Retirement planning: Planning for retirement early

Retirement planning for every stage of life.

Planning pension provision early pays off in old age. Those who give regular consideration to retirement planning and make any necessary adjustments have fewer worries about financial security in old age. Keep this in mind so that you can enjoy your retirement to the full later on.

When is the right time to take care of retirement provision?

Retirement provision will be one of the most pressing problems for future generations. Yet many people still only start to think in detail about this issue when they have almost reached retirement age, and by then it may be too late to close any pension gaps and to safeguard the current standard of living for old age.

We recommend that you take a few minutes to review and optimize your own financial planning at each important stage of your life – those who give regular consideration to their own pension provision can achieve a lot for their old age with just a few simple actions but at least every five years and in the event of major personal or professional changes.

Adjusting retirement planning to suit the stage of life

Adjusting retirement planning at every stage of life pays off

Source: Credit Suisse

1. Good retirement planning in the first few years of your working life pays off in more ways than one

Retirement is still a long way off when you first start out in your working life. Nevertheless, young adults can set a course for optimum pension provision with little expense. Once you start earning a regular income, it is possible to close any AHV contribution gaps caused by studies or time spent living abroad within five years of the gaps being created. This is also a good time to start building up a liquidity reserve for emergencies.

Early and regular contributions to Pillar 3a are key to starting to build up your pension provision at a young age – even if the maximum contribution cannot yet be paid in. This is because pension provision in the 3rd pillar pays off several times over in old age, even for small amounts, thanks to the compound interest effect. In addition, insured with contributions paid into a voluntary pension provision can save on tax.


2. Realign your retirement planning when you start a family

When you start a family, your pension provision priorities change. The focus is now also on issues relating to risk coverage in the event of death and disability, which may vary greatly depending on the form of partnership. This means that it is an important time to adjust your retirement planning.

This is particularly important for women, as they often invest more of their time in family life and take a career break or reduce their level of employment. This leads to gaps in the AHV and the pension fund. The reduction in mandatory pension contributions can usually be offset through voluntary measures such as payments into tied pension provision. To ensure that your pension provision is at the same level when you retire as it would have been if you had worked full time without any breaks, you need to implement these measures as early on as possible.

One topic that is not very pleasant for married couples but about which both partners should nevertheless be well informed is how the retirement capital would be divided in the event of a divorce and whether gaps could arise in the private pension provision as a result. Dealing with this issue at an early stage can prevent unpleasant surprises in relation to retirement.

3. Keep your pension provision in mind when buying a house

Many people dream of purchasing their own home. Buyers often use an advance withdrawal or pledge of their own pension capital to do so. In this scenario, it is important that they close the resulting pension gap before retirement.

An owner-occupied home is often considered part of the pension provision itself, as ownership often leads to savings on living costs. For homeowners, indirect repayment of the mortgage via a Pillar 3a account or safekeeping account has interesting tax considerations. Not only can the full mortgage debt be deducted from the taxable assets during the entire term, but the mortgage interest and the payments into the 3rd pillar can also be deducted from the taxable income. This means that homeowners can make two-fold tax savings.

4. Adjusting retirement planning to take account of self-employment or a career change

A salary change, a change of employer or making the decision to become self-employed: Major changes in working life are also key moments for pension provision. This makes it all the more important to really understand the impact on financial planning so that the standard of living can be maintained as far as possible after retirement.

If the possibility arises, the purchase of pension benefits can pay off in two ways: by increasing your own retirement capital and optimizing income taxes. In addition, with 1e pension plans and pension fund solutions, company founders have considerable scope to optimize their own pension provision and tax burden. This allows self-employed persons to tailor their retirement planning precisely to their income situation and also to possibly benefit from higher tax deductions.

5. Review your pension planning at 50

Age 50 is a good time to take another in-depth look at your retirement planning and work out whether you have accumulated enough capital for your retirement: Around ten to 15 years before your retirement date, it gradually becomes possible to identify what your needs will be when you retire and how much capital you will require to meet these needs. At this point, it's still possible to adjust your retirement planning if necessary to increase your pension – leaving nothing standing in the way of your dream retirement.