#72 How long is my investment horizon for pillar 3a?

Your investment horizon has nothing to do with the AHV reference age per se. Rather, it depends on your personal investment goals and when you will actually need the invested capital.

Of course, it’s possible that your investment horizon coincides exactly with the period during which the law allows you to withdraw your retirement savings. You might then want to make a gift or pay off a mortgage.

A real-world example: Thinking beyond the reference age

Let’s assume you are 55 years old, have built your own business, and both you and your business are in excellent health. You can easily imagine continuing to work part-time until the age of 75 and not needing your capital to cover living expenses until then.

In this case, your investment horizon spans twenty years. This justifies a riskier investment strategy with a correspondingly high allocation to stocks.

It could harm your overall performance if, instead, you were to rigidly align your investment horizon in pillar 3a with the AHV reference age of 65. With a supposed investment horizon of only ten years, you would likely invest more conservatively and hold more bonds.

Staggered withdrawals and «reallocation»

What you can do starting at age 60 is what’s known as «reallocation»: You begin to close one of your 3a accounts and reinvest the money directly into your non-pension assets using the same investment strategy. You repeat this step at age 61, 62, and so on. In any case, you should withdraw your retirement assets in stages as much as possible to avoid being fully subject to progressive taxation.

What happens in the event of a stock market crash?

No one likes to realize losses. But even if the withdrawal coincides with a stock market downturn, it’s not the end of the world: If you withdraw the money from your pillar 3a account and reinvest it directly in your non-pension assets, you’ll seamlessly participate in the subsequent market recovery.

This approach even offers tax advantages, since the capital withdrawal tax owed depends on the amount withdrawn from the 3a account – and this amount is correspondingly lower when stock prices are low.

A holistic investment strategy

Whether it’s retirement savings or personal assets: At True Wealth, we manage your assets using a holistic, personalized investment strategy. That’s why it doesn’t matter for your investment horizon and strategy which «pool» your capital is currently in. To ensure you can withdraw your 3a assets flexibly in staggered installments later on, we automatically set up multiple 3a accounts for all clients.

Can you also imagine continuing to invest your capital beyond the age of 65? Send me an email.