. If my income is derived from investments denominated in dollars, this obviously costs me more because of the exchange rate.

Answer 1

Well, in the first place your aren't actually losing anything at all by moving from dollar to euro denominated investments any more than you'd gain something by moving from dollars to pesos. Currency is, in the final analysis just a fungible commodity like any other.

And, in any case, there is no reason to have your entire portfolio in the currency of the place you call home. In fact, its a good idea to keep your risk spread around. My portfolio includes investments denominated in a dozen different currencies.

As to cost of living that is subject to a lot of variables.

For example, the average French family lives in a house or apartment that is considerably smaller than their American counterpart. Indeed, the average poor family (lowest quintile) in America has more living space than the average middle class French family. Are you going to want a 2500 square ft. 3 bedroom 2 bath house with attached garage and central heat and air when you move to France? Expect to pay far more than you would in the USA because that is not how people live in France. The same sort of issue arises over other aspects of an American versus French lifestyle.

In general one must be careful not to compare apples to oranges when comparing costs.

Food costs in France are not particularly different than in the United States but you may find shopping occupies more of your time because the American megamarket is not as common in France and there tends to be more specialization in food stores.

Notice too that things like sales and property taxes are considerably higher in France than in most parts of the USA. The VAT tax is up to 19.6% for instance.

If you haven't already seen it this article from International Living (which says that France is now the Number 1 place to live) instructive: http://www.internationalliving.com/qol06

EDIT: I have no idea where you get the idea that the mere fact of a difference in exchange rate means anything other than a difference in an exchange rate. It is simply an irrelevant consideration.

It is akin to asking which weighs more, a pound of iron or a pound of feathers. Two million dollars in euros is worth the same as two million dollars in pesos which is the same as two million dollars of rubles.

The fact that 100 dollars buys 74.80 euros does not, by itself, mean anything in terms of the cost of living.

Over time, the value of the dollar and the euro will change relative to each other. At any one given moment there will an advantage to holding dollars versus euros or vice versa.

Last year at this time I bought euros for $1.22. This fall when I visit Paris I will likely pay more. That will make Paris somewhat more expensive this fall. Then again maybe the dollar will appreciate against the euro and it will be cheaper.

Absent a truly unlikely large relative change it is not a matter of sufficient concern to base life altering changes, like moving to France.

Have you read the article I pointed you to? It points to the site of a supermarket chain. Look at the prices in euros for various items if you want to get an understanding of what prices are like.

Answer 2

Hm, well, as a new yorker, i have to say that if you think living in NYC was expensive- brace yourself for France. I went to Paris just a week ago, and the euro makes it very expensive to live there.

maybe if the euro dips down a bit, you should move.

Answer 3

Ha, the problems of the rich. Difficult situations indeed.

Answer 4

Good thing you have money. The poorer parts are very dangerous.