#44 How do I withdraw my assets properly?

Investing and watching your assets grow is relatively easy. But when you enter the “third phase” of your life and decide to give up work, you need a new strategy. While some people don't retire until they are 80, others stop working at 50. Another trend is evident in the choice of retirement provision: more and more people are opting to withdraw their pension capital as a lump sum and manage it themselves.

The depletion of assets

If you invest your retirement capital in the capital market and regularly withdraw amounts for living expenses, this is referred to as a savings plan. This raises two key questions:

1. How long will my assets last and will they be sufficient until the end of my life?
2. How much can I withdraw each year without using up my capital too early?

Since no one knows exactly how long they will live, various scenarios can be calculated. Our asset depletion calculator is a helpful tool for this.

The right investment strategy in the decumulation phase

Many investors prefer bonds or stocks with high dividend yields during this phase, as these are often considered less volatile. This is frequently motivated by a desire to leave the substance of the assets untouched. However, a strategy involving growth stocks or a broadly diversified, market-weighted stock index may make more sense in the long term.

There is an important tax advantage here, particularly for investors in Switzerland: Switzerland is one of the few countries without capital gains tax. This means that the market returns on stocks that reinvest their profits in their own growth remain tax-free – unlike dividends, which are taxable as income.

Have you already thought about your strategy for retirement? Or are you in the comfortable position of being able to live solely off the income from your assets? Send us an email with your feedback.