Where to live in old age Moving house when you retire can pay off

Four percent of new pensioners currently use their retirement as an opportunity to move. In the study “Where to live in old age”Click here to read the study (in German), the UBS Chief Investment Office assumes that higher real estate prices and rents could cause this percentage to increase further in future.

75 percent of those who decide to move on retirement remain in Switzerland. Five cantons are particularly popular: the mountainous regions of Wallis and Graubünden, sunlit Ticino, plus Freiburg and Thurgau. These last two cantons are particularly popular among people from the neighboring cantons of Vaud and Zurich.

Evaluation of the data gathered shows that the majority of pensioners remain living in a region where the same language is spoken when making a permanent move, and that they choose a canton with lower living costs.

Ten years after retiring, those based in east Switzerland, Ticino or in parts of north-west and central Switzerland have the highest overall assets. The people whose assets have reduced the most are those who chose to live in the canton of Zurich, one of the two Basel cantons or most places in west Switzerland.

Real estate prices are also high in expensive cities like Zurich, Basel and Geneva. The same applies to Zug and popular vacation destinations in the Bern and Wallis Alps and Engadin.

In the highest-priced regions, buying a property of the same size will mean less money left over for living costs. Should a financial shortfall occur, this will reduce the value of the property, even though it is possible to economize on non-essential home maintenance. Under some circumstances, liquidity shortfalls could make selling your property necessary.

Someone who withdraws money from their pension fund as capital – rather than as a pension – pays capital withdrawal tax on the chosen amount. In our example and across Switzerland, this tax makes up around 12 percent of overall expenses over the 10-year period on average.

While the differences between cantons are modest when withdrawing CHF 1 million, the situation is very different for a withdrawal of CHF 2 million: in the cities of Zurich and Bellinzona, around CHF 100,000 more than the average for the rest of Switzerland will be owed solely due to progressive taxation. The amount of capital withdrawal tax can be partially reduced either through semi-retirement or, in the case of married couples, by spreading the capital withdrawals over several years.

In the example, income tax in retirement accounts for an average of eight percent of total expenses, significantly less than when working. Capital tax accounts for five percent of expenses. Pensioners in French-speaking Switzerland and in the two Basel half-cantons tend to pay higher income and wealth taxes. Central Switzerland, Appenzell lnnerrhoden and parts of Graubunden on the other hand are very attractive from a tax perspective. Tax rates are especially relevant to those retiring with an above-average income and a lot of assets. In this case, living in central Switzerland would be beneficial.

Important: You can't move to another canton shortly before retirement, make a one-off pension fund withdrawal, then move back to your old canton, as the tax office would consider this to be tax evasion.

Along with health insurance premiums, “other living costs” account for two-thirds of all expenses – the biggest item by far. In this regard, the canton of Ticino is the cheapest place to live in old age. However, health insurance premiums tend to be lower in German-speaking Switzerland than in other parts of the country. The highest cost of living is found in several cantons in central Switzerland, Zurich and Geneva.

Where you live after retirement has a considerable influence on the proportion of your assets that will remain at your disposal. But not everyone who moves after retirement chooses their new home purely for cost reasons. Your personal situation, for example proximity to family members, also plays an important role.

It's a good idea to get to grips with the question of how to optimize your place of residence early on, especially as demand for housing suitable for pensioners increases. By the end of the decade, many baby boomers will reach normal retirement age, which will increase the number of new pensioners by 25 percent.