Retiring Outside of Switzerland: Your Swiss Pensions and Finances Abroad
“It’s better to look ahead and prepare, than to look back and regret” – Jackie Joyner-Kersee
2 min read
Retiring Outside of Switzerland: Your Swiss Pensions and Finances Abroad
“It’s better to look ahead and prepare, than to look back and regret” – Jackie Joyner-Kersee
2 min read
Living abroad comes with its own set of unique challenges, including managing pensions, taxes, currency fluctuations, and inflation risks. If you are considering retiring away from Switzerland or have already made the move, it is crucial to familiarize yourself with the specific differences between your chosen country and Switzerland.
Financial Management and Investment Strategy
One key aspect to consider is your future financial management and investment strategy. It is advisable to plan ahead and take into account country-specific differences and your initial financial situation before moving abroad.
The Significance of Inflation for Retirement Income
When it comes to retirement income, three main sources typically come into play:
- State Pension (AVS / AHV)
- Personal Pension fund
- Income from assets
The Swiss Federal Council reviews AVS / AHV adjustments in line with changes in prices and salaries every two years. However, the impact of inflation on your AVS / AHV pension will depend on how prices and salaries change in your new country compared to Switzerland. Additionally, payments from Pillar 2 are generally not adjusted for inflation, which means that inflation can reduce the purchasing power of your pension.
Currency Risks and Mitigation Strategies
Managing currency risk is another important consideration. Both Pillar 1 and Pillar 2 offer the option to receive monthly payments in either Swiss francs or the local currency of your country of residence.
If your income and expenses are in different currencies, you are therefore exposed to currency risk. It is generally advisable to convert only the amount needed for your living costs into the local currency if it loses value compared to CHF. Consulting with Financial Advisers can provide guidance on mitigating currency risks, so get in touch with us today!
Mitigate Double Taxation
Double taxation can be a concern when it comes to pension payouts. If you are already a resident abroad at the time of payment, pension payouts from your personal pension fund or Pillar 3a are taxed at source in the Canton where the your Pension Foundation Provider is based. However, you may be eligible to reclaim this tax or have it credited towards taxes due abroad, provided there is a double taxation agreement (DTA) between Switzerland and your country of residence.
Planning Ahead for Financial Success
Retiring abroad presents a range of financial considerations, but with careful planning and professional advice, you can navigate these challenges successfully. By understanding the intricacies of managing finances abroad, you can make informed decisions and ensure a secure financial future.
So, are you ready for your retirement abroad? Get in touch with us today to ensure all your ducks are in a row before you leave Switzerland.
Contact us now to book your initial, no-cost and no-obligation meeting. Either send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84.
