I am planning my retirement for early 2034 (at age 65) and would appreciate a critical review of my DIY strategy. My goal is to manage everything myself via Interactive Brokers and cost-effective ETFs, completely avoiding expensive financial advisors. I actually had an offer from VZ, but they are asking for 1.15% to 1.25% total fees every single year…
Context & Personal Situation:
Age: 57 (Retirement planned for February 2034)
Location: Switzerland, Canton Aargau (AG)
Status: Living in a domestic partnership (Konkubinat), expenses are shared, testament is written and 2nd and 3rd pillars are informed about the partership.
Cash Reserve: 100,000 CHF (rainy-day fund), kept completely separate on a savings account, never invested.
Savings Rate (2026–2031): 17,400 CHF/year to IBKR + 7,000 CHF/year to Pillar 3a VIAC Global 100 (monthly inflows, dividends are 100% reinvested during this phase).
Savings Rate (2032–2034): 12,000 CHF/year to IBKR + 7,000 CHF/year to Pillar 3a VIAC Global 100.
Pillar 3a Strategy: 5 separate accounts at VIAC, which will be dissolved in a staggered manner from 2030 to 2034 to break the tax progression in Canton AG snd will be transferred to IBKR
Final Asset Allocation 2034 with IBKR: 75% VT / 17.5% CHSPI / 7.5% SPMCHA (Targeting broad global growth with a 25% Swiss CHF dividend anchor for the withdrawal phase).
Expected ETF Depot at Retirement (Feb 2034): ~420,000 CHF (calculated using exact monthly compounding at 5.0% Total Return during accumulation).
Retirement Phase (Starting 2034):
Target Budget: ~96,000 CHF/year gross (indexed for inflation at 1.5%).
Fixed Guaranteed Income: Pension Fund (PK) Rente 35,000 CHF + AHV Rente 29,000 CHF = 64,000 CHF/year (both starr, not indexed for inflation).
Starting Income Gap 2034: 32,000 CHF (rising by the rising budget because of inflation, see above)
Dividend Strategy: From 2034 onwards, the 2% dividend yield will be fully paid out and used for consumption to help cover the income gap (dividends will NOT be reinvested anymore).
My Dynamic Withdrawal & Risk Strategy:
The Cash Tent (2034): At retirement, I will withdraw 160,000 CHF from my Pension Fund as a lump sum. Together with the Cash Reserve of 100k, this 160k builds a temporary cash cushion of 260k.
Phase 1 (2034–2040): The inflation/income gap is covered by the 160k PK cash and the 2% distributed dividends. Since dividends are paid out, the ETF depot value itself only grows by the assumed 3.0% price growth in the background.
Phase 2 (2041+): Once the temporary cash tent hits the 100,000 CHF floor (which happens during 2040), active ETF sales kick in. Expected ETF Depot at the start of Phase 2 (Jan 2041): ~485,000 CHF. From here on, we sell equities to cover the remaining gap (Total gap minus distributed dividends).
The Crash Protocol: The remaining 100k cash is my ultimate safety net. If, for example, a major market crash (-40%) occurs after 2040, I will immediately freeze all ETF sales, permanently reduce our lifestyle budget by 12,000 CHF/year, and burn through the 100k cash. This buys the crashed ETF portfolio 3 to 4 years of pure recovery time without forcing any capital liquidations at the bottom. Smaller crashes would be handeled by smaller steps.
According to my backtesting, this setup should carry us until the age of 87, maybe 90 in average market environments, and until about 85 in bad market environments. The calculation was made under the assumption that we spend the whole budget including inflation every year until 87. We probably will not use all of this.
My Questions to the Community:
Would you follow such a plan or do you see risks that are too high?
Does this “Cash Tent” combined with the “Crash Protocols” look solid to mitigate Sequence of Returns Risk (SRR) for a Swiss resident?
Is a 5.0% nominal Total Return in CHF (split into 3% price growth and 2% dividends) a reasonable baseline for a 75/25 World/Swiss allocation over the next 15–25 years?
Looking forward to your brutal feedback and optimization ideas!
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Given the high volatility allocation, did you try modelling based on outcomes instead? (Maybe Monte Carlo or similar)
What you want is the actual odds of success, not the whether you succeed in a median scenario (and given past over performance a reversion to the mean wouldn’t be surprising).
are these only your own personal finances? Or do they include your partner as well?
eyeballing your anticipated withdrawal rate, it seems to be about 5%. That’s substantially higher than more conservative estimations for longterm sustainability - especially since it‘s in CHF (which has lower nominal returns than the USD used in many calculations/ studies recommending a lower withdrawal rate.
5% nominal returns are reasonable for a stock portfolio. On average. But your risk is sequence of returns. Which seem underestimated to me here.
these are my own personal finances. Unfortunately our only ones…
good point and I’m aware of that. If market is running well, it’s a chance, if the situation is bad, we have to reduce our budget. But we would have to do so anyway with or witout an advisor and maybe as well with another allocation. What would you do in my shoes?
I understand your point.
with 480k today, my 2nd pillar with BVK will grow without additional payment to 800k.
Until 2031 there will be 5 additional payments of 25k each to reduce the tax. The final amount will be maybe 930k. If I take this, I have to pay about 75k tax. Of course I could split it, but then I have to stop additional payments earlier and lose the tax profit, that was meant to invest.
In the end I would have a base of 100k reserve +855k from 2nd pillar +420k IBKR = 1.375m
If this money is used completly before I die, there is nothing left. I will be a candidate for the social care. If I still have a small rent and the 1st pillar, I maybe can manage my life myself and maybe get some “Ergänzungsleistungen”. Of course I would think different, if I’m facing strong health problems before 2034.
You are a bit at the risky side, If you were maried, i wpudl consider putting more in the second pillar. But the big Problem is: what if you die early? Your partner wpnt get any AHV nor Pension Fund annuity. In my view, your forst priority should be to adress this. The second one - your cost seems rather hogh? Or did I get it wrong, what total cost of living do You forecast?
I would NOT eithdraw second pillar or invest less, just to make that clear. You don‘t have the risk capacity, excess capital and Stock market experience for that.
Our costs are high, you’re right. They are calculated for 2034 with 96k. But for 2 persons and for a start with the goal, not to reduce our lifestyle as long as it is not necessary.
My Partner will get the whole money of the 2nd pillar and all the rest, if I die before 2034. And a small pension and all my captial, if I die after. Maybe we will marry later. But first: one of us has to divorce .
The budget is made out of the actual situation with the logical changes in life, when you are not working anymore. There are changes in tax reductions, there are a inflation driven higher health insurances, less expenses for business lunches… All of it checked by VZ advisors. The budget is high because we want to keep our lifestyle if possible. But of course we have to reduce costs if the situation is bad. So far I think the details of the budget are not really important. We have ideas, what we could change and were we can reduce costs.
But what budget would you think is apropriate for a retired couple, renting an appartment in Switzerland?
A few comments / observations, some related to your questions / others to think through:
Budget: everyone has a different ones based on their needs / spending power
withdrawal rate: traditional retirement models suggest 4% withdrawal rate with very high probabilities of success. This is based on USD. CHF is likely lower 3-3.5%
You are quite above it. You aren’t describing about having kids or sort (or wanting to pass money down). Regardless, I think it’s not a bad idea to take annuity in your situation
3 reasons: a) it’s a form of derisk; b) as you get old it will be difficult to manage money yourself (welcome dementia to all of us at some point or diseases that can it difficult to manage capital); c) you don’t want to pass money down
money/capital mgmt: see above point, this is one of the things I would be most scared especially if it’s only you and your partner. Also, is your partner able to manage money.
I would recommend to plan, for a given, to change the structure or further simplify that you would receive money / dividends in your bank account, without any need of selling ETFs or rebalancing
psychological stress: plan is aggressive but also do you have experience to operate and rebalance under stress. Or risk to panic. I think this is one of the biggest issue
divorce: you mentioned this. I guess you assumed that these won’t further dilute your savings or savings potential
projections: are these realistic? What are the risks of lower savings? Or opposite, can you save more?
rent: I am always skeptical of not owning my roof at old age. Obviously in CH is difficult. But is France an alternative?
have you thought about old age care? Do you have CH citizenship? Assuming you or your partner require it. Can you finance this?
life insurance. Have you modeled what? Hospital coverage or not? And how to cover high healthcare costs later in life in case of need.
spending. I suggest to look at studies about overall spending levels during retirement, both FR and CH. My gut feeling is that composition of times may chanfe but I don’t know if you may require less in the 80-90 years old window than previous decade
FX: a France solution would provide benefits for FX exposure, assuming CHF will continue to appreciate, that isn’t a given
Taxes. I assume you included taxes in all your budget projections? Did you? If you are on French size of CH, those are quite high
overall, It seems to me that you and your new partner found yourself and want to plan future life together after some mutual challenges. The desire is there and why all this calculation efforts, but the numbers aren’t realistic. The exercise was helpful To think: a) can I save more aggressively? B) can I think about some alternatives , both budgeting or location? C) overall money/capital Mgmt
If I were in your shoes, I would think about either a more aggressive saving plan, lower spend, or run the numbers with a retirement in France rather than CH.
Look, it can worked out, especially if we get a market downturn soon, so that you catch up a renouncing or bull market wave. But there is a risk that you may run out of money before
Unless you’re owning your home (which there’s no indication of) it seems way too high - particularly the relatively low amounts of invested capital (outside of pension schemes) I can only infer from your original post. Now, I’m a lazy guy and won’t calculate the compounding returns that are merely an assumption anyway, and neither will I bother about (minor, in the grand scheme) inflation indexing. But for quick back of the envelope calculation…
According to your original post, this figure includes
your pillar 3a savings (which “will be transferred to IBKR”) of currently CHF 130,000
future 3a contributions over 9 years, i.e. CHF 63,000.
6 years * CHF 17,400 savings rate, i.e. about CHF 104,000
3 years * CHF 12,000 savings rate, i.e. about CHF 36,000
5% of (presumed) annually compounding returns over the next 8.5 years
From what I can infer, you’re starting with a current asset value at IBKR… of close to zero?
With your only savings outside of mandatory pension schemes, i.e. pillar 1 & 2 currently being
a CHF 130,000 pillar 3a and
a cash reserve of CHF 100,000?
Given your anticipated yearly shortfall of CHF 32’000 between your desired budget and pensions from mandatory retirement schemes and your presumed compound rate of 5%, I can’t understand why you’re keeping as much money earning close to 0% as cash.
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From what I can infer, you’re starting with a current asset value at IBKR… of close to zero?