Annuity or lump sum? This is almost always the first question people ask. Yet it belongs at the end. First, you need to clarify what your assets should do for you after your last paycheck: cover your expenses, provide a reserve, remain accessible, and last for 20 to 30 years.
Two questions are at the heart of it: Are your ongoing expenses covered for the long term? And is there still flexibility left for travel, family, or care later in life? Here's the math: your annual expenses minus your AHV and pension fund annuity. Whatever remains is your gap. It has to be covered from your assets, year after year.
AHV and your pension fund provide predictable income for life. Pillar 3a, vested benefits accounts, personal savings and investments, and home ownership create reserves and flexibility. Neither is better than the other. If you lock everything in, you often tie up too much capital. If you keep everything flexible, you depend on the markets.
Early retirement, partial retirement, or working longer all shift your income, benefits, taxes, and liquidity at the same time. If you stop working earlier, you have to fund years without a paycheck and usually receive lower pensions. The key decisions are made in the five years before you retire.
AHV, pension funds, vested benefits accounts, and Pillar 3a each follow different rules. If you clarify this too late, you may end up planning with money you can't access yet, or you may miss opportunities to stagger your withdrawals.
Only now can this question be answered meaningfully. An annuity provides predictability for life. A lump sum stays available and can be passed on to your heirs, but it has to last a long time. As a rule of thumb, CHF 100'000 in capital provides an annuity of around CHF 5,000 to 7,000 per year. Often the sensible answer is a combination: an annuity to cover fixed costs, and the rest as a lump sum.
A large share of your wealth is often tied up in your home. After you retire, the bank assesses affordability based on your retirement income. Paying down a large part of the mortgage may seem like the obvious move, but every franc you put into the property is no longer available as a reserve. The goal is to find the right balance between your mortgage, housing costs, and liquid assets.
Taxes: All lump-sum retirement withdrawals made in the same year are taxed together, and for married couples this includes both spouses' withdrawals. If you spread them over several years, they often stay in lower tax brackets. In our example, with CHF 250'000, this saves around CHF 2'700 in Zurich and more than CHF 4'600 in Schaffhausen. And your family: which pensions remain if one partner outlives the other?
It answers three questions: What will fund your standard of living? How much freedom will you have? What needs to be prepared in advance? Three buckets make this visible: what you'll need over the next five years stays within easy reach. What you'll need later can be put to work. That way, every franc has a job to do.
Anyone who engages with these questions usually notices quickly that the individual technical terms are not the hard part – how they interact is.
A conversation can help you put your own situation in context, with a view to benefits, asset structure, tax consequences and the sensible next steps.
Because good retirement planning answers more than what is possible. It also shows what each piece is meant to do. If you would like to put your situation in context, let us look at it together.
We take a holistic look at your situation – benefits, wealth structure, withdrawal times, tax impact – and show you what decisions need to be prepared at what time.
