The previous three posts of the series covered the three pillars of retirement in Switzerland:
In this final post of the series, I’m going to summarize over the entire system. I’m also going to talk about how early retirement works in this system.
Continue reading “The three pillars of Retirement in Switzerland – 4. Summary”
I started this series with details about the first pillar. I then continued with information about the second pillar. This post will cover the last of the three pillars, the third pillar. This pillar is the only one that is not mandatory. Everybody is free to choose to invest into the third pillar or not. It is simpler than the second pillar. But there are much more choices than you can make. In this post, you’ll find all the details you need to invest into a third pillar. And also, what you can do to optimize your use of the third pillar.
Continue reading “The three pillars of Retirement in Switzerland – 3. The third pillar”
We have studied the first pillar and Switzerland three pillars system in the previous post in the series. Now, it’s time to see the second pillar. The first pillar cover the basic needs of everybody. The second pillar is here to cover a larger part of your salary than the first one. If you never worked, you’ll never pay anything for this and you’ll never receive anything from this. It is significantly more complicated than the first pillar. In this post, I’m going to try to give you as much important details as possible on the second pillar. I’m also going to try to help understand what you can do to improve it.
Continue reading “The three pillars of Retirement in Switzerland – 2. The second pillar”
Switzerland retirement system is based on a system with three pillars. Each pillar is paid in a different manner and will cover different needs. If you are working in Switzerland, it’s important to know these three pillars. This will help you plan your retirement.
In a series of posts, I’ll try to give you enough information on these three pillars. The goal is that you have a good understanding on how they work. And also what you can do with them to improve your retirement. In this first post of the series, I’ll introduce the system and talk about the first pillar.
Continue reading “The three pillars of Retirement in Switzerland – 1. The first pillar”
I’ve been monitoring my net worth since October 2017. But I’ve not considered my second pillar into it. Why ? Because I don’t get a monthly report on my second pillar. However, I don’t really need it since I can extrapolate from the monthly results. I just was too lazy before to do it.
I decided to stop being lazy and do it. Let’s see how (and why) I did it.
If you need, first take a look at how to calculate your net worth.
Continue reading “How to integrate second pillar in my net worth”
For the first time, I’ve computed my Financial Independence (FI) ratio. In this post, I’m going to explain to you what is FI and how to compute your FI ratio.
First, what is Financial Independence (FI) ?
It’s when you have enough money to sustain your lifestyle without working. For this, your wealth must generate income. And this income must be greater than your expenses. The main way to generate income from your wealth is simply to withdraw from it. However, you need to withdraw little enough to sustain your wealth for the longest time.
You may have heard of the 4% rule. It states that if you only withdraw 4% of your investment portfolio, it should sustain you for at least 30 years. This percentage is your Withdrawal Rate (WR) or Safe Withdrawal Rate (SWR). These rules assume that you invest your portfolio in the stock market. Generally, the rule assume 75% stocks and 25% bonds, but the asset allocation is up to you. 4% is the recommended SWR, but some people choose to be more conservative (<4%) or more aggressive (>4%). I am a bit more conservative and my SWR is 3.5%.
Now I got my SWR, how much do I need to be FI ?
In fact, it’s pretty easy. By dividing 100 by your SWR, you’ll have the number of years of expense you should save. For instance, for my SWR of 3.5%, I have to accumulate 28 years of my annual expenses. If you think your expenses are going to go up or down in the future, you should also account for that. You should use the amount of expenses you plan for FI. So, your target net worth is 100/SWR times your annual expenses.
Continue reading “How to calculate your Financial Independence (FI) Ratio”