AHV Calculation

Banks, Insurances & Third Pillar
1

Hi there

Maybe this board would need a category “(early) retirement”!?

I read quiet a bit about the issue I have and also found some puzzle-pieces but I still strugle “gluing” all pieces together and calculating my “to expect” AHV!

The plan is to retire in 5-7 years, outside Switzerland/EU.

My wife is 5 years younger, we both work now 100%, we make quiet good money and we expect no major changes (ups/downs) regarding income in the coming years.

As I will retire with 58-60 (and my wife then with 53-55) I am now trying to figure out what the best strategy is regarding the AHV.

I know I have to continue paying until regular pension age (and my wife too). As I will leave Switzerland I would pay in the “Voluntary AHV for foreign Swiss”. Then there is also the possibility to get AHV up to 2 years earlier.

What I am looking for is advice (can even be paid/professional) on the best strategy and on how to proceed…

Thanks

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Go here: https://www.acor-avs.ch/conditions

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3

Don‘t get the AHV early if you can avoid it. Otherwise they cut your monthly payments.

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4

There is not much discussion about social security in Switzerland for people retiring early. But there is a lot about it on Bogleheads. It’s American social security, but AHV is extremely similiar too it, so one can come to the same conclusion.

It’s generally accepted that you should take AHV/SS as late as possible. Taking it 2 years earlier will reduce the amount by 13.6% for the rest of your life, taking it 5 years later will increase the amount by 31.5%. So based on a single individual we are talking about 2’065 CHF vs. 3’140 CHF per month, including future inflation-linked adjustments.

I wouldn’t advise to make the decision based on calculations at what age you would get the most out of the system. AHV or social security in general is kind of an insurance. If you happen to live way longer than expected (90+), you make sure that you won’t run out of money with your portfolio.

So if you are 63, your body and your portfolio are in great shape, don’t take AHV. If there is no need for it, just wait.

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5

I wonder what the rules are about married people. Is the % you pay in 1.5x (after RE) because as a married couple you get 1.5x the AHV of a single person?

And what about the age difference? One is legally retired the other one not.

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If only I had a crystal ball… I could look into the future and see how much AHV will be paying in 20-30 years.

Looking at the demographic statistics, the system can’t work much longer, it’s just not sustainable.

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I once had a guy arguing that as soon as the baby boomer generation has died it will get better. Not sure what to make of it. IMHO scrap it asap (easy to say as I‘m still young and have not contributed that much). How would you solve it? Current strategy in politics is throw money at it and raise the reference age (no longer called retirement age).

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Not sure if it was your question but the last paragraph on this page gives some direction how they calculate what you will have to pay,

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One question about missing AHV contribution years.

As per what I understand, if someone was not Swiss resident during applicable AHv contribution years and is also not Swiss citizen, then there is no way to reduce AHV gap.

However , if someone was unemployed for few months during one of the last 5 years, and let’s say 3-4 months of the contribution were missed. Can these be bought ? Or it’s not needed anyways?

Not sure what actually counts -: minimum contribution during 12 month period to AHV or 12 months of minimum contribution.

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Important is to be over the annual minimum contribution each calender year.
A gap of a few months is irrelevant, if annual contribution is ok and if you stay registered in CH.
PS being unemployed and at RAV the AHV deduction/contribution is 5% of unemployment money, as with normal salary, so no gap.

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11

If you were unemployed and also no RAV, then you would have worked <9 months so have to pay AHV on wealth basis and get credit for the employment AHV paid.

Unless you are married and wife pays sufficient AHV to cover you.

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Actually it was just 2-3 month gap between jobs for travel and chill. Not really unemployed. I have requested the statement from AHV to check what it says

Most likely no gap

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This is a thing? I thought you just have to pay the minimum (which is definitely covered by e.g. 4 months salary)? But I only know the situation from students which do not really have wealth. :sweat_smile:

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In this situation a so called “comparison calculation” is executed to determine if your AHV contribution is based on your salary contributions of that year or your wealth. It wouldn’t be on wealth basis in every case.
So if you have earned enough in lets say 4 months and the AHV contributions exceed half of what you would pay on wealth basis then you do not need to pay additional AHV contributions for that year.

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