header.search.error
A sound investment strategy will allow you to achieve a good income even in retirement. Planning for this should begin well in advance of retirement.
When you reach retirement age, not only does your life situation change, but so do the conditions under which you manage your finances. In place of your salary, you receive either a pension that is often lower, or a lump sum. On the other hand, your expenses usually do not change that much or are simply spent on other areas of life. With a targeted investment strategy, you can avoid financial difficulties.
Investing your assets can be a way to maintain your lifestyle or pass your wealth on to the next generation. This is particularly helpful if you need to use your existing savings over the years to cover upcoming expenses. Although investments also carry risks for retirees and returns cannot be guaranteed, you should not overlook the opportunities that investing offers. We’ll show you how to find the best strategies for your financial situation.
Life expectancy in Switzerland has risen in recent years to 86 years for women and 82 years for men. Since 1 January 2024, the standard retirement age for most people has been 65. Despite the higher retirement age, retirees can enjoy their retirement for longer, but they also need more capital to cover their expenses over a longer period. To ensure that life in old age matches the standard of living during your working years, it is important to take a realistic look at living expenses after retirement.
Income from the OASI (pillar 1) and your occupational pension fund (pillar 2) is generally 30 to 40% lower than your final income before retirement. An early budget analysis can help avoid future financial shortfalls. It allows you to track your regular expenses and assess, even before retirement, whether they will decrease or increase in the future. You should consider the following expenses:
The latter will increase over the years, especially if care and nursing costs arise. You should also take into account the financial burden of taxes and the inflation rate. You must also factor in large, onetime expenses if you wish to fulfill one or more long-held dreams during retirement.
When you think about your retirement, you are faced with some important decisions. Let’s draw up a plan together based on your personal wishes, so that nothing stands in the way of a relaxed financial future.
When investing your assets in retirement, you should take a planned approach and define appropriate goals. Experts believe that two main goals become relevant when investing in later life:
To achieve these goals, it makes sense to define three strategies:
This model makes it possible to ensure the necessary liquidity while taking advantage of investment opportunities.
When you retire, it makes sense to ensure that your retirement savings are transferred to your personal assets in the most advantageous way possible. The choice between a lifetime annuity and a (partial) lump-sum withdrawal has a significant impact on your future financial and asset situation.
When planning your finances for the post-retirement period, it becomes easier to decide whether part of your pension savings should be paid out as a lump sum. You have a onetime opportunity to choose whether you wish to receive your pension fund assets in the form of a lifetime annuity, a onetime lump-sum payment, or a combination of both. If you retire gradually in several stages of partial retirement, you can make this decision for each stage.
The decision of whether to receive a pension or a lump-sum payment from pillar 2 depends on a number of personal factors – there is no one-size-fits-all solution. One option is to use the following rule of thumb: Recurring fixed costs can be covered by a fixed pension, and the remaining retirement savings can be withdrawn as a lump sum.
When you retire, you need to adjust your personal risk profile and investment strategy to your new circumstances – in other words, the focus shifts from building wealth to preserving and drawing down your assets. The best approach here is to proceed in two stages and divide your assets into a consumption portion and a growth portion.
If the benefits from pillars 1 and 2 are not enough to maintain your desired standard of living in retirement, you’ll need to save more. Find out how much today.
If you’d like to invest part of your retirement savings in your later years, you should know exactly how much you’re entitled to and how much money you’ll need as a retiree. What are your living expenses? Are there any other fixed costs? What dreams do you still want to fulfill? What sources of income or savings do you have? Have you factored in a potential loss in the value of your capital?
Also consider how your living situation will change over the years. Many retirees move into a nursing home in their later years or need to renovate their home to make it more age-appropriate. It is advisable to build in a buffer for all anticipated costs and to consider in advance how your invested assets should be used later on. You should also consider what tax changes you will face when you reach the reference age. In any case, it is important that all fixed and unexpected costs are always covered and that your investment strategy does not put you in financial difficulty. Consulting with experts who can review your planning with you can minimize this risk.
An important aspect of any investment strategy is managing your own risk. How much of a loss can you financially withstand? How comfortable are you with risk? Generally speaking, the more risk you take when investing, the higher both your potential gains and losses can be. Your risk profile also plays a crucial role as you age. You should never take on so much risk that you can no longer cover your expenses or jeopardize your retirement savings.
To ensure this, diversification can be the key to balanced risk management. This involves combining a wide variety of investment types to offset the losses from some with the gains from others. If your portfolio consists of broadly diversified investments that combine traditional and alternative forms, the risk of loss is reduced accordingly.
While retirement may bring many changes, it’s still worth investing even after you’ve retired. This allows you to either grow your assets enough to ensure greater financial security or to leave a sufficient inheritance for your heirs. To achieve this, it is advisable to start preparing early with comprehensive financial and estate planning.
This serves as the basis for decision-making when planning for retirement and helps you find the right investment strategy. You should also consider the level of risk you are willing to take when investing and which investment vehicles are suitable for your portfolio. Consulting with experts can help you make the right decisions in this regard.
Arrange an appointment for a nonbinding consultation, or if you have any questions, just give us a call.
Disclaimer
