Usually only noticeable years later A mistake in thinking costs senior citizens a lot of money

In Switzerland, thousands withdraw their pension fund capital in full every year - and then simply park it in an account. Experts warn that the supposedly safest solution can become the most dangerous in old age.

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The moment of retirement is a turning point in life for many Swiss people - also financially. Instead of a monthly salary, they suddenly receive a large amount from the second pillar, depending on the type of lump sum withdrawal: 150,000, 200,000 or 300,000 francs and more. According to experts, this is precisely where crucial mistakes are made.

In a recent study on savings and investment behavior, the Lucerne University of Applied Sciences and Arts shows that a considerable proportion of retirees simply park a large part of this capital in their account.

With a view to long-term development, this is problematic, says HSLU professor Simon Amrein: "In individual cases, there may be good reasons for this. For example, if you want to make a major investment in the near future, such as renovating a house, or if you no longer expect a long lifespan."

In principle, however, it is more of a problem to simply store the money in a savings account. "If a person lives for another 20 years from the time they draw their pension and doesn't invest the money, they miss out on the corresponding returns. These returns would be realized if the money remained in the pension fund."

Problems only become apparent in years

The calculation behind this is simple: if the money remains in practically non-interest-bearing account balances for decades, inflation eats away purchasing power year after year. The nominal amount remains the same - but in real terms you can afford less and less.

If the capital shrinks in real terms, the problem becomes very real later on. "If this person's assets are used up more quickly towards the end of their life, the corresponding state benefits from supplementary benefits have to be used earlier," says Amrein.

"Fear eats up returns"Every second person leaves money lying around and doesn't realize it

David Kunz, CIO of the BX Swiss Exchange, observes the same patterns in practice. For him, it is clear why many retirees do not invest their capital. "It is often due to a mixture of uncertainty, fear of loss and excessive demands," he says.

From a psychological point of view, this is hardly surprising. "Such emotions and the need for control ensure that money in the account is subjectively perceived as 'safe', even if it objectively brings hardly any return."

Kunz warns against underestimating the risks of the account. "Short-term fluctuations in securities are overestimated and the risks of 'doing nothing' are underestimated." This caution can be dangerous, especially in retirement. "Although the nominal amount remains in the account, you can afford less and less in real terms," he says.

Excessive demands are often at the center

When 150,000 to 300,000 francs or more suddenly end up in your account, people react very differently. Kunz observes three patterns that occur particularly frequently.

Many people do nothing out of fear and leave the money lying around. Others invest hastily in individual securities or "hot tips", driven by greed or herd instinct. And many view capital in isolation, without embedding it in an overall plan.

"Psychologically, many focus on the current amount," says Kunz. "Liquidity requirements, taxes, existing pensions, mortgages or the desired standard of living in old age are not taken into account enough." This results in strategies that contain either too much or too little risk - and both can be expensive later on.

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Patrik Schär, CEO of digital asset manager Selma, also sees excessive demands at the heart of this. "The reason is often uncertainty," he says. "According to our customers, the decision to invest pension capital instead of parking it in an account is often one of the biggest financial decisions of their lives."

The new situation after retirement is complex. "Ultimately, the money has to last until the end of your life, and the new situation when your income stops is complex," says Schär.

Those who don't know how long the money will have to last or how it can be structured understandably make defensive decisions. "Paradoxically, this is often the riskiest option in the long term, because how do you close potential pension gaps and protect yourself against inflation?"

Fear is the greatest danger

Schär emphasizes the importance of transparency. "Retirees today are often still treated like they were 25 years ago." Many have been using apps and digital tools for a long time, but hardly get any up-to-date support.

Digital tools could help to prepare scenarios in an understandable way and make structured decisions. "Retired people shouldn't have to make this big decision alone," he says. "But they need the right mix of advice and technology." Selma, for example, has developed its own retirement mode that links available capital, expected life expectancy and real needs.

Expert Kunz also warns against underestimating one's own life expectancy. Many people unconsciously assume that the money does not have to last for decades. But anyone who has to finance 20 to 30 years needs a strategy that works over long periods of time.

"Too much security in your account can be less secure in the long term than a sensibly diversified investment strategy that matches your own risk profile," says Kunz. Inflation reduces purchasing power, assets do not grow with it and ongoing withdrawals further accelerate the reduction.

The experts therefore come to a clear conclusion: the greatest danger to pension fund capital is not market movements - but fear, procrastination and the desire not to make mistakes.