50+? Then slowly but surely you are arriving at the third stage of your life. Whether you are toying with the idea of retiring early, plan to take regular retirement or want to continue working after reaching retirement age, you need to plan your retirement savings carefully.
Once you reach retirement age a new phase of life with exciting opportunities opens up for you. You will finally have more time to do what you want – vacations, traveling, hobbies, sports, grandchildren, friendships, and the list goes on. There’s a lot to look forward to. But you need to make sure you don’t put off making the important decisions. By carefully planning your financial future, you can look forward to a carefree retirement.
If you are 50 or older, we recommend you start actively planning your finances for the time after you stop working. This way you will have plenty of time to plan and take the necessary steps:
Once you retire, your income will come from several different sources:
If you want to retire early, this means your pension will be considerably smaller. You may draw your OASI pension one or two years prior to the regular retirement age. But your pension will be reduced by 6.8% or 13.6%, respectively. During this time you will also continue to pay the OASI minimum contributions. Some pension funds let you retire early starting at age 58. For every year of early retirement, your pension will be reduced by between 5% and 8%.
When and how you take out your retirement savings from the pension fund or your 3a accounts makes a tremendous difference, because taxation varies greatly depending on the time and amount of the withdrawal. So, if you gradually take your OPA savings out of your 2nd Pillar account over a longer period of time, you could easily save several thousands of francs in taxes. You can make withdrawals starting five years before and up to five years after the regular retirement age. This same principle applies to withdrawing your funds from your 3rd Pillar pension over multiple tax years.
The minimum and maximum retirement pension for individuals and married couples can vary from year to year. The pension you receive will depend on your average income as well as whether you have been paying your OASI contributions from age 21 without any gaps up to your regular retirement age. The current legal conversion rate also plays a role in this. Since making individual calculations is complicated, starting at age 40 you can request a free pension forecast from OASI every five years. An online pension estimate is good enough if you just want a rough idea of what your future retirement pension will be.
If you want to maintain your accustomed standard of living, you will need around 80% of your most recent gross salary every month. If the amount paid out after retirement is less than this, this is what is known as a pension gap. Pension gaps can be avoided by making financial preparations for the period after retirement with suitable retirement solutions. Incidentally, this is also a smart way to save on taxes and achieve your individual savings goals.
Regular retirement age is 64 for women and 65 for men. In general, you can take early retirement up to two years before the regular retirement age. You should also consult the rules of your pension fund. They explain what options your occupational retirement plan gives you. Generally, occupational retirement plans let you retire at age 59, although there may be exceptions. You should consult the rules for your pension fund to be sure.
If you retire early, the retirement capital you accrue will be less than would be the case at regular retirement age. To determine your anticipated pension benefits on the desired retirement date, you can perform an online calculation or ask your employer to do this.
By law, you can defer retirement for up to five years beyond regular retirement age. However, the provisions in your pension fund regulations are also definitive here. The deferral results in a higher conversion rate and hence a bigger pension.
All pensions must be declared as income; retirement capital, on the other hand, is subject to a reduced rate depending on which canton you live in. We recommend that you contact your local tax office.
Do you have any questions, or would you like a no obligation retirement consultation? Our experts are there for you.