#75 A rough financial plan: This is how much income you'll have after retirement

Imagine the following: You are 45 years old, and your pension fund statement shows a projected retirement balance of 600'000 Swiss francs. After deducting the capital gains tax, you’ll be left with a net amount of around 552'000 francs in the Canton of Zurich, for example.

In pillar 3a, you have already accumulated a balance of 100'000 francs. Assuming an average return of five percent and continuing to contribute the maximum annual amount for the next 20 years, you will reach a balance of approximately 480'000 francs by the time you retire at age 65, after capital gains tax has been deducted.

In addition, since you started saving early, your discretionary assets include a stock portfolio worth 500'000 francs. If you continue to contribute 1'000 francs monthly until you reach the reference age and achieve a return of four percent after taxes, your discretionary assets will grow to 1.46 million francs over the next 20 years.

The overall result after retirement

When all three components are added together, the picture is as follows:

With your pension fund, pillar 3a, and personal assets, you will therefore have approximately 2.5 million francs available for investment after retirement.

Income and taxes in retirement

Invested at a realistic annual return of four percent, this capital of 2.5 million Swiss francs will generate an annual return of 100'000 francs after retirement.

If half of this return comes in the form of dividends and interest, you’ll pay just under 5'000 Swiss francs in income tax on these earnings. On top of that, there’s the annual wealth tax: for assets totaling 2.5 million francs, you’ll pay around 8'000 francs per year in the Canton of Zurich.

In this example, your AHV pension fully covers your current taxes.

Your individual situation

This is a simplified model calculation. In your personal situation, other factors such as inheritances, real estate, home ownership, or running your own business may come into play – as well as individual financial or family obligations.

And one final advice: By staggering the withdrawal of your retirement savings over several years, you can save additional taxes on the payouts.

Have you ever taken stock of your financial situation like this? What questions do you have about your retirement planning? Feel free to send me an email.