Bespoke retirement: Switzerland's four retirement models

Retirement is a milestone in your professional life. That is why it needs to be planned well. Whether you choose to retire early at 58 or defer retirement until 70, and whether you take a partial retirement in stages or retire upon reaching the AHV retirement age: Learn about the pros and cons of the different retirement models and find out more in informative articles. These will help you find out which retirement model is best suited to your personal situation.

It's better to think about your retirement today than to put it off until tomorrow. Timely, comprehensive planning is absolutely essential when it comes to choosing the right retirement model. A sensible way to start is by calculating your financial needs after retirement. By comparing your living costs and other expenses before and after retirement, you'll learn whether your financial resources are sufficient for your desired form of retirement. 

Adjust your retirement to fit your needs

Switzerland's Old Age and Survivors' Insurance (AHV) offers insured flexibility when it comes to drawing their pension. Most pension funds allow you to tailor your retirement too, provided their regulations allow it. In addition to entering retirement normally upon reaching the statutory retirement age, you can also retire earlier, later, or in stages.

Each retirement model has both financial and personal consequences that you should be familiar with when planning your retirement. It is therefore worth comparing the advantages and disadvantages of the various retirement models. How much importance you give to each individual point will depend upon your own personal needs. More free time might be the deciding factor for some, while for others, a larger pension may make all the difference.

A comparison of the pros and cons of the various retirement models

Early retirement

(+) More time for your family and hobbies.

(-) AHV benefits are reduced by 6.8% for each year of early retirement; you can retire a maximum of two years earlier. In addition, people who are not part of the workforce must continue to make AHV contributions until reaching the statutory AHV retirement age.

(-) The retirement assets in your pension fund are lower because of the shorter time spent paying in and the lower conversion rate. This equates to an estimated -8% for each year of early retirement. 

Partial retirement

(+) More free time, but you still have partial income.

(-) If you draw your AHV pension early (maximum of two years possible), it is reduced by 6.8% for each year of early retirement. You must also continue to make contributions until reaching the normal retirement age.

(-) You continue to make payments to your pension fund and your retirement assets continue to grow. However, because of your reduced level of employment, your contributions are lower. In addition, benefits (pension or capital) must be drawn in line with your degree of partial retirement.

Normal retirement

(+) Reliable planning and less administration.

(+) Because you work until the statutory retirement age, your pension will not be reduced – apart from any gaps you may have already had in your pension provision.

(-) May not be the ideal solution for your personal situation. The possibilities offered by flexible retirement models are not fully utilized. 

Deferred retirement

(+) The insured receives a percentage increase to their AHV pension, depending on the deferral period (maximum of five years).

(+) If pension fund regulations allow, you may continue to make contributions to your pension fund, increasing your retirement assets. In any event, the assets will also be paid out using a higher conversion rate.

(-) Extended professional life and less free time.

The four retirement models

Early retirement

It's nice to imagine retiring early and having more time for your family and your hobbies. But drawing your pension early has financial consequences. Find out whether early retirement is an option for you. 

To early retirement
early-retirement-planning-for-early retirement

Partial retirement

Partially working, partially already retired: This gradual transition to retirement is offered by an increasing number of pension funds. Read about what to consider when thinking about staggered retirement. 

To partial retirement

Normal retirement

Upon reaching AHV retirement age, retirement benefits from the state, employee benefits insurance, and private pension provision are paid out. Learn which steps must be taken to initiate normal retirement. 

To normal retirement 

Deferred retirement

Enjoying their job and being in good health are reasons why a growing number of people in Switzerland are working longer than legally required. This has financial benefits. Learn how deferred retirement works.

To deferred retirement

Filling the gaps and increasing your retirement assets

Gaps in your pension provision reduce your retirement assets considerably. If you discover gaps in your AHV contributions due to, for example, stays abroad, divorce, or missed payments by your employer, you can take specific measures to address them. Learn what those measures are here.

It may also be worthwhile to make voluntary purchases of pension benefits or payments into Pillar 3a as a way to ensure your standard of living in your twilight years. The best option for you depends on your personal circumstances. You should carefully review the pros and cons of each option.

AHV 21 reform: The changes coming to retirement

The statutory retirement age in Switzerland is currently 64 for women and 65 for men. That is set to change, however, based on a proposal by the Federal Council. The AHV 21 reform proposes gradually increasing the retirement age, now called the reference age, for women to 65. In addition, both sexes will be offered more flexible ways to draw their pensions, sometime between the ages of 63 and 70. With regard to pension funds, politicians are also currently discussing employee benefits insurance reform.

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Careful planning leads to worry-free retirement. We advise you to start making plans when you reach 50. We would be happy to assist you with a no-obligation consultation.