Giving your savings to your children: Ten mistakes to avoid when packing

Retiring early is expensive. If you work one less year, your annual salary will be less and your AHV pension will be reduced by 6.8 percent over your lifetime. Your second pillar pension actually drops twice: First, your pension capital is smaller than if you had paid in for a year longer. Secondly, this capital must last one year longer; The pension will also be reduced accordingly. As a general rule, you need approximately one year’s salary for each year you retire early to offset all losses. So win the lottery on time! Plan B: Start saving.

Living rent-free and debt-free in old age sounds good. But it’s not free. If you want to reduce your mortgage more than the bank requires, you should be willing to do so. If you use around 100,000 francs of PK money for depreciation, your mortgage will be 2,500 francs cheaper per year at a 2.5 percent interest rate. But if you use this capital for a PF pension, you will receive 5,000 francs more in pension each year with a 5 percent conversion rate. If you take taxes into account, you should calculate in advance which one is better in the end.

Towards the end of your working life, purchases into your retirement fund are particularly valuable; The later it is, the more profitable it is. If you later withdraw the money as a lump sum rather than as a pension, it will be even more profitable from a tax perspective. But be careful: after making a purchase, you are not allowed to withdraw any PF capital for three years – up to full term – otherwise you will have to pay back the tax savings with interest. If you also have a balance in Column 3a, you must have paid this off in the year before your retirement. Otherwise, more taxes may need to be paid. All capital withdrawals in a year are added together to determine the tax rate.

It’s hard to believe, but it’s true: even if the state knows exactly when you will turn 65, the AHV pension does not flow automatically from then on. For it to work safely, you must first register with the compensation office, ideally three to four months in advance. Conversely: If you do not want to receive AHV for now (e.g. if you are still working), you must also notify AHV in writing. Otherwise, you will not receive any additional payment for the deferment that you are actually entitled to; you will only have to pay the normal AHV.

Most in savings accounts, some in bonds: This is where many people put their money away for old age. You can do this, but you can also do better. If you invest as you plan, your money will return more and last longer. At 65, you don’t need everything right away; Some of it can be left invested for a longer period of time. The longer you need it, the larger the equity portion can be. This is because stocks can be subject to strong fluctuations in value in the short term, but almost always provide better returns than other investments in the long term. That’s why you should split your retirement assets into several pots: Everything that will be needed soon goes into a savings account. The only thing you will need after 20 years is to invest in stock funds.

The political goal is to reach 60 percent of final wages with pensions from the first and second pillars. But is this really enough to maintain your standard of living? You no longer have to commute to work and eat out. Since your income is less, you have to pay less tax. However, you should not exaggerate this effect because you will no longer be able to deduct professional expenses and column 3a. This doesn’t mean you’ll need it less when you retire, either. Your health care costs will likely increase, and you’ll also have more time to spend money.

Those who do not have enough money for retirement or a nursing home receive support from the state. For this reason, many people think of giving their savings to their children in advance. However, under certain circumstances you may lose your right to additional assistance (EL). Because that’s why the given assets are counted as if they were still there. 10,000 francs are deducted from this every year, but no one who leaves a house worth a million to his son will not receive EL for decades. No one is left under the bridge, so there is definitely social assistance. However, their approach is deeper than EL, so a single room or salon visit may no longer be possible.

In case of divorce, PF assets accumulated during marriage are divided. Depending on the situation, your retirement savings may be significantly reduced. One consolation: You can repay this amount and deduct it from your taxable income. But explain whether your PR sets a deadline for the purchase. By the way: If you want to withdraw your capital when you retire, the three-year blocking period is not valid for buybacks made due to divorce. But don’t wait too long, otherwise this could be considered illegal tax avoidance. Ask the authorities in writing.

They followed all the recommendations. You’ve calculated the budget, drawn up a financial plan – then you get sick, your company goes bankrupt, or your husband wants a divorce. Your retirement plan is nothing but waste paper because no assumptions or numbers are accurate anymore. In the worst-case scenario, this is also a financial disaster. But you shouldn’t be shocked. Instead, analyze the new starting situation as soberly as possible and examine the options for action: Are there any bridging benefits provided by the government or insurance companies? What can you do to improve your financial situation before retirement? Where can you compromise on the budget? Adapting your retirement plan to the new reality is not a pleasure, but a necessity that will pay off.