It’s worth saving early
Even though retirement planning may not interest you as much when you’re young, it’s important to start thinking about it as early as possible.
The pillar 3a is relevant to you right from the age of 18 when you start earning your first salary, and you should start to set aside a small portion for your pension from then onwards. After all, time is your friend – even small contributions have a big impact over long periods of time, especially with securities savings. The pension assets could also become useful to you sooner than you think, for example if you want to start your own business or dream of owning your own home. By the way, you also save on taxes right from the start!
The example of Jonas and Leon shows the effect you can achieve with a longer savings horizon alone.
Jonas, 25 years
- Jonas starts saving for his pension at age 25.
- He invests CHF 2,400 per year until his normal retirement age – i.e. for 40 years.
- This way, he will have made a total of CHF 96,000 in deposits.
- Jonas has chosen a balanced investment strategy and hopes to achieve a hypothetical annual return of 3.36% (after costs)*.
- His theoretical capital at retirement age is equivalent to CHF 193,000.
Leon, 35 years
- Leon doesn’t think about his pension plan until he is 35.
- By this stage he has a little more money available, and invests CHF 3,200 per year in his pillar 3a.
- He also makes a total of CHF 96,000 in deposits.
- He has only 30 years until his normal retirement age.
- Leon has likewise chosen a balanced investment strategy, and hopes to achieve a hypothetical annual return of 3.36% (after costs)*.
- His theoretical capital at retirement age is equivalent to CHF 160,400.
Both have paid the same total amount into their pillar 3a. Nevertheless, Jonas has higher potential returns thanks to the longer savings horizon, and therefore has CHF 32,600 more at his disposal than Leon when he retires.
*Assumptions: equity component 45%, hypothetical return per year 3.36% (net after costs). The future returns and risks presented here are for illustrative purposes only. Securities savings may fluctuate, the hypothetical return cannot be guaranteed, and tax effects are not included in this forecast.
