#19 How to invest after retirement?

Holistic wealth planning also includes the time after retirement. But should you still invest after retirement and if so, how? In the following blog post, we look at the advantages and disadvantages of the various options and provide an insight into how you can best invest your money after retirement.

Lump-sum withdrawal: flexibility and responsibility

Swiss law allows pension funds to make lump-sum withdrawals, but these must amount to at least a quarter of the mandatory pension assets. However, many pension funds even allow a lump-sum withdrawal of up to 100%. This means that you can withdraw some or all of your pension assets as a lump sum on retirement. It is therefore worth reading the pension fund regulations to find out how much is possible in a specific case and when this step must be registered. With some pension funds, this is the case up to three years before retirement.

The advantages of lump-sum withdrawals are obvious: they offer more flexibility in terms of investment decisions, may allow a lower tax rate than pension withdrawals and open up additional opportunities to provide for spouses and descendants. However, there are also disadvantages to consider. Lump-sum withdrawals require more responsibility in terms of asset management and long-term income planning. In addition, there is no guaranteed pension for life, which requires careful financial planning.

When does a lump-sum withdrawal make sense?

The decision for or against a lump-sum withdrawal depends on various factors. It is advisable to make this decision on an individual basis, taking into account your own risk tolerance and financial situation. If money is tight after retirement, a lump-sum withdrawal may not be the best choice. However, it can make sense if there are other financial reserves in addition to the pension fund and AHV. Whether a lump-sum withdrawal is worthwhile in purely mathematical terms depends to a large extent on the return with which you manage your capital after the lump-sum withdrawal.

The right investment strategy after retirement

There are a few basic principles when it comes to investment strategy. The traditional 1×1 of investing teaches us that with a longer investment horizon, riskier investments such as equities should be in the portfolio. In view of increasing life expectancy, which in Switzerland is around 20 years for men and 23 years for women after the age of 65, the investment horizon after retirement is often longer than expected.

Four points are particularly important in the context of capital withdrawals:

1. Create a budget and consider how much income you need to generate with your capital.
2. Determine your risk tolerance, as this will influence the expected return.
3. Diversify your investments according to your risk tolerance.
4. Keep the costs of your investments as low as possible.

The path after retirement opens up new financial challenges and opportunities. Capital withdrawal is an option, but one that should be chosen carefully and based on personal preferences and risk tolerance. The right investment strategy is crucial and requires careful planning. If you are unsure, it is advisable to seek professional advice.

I hope this overview provides you with valuable insights and guidance. Feel free to share your thoughts on the subject with me, or ask further questions by e-mail.