Early retirement – many would like to take it, but only few can afford to. The earlier you take early retirement, the more you need to set aside for it.
Taking early retirement requires long-term planning. You have to make sure that you maintain the right balance between your income and your outgoings. When you take early retirement, your income is reduced but your costs of living remain largely the same.
Making up for losses
Financial difficulties can be avoided by compensating for a reduction in income by taking measures related to your private pension (third-pillar savings) or by making additional contributions to your pension fund.
You need to decide whether you want to draw your AHV pension early. However, you can do this only up to a maximum of two years before you reach the statutory age of retirement. For every year that you draw your pension early, your statutory pension is reduced by 6.8%. So if you retire two years early, your pension will be 13.6% smaller – for the rest of your life.
You should also plan when to withdraw the assets from your 3a pension planning accounts. Unlike life insurance products, they are not paid out on a set date, so when you decide to withdraw them may have a positive impact in terms of the one-off capital tax they are subject to.
You also have to take a careful look at your mortgages, as the reduction in your income may mean that the bank no longer considers a mortgage to be affordable.
Professional advice recommended
Make sure you plan your early retirement in time and seek professional advice. The experts in our Centre for Pension Planning deal with retirement-related questions on a daily basis and are happy to share their expertise and comprehensive advice with you. Get in touch with our Centre for Pension Planning. Our experts will be happy to help.