Our goal is FI in 3 years, we have set 5 M CHF as our target. We wish then to travel for 2-3 years and see what life brings. We are unlikely to remain domiciled in Switzerland forever, although we at least wish to reside here tax-wise during our travel years.
We are both employed. The following numbers are somewhat rounded but within 95%, I guess I could spend an hour or two to get the exact numbers…
Our combined annual pre-tax income from our jobs is 800k CHF (including average bonuses, RSU values, car allocation, all of it) and the take home is net 475k after selling RSUs (So obviously we are not in the best Canton tax-wise, back to this later). On top of the mandatory (+ max elective additional contributions) pillar 2a, we save 355k CHF per year (75% savings rate). Currently we invest as follows: Pillar 3a (13K), additional Pillar 2a buy-back (115k) and the rest in low cost ETFs.
Our expenses are ~ 10K/month.
Rent 4K
Health insurance for family 1K
Food 1K
Travel 2K
Transport, incl public, car insurance, gas, maintenance 0.5K
Cleaning 0.3K
Media 0.1K
Clothing 0.2K
Other: Internet purchases, skiing, sports, gifts, restaurants… 0.5K
No house, no debt. One car that we own.
Net worth: ~3.2M CHF:
Cash: 150K
ETFs: 2.1M
Pillar 2a: 600K
Pillar 3a: 50K
Foreign pension funds: 300K (low cost, tracing index)
RSUs are unvested, so not included into net worth
The plan looks like this assuming 5% annual return from ETFs and 2% from pillar 2a:
End2020: 3.4M (bonuses and RSU already paid out this year)
End 2021: 3.9M
End 2022: 4.5M
Mid 2023: 5.0M (by mid 2023 RSUs and bonus paid for the year)
The plan is to move to Zug in 2022, so that we will be taxable there for 2022/2023 and also for wealth tax and if/when we get pillar 2a out as a lump sum (potentially in 2026/27) upon a move outside CH. In Zug, we get commute longer to work but tax simulations show we can save 10K/month in tax (excluding pension contribution effects for a moment). That saving is not reflected in the above numbers so an upside.
Questions:
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Does our budget make sense? It feels like we are spending a fortune. Travel is important and although we could go lower this is probably one of the last things we would reduce…
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Does it make sense we invest that much in pillar 2a? We do it because we save on taxes and that our companies give minimum return - it is our safe part of the net worth, for the rest we are all in ETFs and therefore fully exposed to the ups and downs of the stock market…?
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in 2021, I plan to add even more in pillar 2a to maximize taxes. But then in 2022/2023 we plan to stop any extra pillar 2a contribution completely because the move to Zug, which lowers the tax benefit of pillar 2a contribution. Instead, we’d save in cash & ETFs. Does this make sense?
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Weaknesses in our plan or thinks that could be optimized?