Retirement Planning your retirement as a woman

We answer the key questions about pension planning to help you make the most of your retirement.

10 Jun 2021
Women face particular hurdles when it comes to saving for their retirement.

In Switzerland, women generally live four years longer than men. However, normal retirement age for women is one year earlier – at least for now. This means that women face a particular challenge when it comes to saving for their retirement. Compared to men, they earn less on average and are more likely to work part-time. As a woman, your retirement planning will begin from a different position to that of men; you would do well to review your position accordingly.

In order to maintain their desired standard of living in old age, women should start planning their retirement early. The three pillars of retirement planning – AHV, the pension fund and private savings – must be considered here.

In this article, we provide guidance and answer the crucial questions about the AHV, AHV pensions, pension funds, the age at which you will retire, early retirement, delaying your retirement and much more.

Retirement age: when can women retire in Switzerland?

The retirement age for women in Switzerland is lower than that of men. Women usually retire at 64, and men at 65. However, this could soon change. Given that women retire earlier and have a higher life expectancy, their pension is paid out for longer, which puts financial pressure on the AHV.
The AHV is a pay-as-you-go system, meaning today’s pensions are mainly financed through the contributions paid by those currently in work and their employers. This system dates back to demographic conditions of a time when life expectancy was lower.

Standardizing the retirement age as 65 for both men and women in Switzerland is also part of a government project to reform the AHV (AHV 21).

Life expectancy: how should you plan your retirement knowing that you will depend on your pension for longer?

The following tips and measures can help you maintain your standard of living in retirement:

  • Start planning as early as possible: Ideally you should look into your pension at a young age, taking into consideration all three pillars: AHV, the pension fund and your private pension. We cover concrete steps you can take to strengthen each pillar in our article “Trust is good, control is better”.
  • Take heart in the knowledge that you can already start benefiting today: Saving for your retirement now won’t just benefit you in later years, it will also let you save on taxes today. Payments into pillar 3a up to the annual maximum amount of CHF 6,883 can be fully deducted from your taxable income in Switzerland (as of 2021). You can find more tips in our article “How to save on taxes”.
  • Invest in a private pension: A private pension not only offers tax advantages, it also allows you to invest your pillar 3a savings in pension funds, which offer additional potential returns. Do you want to improve your private pension while also doing something good for society and the environment? Find out how to do this in our article “Sustainable investment in retirement savings”.

Pension gaps: what can you do about them?

Women are far more likely than men to work part-time and they also earn less on average. This leads to insufficient capital in their pension fund and a significantly lower pension. Did you know that one in four retired women has no pension fund to rely on? Learn more in our article “One in four women has no pension fund”.

Steps you can take:

  • Place the amount that you would save for your retirement if you were in full-time employment in diversified investments, such as an investment fund. A fund account boosts your chances of higher earnings compared with a savings account. Spreading the risk across different securities will also minimize the impact of any market fluctuations.
  • Start investing for your retirement as early as possible in order to take advantage of cumulative returns. If you take a career break or switch to part-time work, do not stop saving for retirement but continue to pay in the same amount as before if possible.
  • Do not rely solely on your partner’s pension. In principle anyone who is insured receives their own AHV pension. This is usually far higher for men than for women. Many women do not notice this as they rely on their partner for financial support. Even if you can’t imagine not having your spouse at your side forever, you should never be entirely reliant on them for support.

How can I retire early? What if I want to postpone my retirement?

Finally more time for your family and projects? While many people would like to retire early, some women see work as a source of motivation and fulfillment and would like to work beyond normal retirement age. Both are possible with the right planning:

  • Early retirement: Contact your AHV office to find out whether you can withdraw your AHV pension and to organize your early retirement. You can withdraw private retirement savings (pillar 3) as a lump-sum capital payment no earlier than five years before reaching normal retirement age.
  • Learn more about early retirement in our article “Early retirement? Let us show you how.”
  • Deferral: If you choose to work beyond normal retirement age, you will continue to pay AHV contributions on income above the tax-free limit of CHF 16,800 per year or CHF 1,400 per month. However, you will no longer have to pay unemployment insurance (ALV). You can delay payout of AHV benefits for up to five years, allowing you to receive higher AHV benefits, depending on the length of the deferral. As long as you continue to work, you can also keep paying into pillar 3a, though you can only defer payout of the funds for a maximum of five years after normal retirement age.

I’m about to retire – what do I need to do?

If you are about to retire you need to do the following to receive your AHV pension (pillar 1) and benefits from your occupational and private pension schemes (pillars 2 and 3, respectively):

  • Register your entitlement to an AHV pension (pillar 1): Your AHV benefits are not paid out automatically. You need to request payment by writing to the AHV office to which you last paid contributions.
  • Drawing your occupational pension (pillar 2): You must decide whether you want to receive your retirement savings as a pension, lump-sum payment or a mix of both. Benefits from pillar 2 are usually paid out as a pension. However, you may also want to receive part of your pension credit as a lump sum. Ask your pension fund about the different modalities. Both options (pension or lump-sum withdrawal) have their benefits and drawbacks. The option you choose will depend on your personal situation and retirement needs, which is why a mixture of pension and lump sum is often chosen.
  • You should also check with your pension fund how soon before retirement you need to register a (partial) lump-sum capital withdrawal.
  • Private pension benefits (pillar 3): Funds from pillar 3a cannot be accessed until five years before normal retirement age. It is worth withdrawing your 3a funds in stages to prevent progressive taxation, though this is only possible if you have opened several pillar 3a accounts.

Be proactive about your retirement planning

Would you like to be able to make your dreams a reality in 10, 20 or even 30 years’ time? With the right preparation, you can maintain a good standard of living in retirement. Our “Retirement” learning path can help you.

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