In Switzerland, the “normal” retirement age is 64 for women and 65 for men. This does not mean you have to retire at these ages. You can determine the age that is right for you and choose to retire early, take partial retirement, or postpone retirement. We show you how these options differ and how you can shape your retirement in a self-determined manner.

Are you between 50 and 60 years old? If so, it’s high time to start thinking about life after you stop working. Some people will certainly wonder whether they will be able to afford to retire earlier, while others are perhaps unsure what will happen “afterwards” and would like to make the transition to retirement gradually. And there are still others who want to continue working because they enjoy their profession. There are different points to consider, depending on which option you choose.

Retirement timing

The age at which you choose to retire affects the amount of your AHV pension and your pension fund assets. 

  • AHV pension

You can draw your AHV pension up to two years earlier or defer it for up to five years. Drawing your pension early reduces pension payments over the course of your life, while deferring it increases them over the course of your life. You remain subject to AHV contributions for the duration of the withdrawal. If you are already 64 or 65 years of age, you will only be required to pay contributions in the event of a deferral if you, as an employee, exceed the CHF 16 800 allowance.

  • Pension fund assets

The earliest you can draw second pillar (pension fund) benefits is at the age of 58 and at the latest when you turn 70. If you take early retirement, your pension is far lower because you have paid contributions for fewer years and the conversion rate is lower due to the longer period for which benefits are paid. If you retire after your 70th birthday – i.e. postpone your retirement – benefits will increase.

Early retirement

Those who plan to retire early should examine their financial situation closely and would be well advised to create a budget. By doing so, you can determine whether there will be any income gaps as a result of early retirement. If this is the case, you can take measures to close these gaps. Your pension certificate shows whether you have already earned the maximum pension entitlement. If not, you can make voluntary contributions to the 2nd pillar. You can also close pension gaps using the 3rd pillar.

How to proceed:

  • Check your pension fund regulations to find out the earliest possible retirement date.
  • Calculate the reductions for 1st and 2nd pillar benefits.
  • Find out about options to bridge the gap.
  • Calculate the additional savings required to cover fixed and variable costs.
  • Ask your pension fund by when you need to register for early retirement and choose the lump-sum withdrawal option (instead of an annuity).

Deferred retirement

An increasing number of Swiss are working past the normal retirement ages of 64 and 65 for women and men respectively. If you choose to work beyond the normal retirement age as well, you can defer drawing your pension benefits (if your pension fund offers this option). Pension benefits are then only due when you cease to work, and at the latest at the age of 70. The longer the deferral period, the higher your first and second pillar benefits.

Points to consider:

  • Contact your employer and your pension fund.

Partial retirement

You can retire in stages from the age of 58. Most pension funds offer flexible pension models that support this. They are contingent upon a significant reduction in your working hours. For example, if you only work 50% now, you can draw 50% of your pension. Most pension funds allow you to choose between a lump-sum payment and an annuity at each retirement phase.

Points to consider:

  • If you are considering partial retirement, you should contact your employer and your pension fund.
  • For tax reasons, you should not reduce the hours worked more than twice.

Normal retirement

Occupational pension provision (2nd pillar) ensures a secure income in old age. You are also insured against disability and death. However, the 1st and 2nd pillars only provide an income amounting to around 60% of your last salary. Depending on your situation, it may be difficult to maintain your accustomed standard of living.

Points to consider:

  • When you draw your pension, you can choose between a one-off lump-sum payment and a lifelong annuity. A combination of the two is also possible.
  • Before you retire, you can make voluntary payments to Pillars 2 and 3 to fill any financial gaps - and reduce your tax liability. Please note that tax deductibility in the event of a lump-sum payment can only be used up to 3 years prior to retirement.

Everyone has different needs and goals in life – this is also true of retirement and the right age for it. The best part is: you can decide in a self-determined manner if you plan early.

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