Retirement planning in Switzerland

Retirement planning is a comprehensive exercise that requires coordinating all your resources: the 3 pension pillars, your private wealth, your real estate and your life plans. Well planned, your retirement can be financially comfortable and tax-optimized.

Step 1: assess your retirement needs

The first question is: how much do you need each month? The 70-80% of last salary rule is a good starting point, but your actual needs depend on your lifestyle:

Expenses that decrease

• Social contributions (AHV, DI, LPP, 3rd pillar)
• Professional expenses (transport, meals, clothing)
• Mortgage (often repaid or reduced)
• Tax burden (generally lower income)

Expenses that increase

• Health (health insurance premiums, unreimbursed care)
• Leisure and travel
• Home help or home care (as you age)

Use our retirement capital calculator to determine your savings target.

Step 2: take stock of your resources

1st pillar: AHV pensions

Order your individual AHV account statement to find out your contribution years. The maximum pension in 2026 is:

• Single person: CHF 2,520/month (CHF 30,240/year)
• Couple: CHF 3,780/month maximum (CHF 45,360/year)

Learn more about the 1st pillar (AHV).

2nd pillar: pension fund

Request your pension certificate from your pension fund. It indicates:

• Your current retirement assets
• Your projected annual pension at age 65
• Your buy-back potential
• Capital/pension options

Learn more about the 2nd pillar (LPP).

3rd pillar

Take stock of your 3a and 3b assets:

• Number of 3a accounts and accumulated amounts
• 3a or 3b life insurance contracts and surrender values
• Current investment strategy and expected return

Simulate the growth of your 3rd pillar with our 3rd pillar calculator.

Free assets and real estate

• Savings and investments outside pension
• Value of your property and mortgage balance
• Other expected income (inheritance, rental income, etc.)

Step 3: identify and fill the gaps

Compare your projected resources with your needs. If a shortfall appears, here are the available levers:

Step 4: optimize withdrawal taxation

Staggering withdrawals is the key strategy to minimize capital benefits tax:

Optimal withdrawal calendar

1. Age 60-62: withdrawal of the first 3a accounts (one per year)
2. Age 62-64: withdrawal of remaining 3a accounts
3. Age 64-65: withdrawal of LPP capital (if capital option chosen)
4. Age 65: start of AHV pension and LPP pension (if pension option)

For couples: coordinate withdrawals so that both spouses' capital is not withdrawn in the same year (joint taxation).

Estimate the tax on your withdrawals with our withdrawal tax calculator.

Step 5: prepare practical aspects

Real estate and mortgage

• Is your mortgage sustainable with your retirement income?
• Should you amortize more before retirement?
• Does the bank require amortization at retirement?

Health insurance

• Premiums continue to increase with age
• Right to subsidies depending on your retirement income
• Consider supplementary insurance before it is too late

Will and advance directives

• Update your will and beneficiary clauses
• Draft advance directives (power of attorney in case of incapacity)
• Inform your loved ones about the existence of your pension assets

Recommended planning calendar

Concrete planning examples

To illustrate the planning approach, here are two personas representative of common situations in Switzerland.

Persona 1: Marc, single, gross income CHF 80,000

Marc is 50 years old and works as a technician in Lausanne. He has been contributing to pillar 3a since age 30 and has 3 accounts totaling approximately CHF 120,000. Here is his pension assessment:

• Estimated AHV pension: CHF 2,250/month (full duration, average income)
• Estimated LPP pension: CHF 1,400/month (projected assets at 65: CHF 350,000, mixed conversion rate 4.8%)
• Total 1st + 2nd pillar: CHF 3,650/month
• Estimated retirement needs: CHF 5,000/month (75% of last net salary)
• Monthly shortfall: CHF 1,350/month, i.e. CHF 16,200/year

To cover this shortfall over 20 years of retirement, Marc needs supplementary capital of approximately CHF 324,000. With his current CHF 120,000 in the 3rd pillar and 15 years of maximum contributions remaining (15 x CHF 7,258 = CHF 108,870, plus returns), he should accumulate between CHF 260,000 and CHF 290,000 in his 3rd pillar by age 65. The balance can be covered by his free savings or an LPP buy-back.

Persona 2: Sophie and Thomas, married couple, combined income CHF 150,000

Sophie (48, salary CHF 85,000) and Thomas (52, salary CHF 65,000) live in Fribourg. They own an apartment and have 4 pillar 3a accounts between them (approximately CHF 180,000 total).

• Combined AHV pensions: CHF 3,780/month (couple cap)
• Combined estimated LPP pensions: CHF 2,800/month
• Total 1st + 2nd pillar: CHF 6,580/month
• Estimated retirement needs: CHF 8,500/month (68% of current net income)
• Monthly shortfall: CHF 1,920/month, i.e. CHF 23,040/year

Over 20 years, the shortfall amounts to approximately CHF 460,000. Their optimal strategy: maximize 3a contributions for both spouses (2 x CHF 7,258 = CHF 14,516/year), consider an LPP buy-back for Thomas (who has a buy-back potential of CHF 40,000), and stagger withdrawals from their 4 pillar 3a accounts over 4 different years to minimize taxation. The couple must be careful not to withdraw 3a accounts from both spouses in the same year, as withdrawals are taxed jointly.

Protecting against inflation

Inflation is an often underestimated risk in retirement planning. With an average inflation rate of 1.5% per year, the purchasing power of CHF 5,000 decreases to approximately CHF 3,700 after 20 years. In other words, to maintain the same standard of living, your nominal needs increase by nearly 35% over the duration of your retirement.

Inflation protection strategies

• Invest in equity funds via the 3rd pillar: historically, equities offer returns above inflation over the long term. Even after retirement, part of the capital can remain invested in funds to generate a positive real return
• Maintain a real estate component: property values generally follow inflation, or even exceed it in sought-after locations. Your primary residence provides natural protection against rising living costs
• Plan a safety margin: in your planning calculations, add 10% to 15% to your estimated needs to account for inflation and unexpected events
• Prioritize the AHV pension: AHV pensions are regularly indexed to a mixed index (50% price trends, 50% wage trends). This is partial but automatic protection against inflation
• Avoid all-savings accounts: 3a capital placed entirely in a savings account with a return below inflation loses real value each year. Diversify with investment funds, even after age 50

Inflation impact simulation

Take the example of Marc (persona 1). His needs of CHF 5,000/month at age 65 will become approximately CHF 5,800/month at 75 and CHF 6,700/month at 85 with 1.5% inflation. His 3rd pillar capital must therefore be sized to cover not a constant CHF 1,350/month shortfall, but a growing one. Incorporating inflation, the required capital rises from CHF 324,000 to approximately CHF 380,000.

Common mistakes to avoid

1. Not planning early enough: starting at 60 is too late for major optimizations
2. Withdrawing everything in one year: maximizes tax instead of staggering
3. Ignoring AHV gaps: each missing year permanently reduces your pension
4. Not coordinating pillars: optimizing one pillar without thinking about the others
5. Underestimating inflation: CHF 5,000/month today will not have the same purchasing power in 20 years
6. Forgetting about health: medical costs increase significantly with age

Special situations

Your retirement planning must adapt to your personal situation:

• Couples: joint optimization of withdrawals and taxation
• After a divorce: rebuilding pension after the split
• Retiring abroad: withdrawal conditions and specific taxation
• 3rd pillar withdrawal options: capital, pension, staggering

Retirement planning is a complex but essential exercise. Request a personalized quote to benefit from professional guidance and optimize every aspect of your pension.