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Created on 30.06.2021

Beware myths and half-truths! The biggest retirement myths debunked

Do you really understand the facts about retirement planning? Or do you worry that your knowledge of retirement planning is shaped too much by vaguely reliable information that you have picked up along the way? Read about the eight biggest retirement myths and learn the truth about statements like “retirement planning doesn’t pay off until you’re older” or “retirement funds are way too risky” so you can distinguish between fact and fiction.

The topic of retirement planning is surrounded with myths and half-truths. The Swiss pension system with its 3-pillar principle is well known, but a lot of people get fuzzy on the details.

How do state, occupational and private pension plans differ from each other? Why is private retirement planning so important? And why pay into it at all? The fact is, it pays to be smart when planning for your future. The first step is to find out the truth behind the retirement planning myths and to test your own knowledge.

Retirement planning myths

  • This is incorrect – and dangerous. When it comes to retirement planning, the earlier you start, the more you get out of it in your old age. Those who start paying into a retirement plan at a young age will have a very long investment horizon. This means you can take greater risks and benefit from the effects of compound interest.

    You also save on taxes every year even at a young age if you pay into pillar 3a every year. It’s definitely worth it – even if you can’t manage the maximum payments every year.

    And even if you’ve already taken the first steps in your retirement planning, it still makes sense to regularly assess your own pension situation. After all, your life and your living situation are constantly changing – and that will also influence your retirement planning. Stefan Rothenbühler from Retirement Planning Offer Management goes into this in greater detail in the interview “The path to retirement”.

  • Not true. Even small contributions can grow into large amounts with a long investment horizon. And the tax benefits of paying into pillar 3a each year will continue to apply even if you don’t pay in the maximum amount.

    You can get more out of your 3rd pillar retirement plan with either full or partial investment in retirement funds. You can learn more about this in the article “How to get more from your retirement planning”.

  • Investing your 3a retirement savings in funds enables you to benefit from higher returns in the longer term. The amount of risk you want to take on with your retirement fund will depend on your personal situation and requirements. You choose for yourself whether you want to invest in a fund with a higher proportion of shares or whether you prefer to invest in a fund with a low proportion of shares. As a rule, though, consider the following: the more time you have to invest (your investment horizon) and the greater your risk capacity and risk appetite, the greater the equity component of your retirement fund can be.

    If you start investing in a pension fund at a young age and your investor profile allows it, you can also invest in a fund with a higher proportion of shares or spread your investments across different pension funds. More information on retirement funds from PostFinance.

  • You don’t have to do this. In certain cases, you can even make an advance withdrawal of your pillar 3a funds. This can be for the following purposes, for example:

    • purchasing additional pension benefits
    • buying your own home
    • emigrating abroad
    • repaying a mortgage

    You can also access your pillar 3a funds as early as five years before reaching the AHV-retirement age, regardless of whether these are in a pillar 3a account or invested in a pension fund.

    It is also possible to open several 3a accounts and have the balance paid out in different tax years – also taking into account any payouts from the pension fund (2nd pillar). This enables you to enjoy the tax advantages of this approach. You can read about this topic in the article “Make tax savings with pillar 3a”.

  • Unfortunately, this is not true. The state pension (first pillar) is intended to secure a minimum income level – both in the event that you lose your job, and also in the event that you become dependent on disability insurance benefits due to an accident or illness, as well as for the period after retirement. After all, retirement planning is not just about preparing for old age, but also about protecting yourself and your family in the event of life-changing events.

    Occupational pension plans (second pillar) provide additional benefits through the pension fund and accident insurance, both in old age and in the event of accident, illness or death. However, benefits from the first and second pillars often cover only 60–70% of your previous income. This means you will not be able to continue your current standard of living after retirement.

    To maintain the lifestyle to which you are accustomed in old age and to enjoy your time after retirement, 3rd-pillar pension payments are therefore indispensable. Learn more in the article “4 reasons for private retirement planning”.

  • It’s true that retirement benefits from the AHV and the second pillar are declining in Switzerland. The AHV (i.e. the first pillar) is financed using the pay-as-you-go system, which means the contributions you pay in during your time as an employee directly benefit retired persons during this time. So current expenses are covered by current income. It’s hard to predict how things will be when you retire. After all, Swiss demographics are changing: people are getting older and are therefore receiving benefits for longer and longer, while fewer young people are paying in.

    In the second pillar, on the other hand, everyone saves for themselves. The amount of your pension depends on the conversion rate. Your existing pension fund balance is multiplied by this. At a current conversion rate of 6.8%, for each CHF 100,000 of saved mandatory retirement assets, you will receive a pension of CHF 6,800 per year. We can expect the conversion rate for mandatory pensions to fall because insured persons are getting older and are dependent on their capital for longer and longer. But capital market developments also play a role: the pension fund invests your money – if returns continue to fall, this will also affect the benefits. This makes private retirement planning all the more important.

  • It’s not generally possible to say whether pension payments, a lump-sum withdrawal or, if necessary, a mixture of the two is the best option. The option that best suits you must be clarified individually – you should preferably assess your personal situation together with an advisor. Whether pension payments or a lump-sum withdrawal is generally more suitable for you depends on the following factors, for example:

    • What will your overall financial situation be after retirement?
    • How great is your need for security?
    • How good is your understanding of investments?
    • Would you be confident investing the capital that you withdraw?
    • Are there any debts you need to pay off (e.g. mortgage)?
    • What is your health condition? Or what is your life expectancy?
    • How do you want to ensure your family’s financial security?

    One option, for example, is to cover your basic needs with pension payments, and withdraw anything above that as capital and invest it yourself. For more on this topic, see the article “Close to retirement? You should consider this question”.

  • Retirement planning also means covering yourself and your dependants for death and disability due to illness or accident. But this can apply not only to the main earner but also to the person who takes care of the household and of childcare, for example. And these tasks must also be taken on and financed, if necessary, in the event of disability or death.

    Non-working spouses are insured via the first pillar (AHV/disability insurance), but this is often insufficient. Even if you’re not the main earner, it’s worth taking a close look at your pension situation and taking out additional insurance if necessary.


It’s worth taking a closer look at myths and half-truths. Planning for retirement is one of the most important things we should take care of in our lives.

To avoid headaches in the future, it’s worth getting to grips with the topic early on so you can learn to recognize the myths and half-truths that could prevent you from providing for your retirement effectively.

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