“Retirement” learning path: module 5 of 5

1. Define your desired standard of living

To enjoy the lifestyle you want in retirement, realistic planning is essential. The key question is: how much does your desired standard of living cost – both now and in retirement?
You may be wondering why your current lifestyle is also relevant to your future. There are two reasons for this: firstly, your current lifestyle determines your savings rate, which has a major impact on your ability to accumulate assets. And secondly, we know that most people do not experience a significant drop in their living costs after retirement.

To get a clear view of your budget, you should consider the following factors:

• Living costs: how do you want to live in the long term? Do you envisage yourself living in a rental apartment or owning a home? What might your rent or mortgage payments plus ancillary costs look like?
• Insurance costs: what insurance coverage do you need now and in the future and what will it cost?
• Leisure and travel: what do your current leisure activities and travel plans look like? How much do you expect to travel and enjoy leisure activities after retirement?
• Cost of living: How much money do you need day to day? Groceries, telecommunications, subscriptions, car, etc. These are costs you generally still have once you’re retired. 
• Taxes: how much tax do you currently pay – and how might this go up or down if your income increases or decreases in the future? What future tax payments could arise (for example from inheritance or capital withdrawals upon retirement)?
  

Solid budgeting helps you to realistically assess your desired standard of living and identify potential pension gaps in good time. Use our template to get started with an initial overview: download our budget template here as an Excel file.

You can also find more in-depth information on budgeting and asset accumulation in our “Financial basics” learning path.

2. Keep an eye on your AHV

The AHV forms the foundation of your retirement provision. However, gaps can also occur here that may impact your retirement pension. That is why it is all the more important to know your own contributions precisely and to check early on that all information is correct.

What to do:

1. Order an up-to-date AHV account statement from your compensation office.
2. Carefully review the entries: are the contribution years, your income details and your income per contribution year correct? Pay close attention to the deadline for corrections. If you discover an error, you must report it to the compensation office within 30 days. Only then is it possible for the information to be corrected retroactively.
3. Starting at around age 50, it also makes sense to request a pension forecast. This way, you will know early on what to expect.

Ways to optimize your first pillar:

• Make retroactive payments: if you have contribution gaps from the past five years, you can still make up for the missing payments. To do so, contact your compensation office directly. After the five-year deadline, it is no longer possible to make retroactive payments.
• Work longer: delaying your AHV pension increases your pension for life. A deferral can last between a minimum of 12 months and a maximum of five years. You have the option to defer the entire pension or a portion between 20% and 80%. A one-time increase in the chosen portion is also possible. You must apply to defer your AHV retirement pension no later than one year after reaching the regular retirement age (reference age).
  

3. Optimize your pension fund

Your pension fund is the second key pillar of your retirement provision. In general, the more retirement capital you accumulate in your pension fund, the better. We recommend carefully reviewing your situation in the second pillar by around the age of 50 at the latest. Doing so will mean you will often still have time to close any potential gaps in a targeted manner.

Take a close look at the insurance certificate issued by your pension fund and check the following:

• Your retirement benefits
• Your benefits in the event of disability or death (risk coverage)
• Your maximum possible buy-in amount
  

What you can do:

• Make buy-ins: additional payments into your pension fund not only increase your retirement capital, but also come with attractive tax advantages. This can be particularly worthwhile after reaching the age of 50 when planning horizons become shorter. Important: before making a buy-in into your pension fund, assess the financial stability of the pension fund, for example by checking the funding ratio. Information in this regard can be found on your insurance certificate or can be obtained from the pension fund (e.g. in its annual report). It is also advisable to plan your buy-ins over several years. This will allow you to optimally utilize the tax advantages while evenly spreading out the financial impact. If purchases were made, the resulting benefits may not be withdrawn from the pension as capital within the next three years. If capital withdrawals are made within this period, the tax advantage will generally be reversed by means of a supplementary tax.
• Contribution options: check whether your pension fund and your employer offer different contribution models with varying levels of contributions. If you choose an option with higher savings contributions, you will increase your retirement capital accordingly.
• Clarify whether you would like a pension or lump-sum payment: no later than a few years before reaching retirement, you should clarify whether you would like to draw your pension fund assets as a pension, as a lump-sum payment or as a combination of the two. This decision depends on your personal situation and is final. You can find further information in this regard in this article.
  
• Notify your pension fund in good time: if you wish to withdraw your pension fund assets or part of them as a lump sum, you must inform your pension fund accordingly in good time. Ask your pension institution early on how far in advance of your retirement this notification must be submitted.
• Take a tax-efficient approach: do not withdraw funds from your second pillar in the same calendar year as you withdraw funds from pillar 3. This will allow you to significantly optimize your tax burden in connection with your retirement.
• Plan together: if you live in a partnership, it is worthwhile to take a joint look at both partners’ pension situations. This will help you make optimal use of opportunities and close any gaps together.

4. Make full use of pillar 3a

With the third pillar, you can build up additional retirement capital in a targeted manner and optimize your tax burden in the process. Those who start early on and contribute regularly benefit the most in the long term.

Your options:

• Make regular contributions: consistent payments into restricted pillar 3a solutions help you to steadily build up assets – in no small part thanks to compound interest (particularly when the capital is invested). You also benefit from tax advantages every year. If possible, contribute the maximum amount of CHF 7,258 (as of 2025 for persons without a pension fund) to take full advantage of the potential.
• Invest in pension funds: by choosing a pillar 3a investment solution, you can benefit from additional return opportunities. This is especially worthwhile if you have a long investment horizon.
• Use multiple 3a solutions: ideally, you should have multiple 3a accounts , portfolios or policies. This will allow you to draw the saved capital on a staggered basis later on, helping you to optimize your tax burden upon retirement. Generally speaking, it advisable to open a second 3a solution once your existing solution reaches CHF 50,000.
• Plan for staggered withdrawals: starting five years before you reach the reference age (as of 2025: 65 years for men and also for women from 2028), you can begin to withdraw your pillar 3a funds in stages. Plan for this early so that you can optimally spread the associated tax burden. Be sure to also factor in a potential capital withdrawal from your second pillar.
• Close any gaps retroactively (possible from 2026): starting in 2026, the first time, under certain conditions it will be possible to retroactively make up incomplete contributions to pillar 3a from 2025 – an additional tool to close pension gaps and enjoy tax benefits.
• Optimize together: if you live in a partnership, it is worthwhile aligning your pension planning together. For example, your partner can also make contributions to your pillar 3a. This can make sense, for example, if one person has a lower income due to childcare responsibilities.
  

5. Set up an advance care directive and succession arrangements in good time

It is not only financial planning that is essential – it is also important to clarify legal matters early on: with early succession planning and arrangements in case of loss of capacity of judgment, you ensure that decisions will be made in your best interest and that your assets will be passed on in accordance with your wishes.

What you can do:

• Create an advance care directive: with an advance care directive, you define who will make decisions on your behalf if you lose capacity of judgment – for example after an accident or due to an illness. This helps to prevent uncertainty or disputes within the family.
• Draw up a will: a will allows you to determine how your assets will be distributed after your death within the legal framework. Without having a will in place, intestate succession will apply, which may not reflect your wishes.
• Prepare a living will: a living will allows you to set out in advance your wishes as regards your medical treatment should you lose capacity of judgment. It ensures that your wishes will be respected in the event of an emergency. It will also relieve your loved ones of the burden of having to make decisions on your behalf.
• Consider a marriage inheritance contract: in certain life situations – such as in blended families, if you are self-employed or have substantial assets – it might make sense to consider a marriage or inheritance contract. Be sure to seek advice tailored to your individual situation.
• Set up a cohabitation contract: do you live in a partnership but are not married? With a cohabitation contract, you can define financial matters, property ownership as well as mutual rights and obligations.