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Created on 28.06.2018 | Updated on 25.01.2021

The path to retirement – why it makes sense to start planning early for retirement

Why is it important to start planning for retirement early on? How important is the third pillar? And how does a financial expert plan for their own retirement? Sabrina asked Stefan Rothenbühl from Retirement Planning Offer Management at PostFinance.

Private retirement planning options are increasingly important for the third pillar. After all, we’re getting older and living longer which means we can look forward to longer retirement too. To maintain the standard of living we’re used to for as long as possible, we need to include private options in our retirement planning. Owing to increased life expectancy, the benefits from state and occupational pension schemes – i.e. from the first and second pillars – are decreasing. 

Private retirement planning does not always have to mean a retirement savings account

Voluntary and individual private retirement planning is extremely diverse as anything not tied to an occupational or state pension can be deemed private retirement planning. This includes life insurance, savings accounts at a bank, securities, home ownership, and the classic, tax-privileged pillar 3 account solution. Particularly in times of low interest rates, it is worth considering other types of investment for your pension assets, such as a retirement fund. The individual mix of retirement options is different for everyone – our pension expert Stefan provides for his future and that of his family with home ownership, life insurance and pension funds, for example. While life insurance is used to cover the risk of death and disability, retirement funds can focus more on returns in view of the long-term investment horizon: you can also choose a fund with a higher equity component in order to increase the potential for returns. However, you must also accept higher price fluctuations. At PostFinance, the equity component varies between 25, 45, 75 and 100%. As a general rule, the more time you put into saving and the greater your risk capacity and risk acceptance, the larger the equity component of your retirement fund can be.

The best time to start planning for retirement is now.

It pays to start your own retirement planning early. This doesn't have to mean putting aside large amounts for your private pension every year: Young people who save even small amounts on a regular basis are doing a lot right. You can also benefit from pillar 3a retirement planning today, because you can deduct contributions up to the statutory maximum amount of CHF 6,883 (as of 2021) from your taxable income, thereby saving on taxes. After all, says Stefan, you should also be able to enjoy life. His tips for retirement planning newbies:

  • It pays to start your retirement planning as early as possible in order to reap the rewards over the long term. 
  • Even with smaller contributions, you are taking the right steps towards a secure financial future.
  • It is important to regularly assess your own retirement planning situation and adjust it accordingly, because changes in your private and professional life can both impact retirement planning. For example, this might be when you want to start a family or buy a house, when you are working part-time or become self-employed.
  • Private retirement planning is a very personal issue that can sometimes be quite complex. It pays to get advice from the experts. Get your retirement plan checked so you can optimize your own retirement planning situation. 

Planning for retirement means being able to enjoy life for as long as possible

Everybody has their own very different plans, goals and dreams. Most of us would like to live a life that is as long, fulfilling and carefree as possible. It helps to start planning for your future retirement as early as possible and to structure your private retirement plans according to your own financial possibilities, preferences and goals. There are many options here. 

The key points from the expert interview are summarized again here:

  • Pillar 3 is becoming increasingly important for retirement provision. It includes everything that is not covered by state pensions (OASI and IV) or employee benefits (pension funds), such as funds saving plans, savings and retirement savings accounts and life insurance.
  • Although it is important to live in the here and now, you should also think about the future. That’s why you should start setting money aside as soon as possible – even if it’s only small amounts.
  • Good information is extremely valuable. Irrespective of your financial situation, you should address the topic of retirement planning and find out as much information as possible. This is the only way for you to find the right products to suit your individual needs, goals and dreams.
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