Early retirement always entails financial losses. You no longer have an income from your employment and your pension is lower – until the end of your life. It is therefore all the more important to make full use of tax-advantaged options for your retirement planning.
The size of the pension you will receive on early retirement
You can receive your AHV pension a bit earlier, one or two calendar years before you reach the AHV retirement age. But you will receive a lower pension for the entire period over which the AHV pension is paid. For each year of early retirement you will receive 6.8% less. At the same time, you will remain liable to pay AHV contributions until your regular retirement age.
There will also be losses with regard to the pension fund. Early retirees build up retirement capital for a shorter period, and the income from interest and compound interest is lower. Moreover, in early retirement the conversion rate is lower than it is in regular retirement. If you want to take early retirement, therefore, you will have to expect an additional income gap.
Early retirement – our tips
You can close a pension gap by making voluntary contributions to your pension fund, for example. Your pension fund statement indicates the maximum amount you are allowed to pay in. Your pension fund usually sends these statements out annually.
Furthermore, you should take advantage of third pillar private retirement savings. Pillar 3a provides you with the option to build up additional capital in a pension account or custody account. If you have several pension accounts, you can stagger the payout of your assets. You should also examine any further options to build up capital to allow you to reduce the financial losses resulting from early retirement.
Examine the alternatives to early retirement
For many, early retirement entails excessive financial losses. Perhaps you have alternatives? Most pension funds provide the option of partial retirement. Ask your employer whether working part-time is a possibility.