Retirement is getting to be more and more enjoyable as time moves on. Technology keeps advancing, so do techniques that can keep us in great shape. Humans mostly used to spend their retirement years in poor health, due to not having the same options, or planning badly. Retirement in great shape demands good, early, proper planning. Imagine spending that period with great mobility, tons of energy, and a happy attitude! Who wouldn’t want that, especially since all of a sudden you’ll have more time than you’ve had for a long time. It’s most certainly important to keep busy during that possible, why not do so while being in the shape of your life!
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Life expectancy in Switzerland is 82.2 years. This puts the Confederation in second place in the world rankings behind Japan with 82.7 years. This is very good. And it is particularly pleasing that Switzerland is also at the top of the rankings when it comes to health in retirement. However, in order to be able to enjoy this third stage of life, retirees must also be in good financial health. This requires early planning as well as consideration of aspects such as housing, leisure, and health.
According to the constitution, the aim of the AHV and pension fund is to enable the insured person to maintain his or her usual standard of living at retirement age. As life expectancy has risen and the prospects for returns on the stock markets have fallen, the Federal Council has already lowered the minimum interest rate on pension fund capital several times – from 4% initially to 1.5% currently. In addition, over the next twenty years, people born in the years with the highest number of births will retire. Ultimately, this means ever lower pensions. But complaining about this will not help. It is better to pay close attention to personal retirement planning from the age of fifty.
What do you still want to achieve in life, what goals do you still have?
Preferably draw up a budget. This works as follows: write down all monthly expenses (rent or mortgage interest, health insurance, telephone, personal care, leisure activities, car leasing, petrol, public transport). Enter quarterly, half-yearly or annual expenses (insurance premiums, taxes, holidays, health). In a third step, build up reserves (doctor, dentist, repairs, children’s education, children’s wedding, important birthdays). Determine the large sums you will need in the short term (a new car) and those you will need in five or ten years (investments in the house, cooking, hobbies such as photography, horses). And now the hard part: think about what expenses you could give up if any (clothes, eating out, holidays, entertainment). The next step is to write down your income (salary/pension, side jobs, income from securities, and real estate).
It is essential to include a line item for dreams and projects: write down something totally crazy that you would have done with enthusiasm in your life (world tour, boat, language stay abroad). Being fit when you retire also means doing good, eating well, moving around, and setting yourself new challenges. Make sure you have enough time and money for this. Saving on this front is bad saving. Find out how much money you can put aside based on your income and expenses – or whether you will ultimately have to dip into your nest egg.
Working beyond retirement age or taking early retirement?
If you still feel mentally and physically fit and wish to continue working beyond retirement age, you can defer the payment of your pension. While the pension will decrease by 6.8% per year if you take early retirement, it will increase if you do not. In five years, the increase amounts to 31.5%.
From house to an apartment
A key question that every homeowner will have to think about is whether it makes sense to continue living in the big family home when the children have long since left the nest. Often it is more practical, and more financially viable, to move to a condominium. There is also savings potential in insurance. The health insurance scheme should be looked after. If finances permit, supplementary insurance should not be terminated at the time of retirement. It is a fact that illnesses and disabilities increase with age. It is therefore reassuring to know that the financial aspect at least is not a cause for concern. The management of assets is a delicate point. Should the capital of the pension fund be paid out in full or in part – or should you opt for a regular pension? The general rule is that an annuity is a good solution for people in excellent health with a high life expectancy. For people who are not used to managing large sums of money, an annuity is also a comfortable and more secure alternative. On the other hand, a lump-sum payment provides more flexibility for expensive projects. Tax-saving solutions can also be put in place. In addition, the capital can be bequeathed.
As you can see, retirement planning is very complex. The big winners are those who take advice from a reliable financial advisor.