Plan your retirement

First, get an overview of your expenses after retirement. Remember that some of these could increase, e.g., health, leisure, home repair/maintenance costs.

Your expected pension is made up of your AHV and pension fund pension. You can find the AHV pension in your AHV pension forecast, which you can order from your compensation office. As an alternative to an old-age pension, pension fund assets can also be withdrawn as a lump sum or as a mix of both lump sum and annuity. The amount of your assets is listed in your pension fund statement.

If the basic income is not enough, you should check what additional assets you have. These include real estate, securities, life insurance and assets held in pillar 3a.

A rule of thumb: your living costs should be covered by your pension from the AHV and pension fund. Whatever additional savings you have can be withdrawn as capital. Take into account the following:

a pension provides you with a secure monthly income for the rest of your life. And if you die, your spouse will receive a guaranteed lifelong survivor’s pension. As a rule, this is 60 percent of the original pension.

If you opt for a lump-sum withdrawal, you enjoy more flexibility. You can invest your money freely, but you also bear a certain risk in the event of fluctuations in earnings. And if you die, your unused assets go entirely to your heirs – which is not the case with a pension.

A pension fund buy-in is particularly worthwhile in the years leading up to retirement. This is because the tax-savings effect of a buy-in is greatest when income is at its highest. For many employed persons, this is the case in the years immediately before retirement. But consider the following: if you withdraw capital again within three years of making the deposit, you must repay the taxes you saved. In addition, the buy-in amount cannot be withdrawn as a lump sum for three years.

The longer the buy-in amount remains in a pension fund, the smaller the return. You can deduct the buy-in from your taxable income.

Because the tax savings, which make up a significant part of the return, do not change even with a longer investment period, the return is reduced in percentage terms.

In general, the following applies: A pension fund buy-in is only possible in the event of a pension gap. You can find out whether you have the option to make a voluntary buy-in from your pension certificate.

Early retirement is always associated with financial drawbacks.

If you withdraw your AHV retirement pension early, you will have to accept lower payments for the entire period of entitlement. This reduction is equivalent to 6.8% for every year that you retire early. At the same time, you will remain liable to pay AHV contributions until you reach normal retirement age. Special regulations apply to women born between 1961 and 1969. In particular, reduced reduction rates apply to this age group.

There are also drawbacks in pillar 2. Early retirees have built up significantly less retirement capital and the income from interest and compound interest is lower. In addition, the conversion rate is lower in the case of early retirement than for ordinary retirement. As a rule of thumb, your old-age pension is reduced by 7 to 8% for each year that you withdraw early.

This makes it all the more important to make the most of tax-privileged pension offers. One way is to make the most of the options regarding contributions into pillar 3a, for example by paying in the maximum each year.