Budgeting 100k/year is ok. It’s a luxurious retirement, but you are free to do so. You mention to be 50-55 in 3 years, so right now 48-53. In 12-15 years you are going to receive AHV, up to what 45’000 per married people? Are you including it in your calculation?
That means your stash needs to generate 55000 chf per year starting from 12 years in the future. The rest will come from AHV. You can generate 55000 with a 2% withdrawal rate (just dividend of ETF) with a stache of 2’750’000 chf. So your goal should be to have in 12 years 2.75 millions. You now have 3.6 millions.
You now need to survive 12 years generating 100k from your non-retirement stache (2.25 milion chf). That is a withdrawal rate of 4.5 %. Is not completely safe, but then in 12 years you are going to receive AHV, +all the cash from second pillar + third pillar + foreign pension fund. So even if with 4,5% you are on the risky side, and you withdraw from your principal, you will fill up the gap with the money from the pension funds.
Congratulation! you made it. You can walk away from your job today. Every day you stay on the job will not help you further, it will only reduce the amount of free time between now and death.
and in that free time you can even work and do some project based stuff at your will.
Just a reminder that was said in some point and is inside my calculations for ER:
If you are not working and living in Switzerland you must pay the AVS (AHV) until the age of retirement. You and your wife.
I took in consideration because is not too much but depends of your fortune, age, etc. Could be something you must think about. There are online calculators to estimate.
Of course, if you quit Switzerland, problem solved.
Thanks Grog. Well, retirement benefits such as AHV is for us an upside. We will not get anywhere near the maximum you mention.probably more like 20 k per year in total, although we have to make that calculation still. We have lived and worked in too many countries (which has been amazing life experiences we will never regret but not good for retirement!)
Well, could we retire now, today? Maybe. But financal capacity to do so is one aspect, being ready and having prepared what to do instead turning on that PC every morning is another. Covid taught me that there is a risk to just have one day follow the other if no stimulus. We are not there yet mentally. We also actually like our jobs, it gives us purpose (really!), we work on stuff that improve people and patients lives for real. Also, like to ensure our child on the right educational path before… we could not just start travelling tomorrow even if what we wanted.
The growing urge is that we become acutely aware of is that life holds no certainty. One may get cancer tomorrow or a serious accident. And every day our capacity - and even more scary - the itch to see the world and adventure is diminishing.
Such is the dilemma and perspective for us on FIRE. I imagine many of you have the same (internal) dialogues?
If the work still feels meaningful, than it is another story. But is all flowers and unicorns? You work for big Pharma.
Were you ever part of projects that got cancelled for financial reason or other? Even if they were meaningful projects? It happened to me in my last job at a mulitnational firm. It was frustrating.
[old text, rude from me, I didn0t want to imply he had to do it. Sorry, written too hastily: Never once did you had to cancel a project that could impact people life just for some economic justification?]
Fact is, life does not stop if you are financially indipendent. You can start your own business, you can stop working, you can do stuff that impacts people life.
I’m interested to know what are your thoughts on your child and higher education. Is he interested in university? Are you going to pay all thw stuff or asking him for contribution as “education”? I’m wondering what I’m going to do with my daughters, if it comes to that. I worked and studied at the same time, and lived very frugally. My parents only payed my krankenkasse. It was not easy, but educational. Should I do the same? Or is it selfish if I have the means to let my daughters study without working?
Kind of rude to question someones work without knowing what they actually do.
While it might be true that pharmaceutical companies sometimes refrain from doing good because of financial reasons, you have to remember that the vast amount of good that they do do is because of “economic justifications”.
Thanks all for the input. Our pillar 2a has minimum 1% and a historic 2.5%, why I use 2%. It does not make a big difference in the next 3 years anyhow, while yes, the 5% on ETFs does. So that could throw the target off.
A tax-saving tip: if you can buy into the pension 2 while in Switzerland, it will save you income tax. Your buy-in into pension 2 will be taxed if withdrawn within 3 years; after that time you can take it out when living in a tax-favorable country. Just make sure to transfer it to a Freizügigkeitskonto in a canton with low taxes for your amount.
I’ve just made a quick simulation on each canton’s taxes calculator and it said I would still pauy about 4-5k more in Lausanne than in Basel-Stadt.
But then I realized that Basel-Stadt’s calculator deducts some stuff from the Nettolohn in order to calculate the taxable income whereas Vaud’s asks for the taxable income. I made the numbers match and, magic! Almost identical results, 1.5k more in Basel-Stadt!
And just for self deprecation: 19k less in “high tax Zürich city”.
Did you also take into account Gemeindesteuern ? Because Zurich city as well as Winterthur have one of the highest Gemeindesteuern (and some municipalities just next to it the lowest, which is nuts, because of course they never use Gemeinde subsidized services like bus, culture etc.)
it’s some of the highest in their canton.
Go have a look in french-speaking switzerland and you’ll feel much better.
Example of total income tax burden for a few cities mentioned above (from the confederation comparison tool):
I just semi-randomly selected the parameters. Of course the absolute values depend on the personal situation, but I don’t expect the overall ranking to change much.
What I find really really annoying is that the city of zurich has a 119% tax burden. I would have expected that more than 100% is for special years or something like that, but if you have to pay more than 100% as the main city of a canton, maybe it’s time to raise the taxes on the whole canton…
It’s a good thing (about fiscally) to buy into 2 pension (maybe 2% year but tax deduction)? Or more interesting use that money to buy for exemple ETF Vwrl?
It’s possible to take out some part not obligatory of Lpp(2pilar) if I leave Switzerland, isn’t?
if I stop working and leave Switzerland (for example at 50) I must pay the AVS until the age of retirement (58-65) for have right to receive AVH? Or not necessary?
It depends where you go whether you can still participate or not. But you don‘t have to contribute if you‘re no longer taxed in Switzerland. I think for every year you don‘t pay you get a cut of a certain percentage, so if you don‘t pay for 15 years this will be significant.
Sure it was what I meant. I know general tax is lower in Zurich than in other parts of Switzerland (though you will find a lot of people still arguing too high since high earners are moving to Zug/Schwyz/Uri…) This competition to the bottom won’t end well I am afraid.
Question, do you think you get more services in Basel than in Zurich ? For instance I know that the all-Canton public transport is only 800 CHF in Basel, whereas in Zurich it would be over 2000 CHF/y. I guess it is not that easy to make the whole comparision in the end. Furthermore, taxes for private persons are higer in BS, but might be lower for companies as far as I know(meaning more dividends from Novartis/Roche etc.) Than it becomes a political choice between taxing companies vs. taxing people, and how much service the canton whants to provide for its citizen.
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