Financial planning for retirement is unavoidable, so the earlier you plan, the better--especially for your peace of mind. We believe three of the most important factors to consider are health, time-management and the one we will explore in this article, money. Let's concentrate on regular retirement and leave early retirement planning for a future issue.
In Switzerland the regular retirement age is 64 for women and 65 for men. There are three main sources to fund your retirement. They include the state retirement pension (pillar 1), which is paid in the form of a life-long annuity.
If you have worked, then you probably have the mandatory company pension (pillar 2), which is paid in the form of a life-long annuity or a one-off cash payment. The terms of the one-off payment and how to apply for it depend on the company pension fund provisions, which can be obtained from the employer.
In addition to the aforementioned pillars 1 and 2, the remainder of your accumulated wealth--including property is often the most significant.
List of assets
To begin with it is important to understand how much you have, how much and when you will need it, and how to withdraw this capital in accordance with regulations to ensure that you are taxed efficiently. Once a list of assets is established and a budget and time-scale calculated then a risk-profile should be determined.
As an expat if you moved to Switzerland after age 25, when pension coverage begins, you probably have the option to purchase the missed years from your pension fund. You can make one-off or repeated payments for the missed years, and the payments, while limited, are deductible from your taxable income.
Assuming you have started planning by age 50, you will have around 15 years until retirement. Most banks understandably recommend significant levels of equities or stocks in a portfolio with a duration of ten years or more, however for retirement savings I prefer a balanced portfolio, including bonds, unless a client wants a more aggressive approach.
Your advisor will assist you in determining your investment strategy, bearing in mind diversification options. The strategy outlines how the money should be spread across the various asset classes.
Most expats aim to repay their mortgage by retirement. If you are set to receive a significant pension and income from your property and investments then in most cantons a certain amount of mortgage or loan debt is...