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 put off retirement.

People between the ages of 50 and 60 start thinking about what life after work will look like and when it will begin. Some no doubt 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 career. There are different factors to consider, depending on which option you choose.

Drawing your pension assets

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 continue to be subject to AHV contributions during the entire deferral period.
  • 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 are 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.

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, they can determine whether there will be any income gaps as a result of the 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 second pillar. You can also close pension gaps using the third pillar

How to proceed:

  • Check your pension fund regulations to determine the earliest possible age for retirement.
  • Calculate the first and second pillar benefit reductions.
  • Find out about options to bridge the gap.
  • Calculate the additional savings required to cover fixed and variable costs.
  • Ask your pension fund when you need to register for early retirement and choose the lump-sum withdrawal option (instead of an annuity). Please note: the deadlines are often years in advance!

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 (second pillar) ensures a secure income in old age. You are also insured against disability and death. However, the first and second 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 the second and third pillars to close any financial gaps – and reduce your tax liability.

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.
  • Note that you continue to be subject to contributions if you remain employed.

Everyone has different needs and goals in life – this is also true of retirement and the right age for it. The nice thing is you can decide for yourself if you plan early on!

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