Costs in old age Retiring with 1.5 million francs - is that enough?

According to a study, the average middle-class couple from the baby boomer years retires with assets of CHF 1.5 million. That should be enough for a nice retirement - right?

Keystone-SDA

27.09.2024, 07:08

SDA

The VZ Wealth Center is addressing this issue and has examined the pension situation of around 2,200 households in Switzerland. The group of middle-class households includes couples aged between 60 and 68 with an annual gross income of between CHF 100,000 and CHF 214,000.

The study showed that many of them underestimate their assets, especially the large contribution made by their pension fund.

This is because monthly payments into the second pillar account for almost 60 percent of assets - if you don't own your own home, VZ calculates. And even for households with residential property, almost 40 percent of assets are still invested in occupational pension schemes. In addition, most people make voluntary payments into pillar 3a.

Large majority own their own home

Many also invest part of their savings in the untied pillar 3b, hold securities and a certain amount as liquidity in savings and private accounts as well as in a vested benefits account, for example by switching pension funds. All in all, excluding real estate, the median assets amount to a good CHF 1 million.

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In addition, 86% of the households surveyed owned their own home, which is also included in the calculation with a median value of around CHF 1 million. Four out of five households had a mortgage, which had a median value of CHF 480,000. After deducting this mortgage, the VZ arrives at the above-mentioned amount of just over CHF 1.5 million at retirement age. This median value means that 50 percent of households have less and 50 percent of households have more assets available at the time of retirement.

Costs in old age higher than expected

However, this seemingly generous sum must also cover all costs incurred until the end of life. And for many, these are higher than expected. This is because professional costs such as commuting to work, special clothing or meals away from home are largely eliminated. However, with more free time, you also have more time and opportunity to spend money or fulfill long-delayed dreams.

The cost of supplementary health insurance is also rising. Not forgetting taxes, which remain a significant expense item.

The experts show that on a conservative calculation, a couple between the ages of 65 and 90 will need assets of more than one million francs for housing costs, taxes and all expenses in addition to the AHV pension.