Retirement income goal
The golden rule of Swiss advisors: aim for 70 to 80% of last net salary to maintain a satisfying lifestyle. Why not 100%?
- You no longer pay social insurance contributions (12% saving)
- You no longer fund pillar 3a (CHF 7,056/year saving)
- Your professional travel and associated costs decrease
- Your taxation is generally more favourable
But some items increase: health, leisure, travel. Plan for 70% for a simple retirement, 80% for a comfortable one.
The three pillars in numbers
Average projection for a salary of CHF 100,000/year with a complete career:
- 1st pillar (AHV): about CHF 28,000/year pension
- 2nd pillar (BVG): about CHF 35,000/year (depends on past contributions)
- 3rd pillar (3a): about CHF 12,000/year if maxed since age 30
Total: CHF 75,000/year, i.e., 75% of last salary. On target. Without pillar 3, it drops to 63% — hence the importance of contributing early.
Planning by decade
30-40 years: lay foundations
- Max out 3a every year (huge cumulative effect over 35 years)
- Choose a high-performing BVG fund when changing jobs
- Build a diversified financial portfolio (global ETFs)
- Acquire a primary residence if stable project
40-50 years: consolidate
- Continue maximum 3a contribution
- Evaluate BVG buy-back possibility
- Invest in continuing education to maintain salary level
- Plan long-term taxation (spreading buy-backs)
50-60 years: optimise
- Regular BVG buy-backs for tax optimisation
- Pension vs capital decision within BVG
- Open a 2nd or 3rd 3a account to spread withdrawals
- Psychological preparation: retirement projects, identity beyond work
60-65 years: transition
- Early retirement decision or not
- Final pension vs capital choice
- Progressive portfolio derisking (reducing equity share)
- Administrative procedures with AHV and BVG fund
Early retirement
Legal retirement age is 65 (men) and 64-65 (women, progressively). You can leave earlier:
AHV: possible from 63 (men) or 62 (women) with a permanent reduction of 6.8% per year of anticipation.
BVG: possible from 58 in most funds, with a discount that can reach 30% (3% per anticipation year).
Total cost of retiring at 60: loss of around CHF 200,000 to 400,000 in income over remaining life. To compensate with solid personal wealth.
Pension, capital or mixed
One of the most important decisions: how to receive your 2nd pillar?
Lifetime pension:
- Absolute security until death
- 100% taxable as income
- In case of death, spouse pension at 60% (then nothing)
- No transmission to children
Capital:
- Total freedom of use
- One-time reduced tax at withdrawal (favourable cantonal rate)
- Risk of mismanagement (high taxes, financial losses, uncontrolled spending)
- Transmissible to heirs
Mixed (50/50, 70/30):
- Combines security and flexibility
- Most frequently recommended solution
The choice depends on your family situation, personal wealth and risk tolerance. Do a detailed simulation 5 years before retirement.
Administrative procedures
A few months before retirement:
- 6 to 12 months before: inform your BVG fund of your intention (date, pension/capital)
- 3 to 6 months before: file your AHV application with the compensation centre
- 3 months before: officially inform your employer
- At retirement: check the first payment, exact calculation, deductions
AHV pays pensions monthly in arrears. BVG pays per your fund's regulations.
Living in retirement
Some tracks to approach this new stage well:
- Stay intellectually active: continuing education, reading, conferences
- Maintain a social network: friends, family, associations, volunteering
- Stay physically active: adapted sports, hiking, walking
- Plan projects: travel, renovations, long-term hobbies
- Give meaning: transmission, mentoring, community engagement
Retirement is the opportunity for a second life, not an end. Well prepared, it can last 25 to 30 years in good health. Investing in this transition is as important as investing in your financial wealth.
