Plan your retirement

As a rule of thumb, you need around 80 to 90 percent of your final income to maintain your usual standard of living. It’s best to create your own personal budget plan:

• Make a note of your fixed expenses: e.g. housing, health insurance, taxes
• Estimate your variable costs: e.g. leisure, travel, health
• Some expenses increase in old age, e.g. health costs. In contrast to these, some expenses that are common during working life, such as professional expenses or payments into your 3rd pillar, no longer apply.

You should also account for inflation until retirement (rough rule of thumb):

• General living costs: approx. plus 1 percent per year
• Housing costs: approx. plus 1.5 to 2.5 percent per year
• Health costs: approx. plus 3 percent per year

Find out more in our blog post

The statutory OASI and pension fund benefits form the foundation of your financial future. OASI is intended to cover the basic living costs, while the pension fund acts as a supplement enabling the usual standard of living. However, this goal is usually not reached: the two pillars combined usually cover around 60 to 70 percent of previous income.

Important: gaps in OASI contribution years result in pension reductions. It’s therefore advisable to order an extract from your individual account from the OASI compensation office in good time and check for any gaps.

A pension gap arises when regular income from OASI and your pension fund combined with the depletion of existing assets doesn’t cover your future expenses. Compare your budget with the expected benefits from OASI, your pension fund and your private pension. What is the resulting pension gap?

There are several ways to close your pension gap, either partially or in full.

The right time depends primarily on your personal life situation and your financial options. The following models are available to you:

Regular retirement

Upon reaching reference age, you will receive your OASI pension and can withdraw your pension fund assets in the form of a pension, capital or a combination of the two. The reference age for men is currently 65. For women, it will also be gradually raised to 65 years of age by 2028.

Early retirement

Early withdrawal of retirement benefits from your pension fund is generally possible from the age of 58, or two years before the statutory reference age for OASI. If you retire early, you receive your OASI and pension fund benefits earlier, but you will have to accept lifetime pension reductions. You must continue to pay OASI contributions yourself up to the statutory reference age.

Postponed retirement

If you continue to work after reaching the statutory OASI reference age or postpone drawing your pension, you can defer receiving your OASI pension by one to five years. For each month of deferral, your future OASI pension increases in stages defined by law More information If deferred for one year, the OASI pension increases by 5.2%, up to a maximum of 31.4% if deferred for five years..

Semi-retirement

A smooth transition with reduced working hours gives you financial flexibility and makes it easier for you to retire. Be sure to check the impact on OASI, your pension fund and taxes.

Find out more in our blog post

Upon retirement, you can withdraw your pension fund assets as a monthly income, as a one-off lump sum payment or as a combination of both options. All options have their advantages. The important thing is to identify which one best suits your situation and your goals.

Benefits of drawing a pension

• Lifelong security: you receive a guaranteed monthly payment until the end of your life
• Predictable income: a pension is comparable to a fixed salary and ensures a stable household budget
• No investment risks or risk of loss: the pension fund bears the risk and ensures reliable payment
• Protection of dependants: depending on regulations, survivors’ pensions are possible for various related parties
• Easy to manage: you don’t have to take care of investment, withdrawal or taxation yourself

A pension is generally suitable for people who value security and fixed monthly income or those who don’t want to assume any investment risk.

Benefits of capital withdrawal

• High degree of flexibility: you decide for yourself how and when to use your money – be it for larger purchases, travel or paying off debts, for example
• Freedom of investment choices: you can invest your capital and decide for yourself on risk and potential returns
• Tax benefits: capital payments are taxed separately from other income at a reduced rate. Staggered withdrawal of retirement assets can also reduce your tax burden
• Heritability: the capital belongs to you and can be passed on to your heirs or to people mentioned in your will
• Individual planning: you decide how you want to use up your assets

Capital withdrawal is suitable for people who are familiar with investments or those who want to remain self-determined and flexible.

The compromise: combine pension and capital

A mixed solution is also possible. Some of the retirement assets are taken as a pension and the other part paid out as capital. This allows you to benefit from security and flexibility at the same time.

Anyone over the age of 50 who works or has worked part-time should focus on retirement provision now. A lower income means reduced OASI and pension fund contributions, resulting in a pension gap.

Impact on retirement planning

Part-time employees are particularly disadvantaged with regard to the 2nd pillar. A large proportion of income can go uninsured if wages are low. As a result, the later old-age pension from employee benefits is significantly reduced.

Losses may also be incurred in the 1st pillar − for example, if contribution years are missing.

Improve your financial situation in a targeted way

Get an overview of your personal retirement planning situation. As soon as you know exactly where you stand, you have various options:

• OASI back payments
• Voluntary payments into your pension fund
• Payments into your 3rd pillar
• Increase your working hours

Tip: find out more in the blog post “Part-time work: how to avoid gaps in your pension”.

Many people still feel fit and committed at 65 and want to continue working. This is possible in Switzerland. However, there are a few points to bear in mind if you continue to work after statutory reference age.

OASI pension: anticipated withdrawal, postponement or a combination

You can postpone the withdrawal of your OASI pension by up to five years. This can be worthwhile if you continue to work and don’t need any additional income. As a result, your later pension will be higher for the rest of your life. Alternatively, you can withdraw part or all of your pension and use the income from continuing to work as a supplement. Get advice on which option makes the most financial sense for you.

Social security contributions when continuing to work

Even after reaching the reference age, you will have to pay OASI, DI and EO contributions on your salary if you continue to work. However, you can choose whether you want to continue paying contributions on your entire income or claim the statutory allowance.

Paying into the 3rd pillar if you continue to work

If your financial situation allows it, you can pay into your 3rd pillar up to five years after statutory reference age. This will allow you to continue enjoying the associated tax benefits.

Maintain pension fund

Many pension funds allow you to postpone your retirement benefit until you are no older than 70. This means the saved capital earns interest for longer. Clarify with your employee benefits institution in good time whether and how it is possible to postpone or continue contributions.

Taxes and income

Note that your income from continuing to work is taxed together with any pension payments. At the same time, you can reduce your tax burden by paying into your 3rd pillar. Carefully consider the tax implications of combined retirement and earned income.

Insurance and retirement planning

If you continue working, check with your employer whether you are adequately insured against non-occupational accidents. If you work only a few hours, you should include accident cover in your health insurance in order to remain covered.

Having your own home means independence and quality of life, including during retirement. At the same time, there’s the question of whether your home will still suit your life situation in the long term. Check early whether your income after retirement is sufficient to continue covering the ongoing costs of your home.

Assess affordability correctly

 Banks and mortgage lenders assess affordability using a benchmark: annual housing costs shouldn’t usually amount to more than one third of gross income. Your income usually falls significantly following retirement, making things more difficult to afford. Use the mortgage calculator to check your situation.

Possibilities for improving financial sustainability in old age

• Increase income: optimizing future pension payments is often an effective approach. Subsequent pension payments can be increased by adjusting your savings instalments or by making voluntary payments into your pension fund.
• Reduce living costs: reducing living costs has a direct and noticeable impact on affordability. Depending on the situation, additional mortgage reduction (amortization) may make sense and may even be necessary in some cases to ensure continued affordability. Check whether it would be worth withdrawing capital from your pension fund or 3rd pillar to reduce your mortgage, taking into account the tax effects and deadlines. Switching to a smaller or age-appropriate apartment can also reduce your monthly outgoings. Renting or selling an oversized property can also generate additional income or free up capital.
• Take free assets into consideration: elements of liquid assets such as account balances, securities or other freely available assets can be taken into account as fictitious income, improving financial viability.

Keep an eye on future maintenance and renovation costs

In addition to your ongoing expenses, you should also plan for regular maintenance and possible renovation work. This includes painting work, replacing appliances or making adjustments to ensure comfortable and age-appropriate living. A careful assessment of these costs helps you to avoid financial surprises and realistically assess affordability in the long term.

Contact our specialists for a thorough assessment of your current situation and to determine suitable measures for your future. We take all financial and personal aspects into account to find the best possible solution for your overall situation, enabling you to live affordably in retirement.

Financial security in old age involves more than just planning your retirement. Legal and personal questions should also be clarified early – in particular, what should happen in the event of illness or after death. Three key documents help you to set out your wishes and ensure they are binding.

Estate planning

Estate planning, e.g. with a will or inheritance contract, ensures that your assets are distributed according to your expectations within the scope of the law.

Unfortunately, conflicts and emotional strain in families over inheritance are common. Talk to your family about your wishes and decisions at an early stage. Get advice on inheritance law and tax issues, especially when it comes to larger assets.

Advance care directive

With an advance care directive, you determine who will make decisions for you if you can no longer do it yourself. You decide which trusted person should take care of your financial, legal and personal affairs. The advance care directive must be written by hand or publicly notarized. It only comes into effect once the competent adult protection authority (CAPA) has determined you as incapable of judgement and approved the advance care directive. The entrusted person must also have approved the directive.

Patient decree

A patient decree allows you to determine in advance which medical treatments you want and don’t want. You can name a trusted person to represent your interests to doctors. The decree can be amended or revoked at any time.

Tip: create or check these documents at least one year before your retirement. Keep all documents in an accessible place and inform your trusted persons.