Your company will pay taxes on the realised gains in value of your assets… Probably a bad deal.
5 Likes
Yes, best to keep assets out of a company. An alternative would be to set up a consulting company on retirement if you might have some post-retirement consulting income, and then take a salary from the company (obvs would be taxable, would have to pay social taxes, pension, etc, so there is overhead and hassle).
1 Like
Yes probably… Unless this company is located in Nassau… And being Swiss and employed by a company outside CH/EU one would be a able to join the “Voluntary Swiss Social System”… But then you most likely would not live permanently in CH anyway… And it would be somewhat borderline (from a moral point of view) 
2 Likes
I asked my insurance provider:
Basic (compulsory) coverage: No rate adjustment allowed based on age. Only young adults under 26 years, do not have to pay the same amount. It undergoes a rate adjustment every year however, this is not personal (so does not depend on illnesses) but depends on the health costs of all insured persons.
Supplementary insurance: The premiums that most health insurers charge for hospitalization cover (eg private ward) increase noticeably every five years. This often results in a heavy financial burden in old age – precisely when you need the best possible cover.
If someone has an existing major illnesses, it is possible that he/she would get a rejection if applying for supplementary insurance for the first time or if applying for higher insurance coverage (e.g. move from semi private to private)
My insurer, SWICA, said they do not reduce existing coverage in the case of illness, which should be law.
SWICA told me they base rates for hospitalization insurance on age when you join, and my premium for private hospital insurance should not be significantly higher in the future
So in my case my premiums should not go up much:
- Compulsory insurance costs cannot increase based on age or deteriorating health
- I am happy with my current supplementary coverage and I trust SWICA on their response that my premiums will not go up much. They have a good reputation and I am already paying them above average monthly premiums
2 Likes
Good summary. I did not say health insurance rises with age, but health costs in general. That‘s one thing to be considered for retirement cost.
2 Likes
Absolutely. I had (via ex employer) semi private insurance for 15 years and only once spent enough to be able to claim anything. If I was paying myself I probably would’ve taken basic cover ~250 chf per month whilst young and studenty as I wouldn’t have minded a shared ward. Now I am a bit older and I can afford it I increased cover to private… probably that is something everyone should budget for ?
1 Like
Cost to pay after Early Retirement: Here is a recap
AVS: 0.2-0.3% of taxable wealth
Health insurance:
-Compulsory insurance: insurers cannot increase premiums with age
-Supplementary insurance: insurer can increase premiums. In my opinion this is something to budget for and I would not stop working early if it means I have to compromise on healthcare as I become older
Taxes
-Income tax on dividends and interest
-Wealth tax. Geneva has highest rate which maxes out around 1% marginal rate(*)
A watch-out is not to fall foul of “professional trader” status. In that case capital gains on share sales are no longer tax exempt.
Confiscatory taxation - I don’t know much about this but the following might be interesting for someone not working and who is worried about high wealth tax. Confiscatory taxation is not allowed per the federal constitution and 7 cantons have specific laws: Genève, Vaud, Valais, Berne, Lucerne, Bâle-Ville and Argovie. The law is different in each.
Example: Currently in Geneva tax should not be >60% of net taxable income. There are safeguards to avoid abuse (bouclier fiscal)
1 Like
I was/am also planning to maintain my primary residence in CH after (not so early) retirement and I have to say that this is probably the point which worries me the most.
I’d like to travel a lot and let’s say spend +/- half time in CH and half time abroad.
If I keep my residence in CH I’ll end up paying (with the costs of today) for me and the wife ca. 2x350x12 = 8’400 CHF/year for a basis health insurance with 2’500 k deductible/each (Ticino costs). So basically if we also use the services we have to account for at least 8’400 + 5’000 = 13’400 CHF/year (OK, + also the 10% participation up to 700 CHF/year). To consider that these premiums grow by 4-5% / year (while the same is not valid for the stash after retirement - quite the opposite indeed).
On top of that, if we spend considerable time abroad we would end up using medical services there and pay extra…
All these costs would probably offset any benefit related to fiscal treatment in CH (e.g. no taxes on capital gain when you start selling your assets during RE). On the other hand I think that a private health travel insurance 365 days/year would end up being cheaper and cover everything when you use medical services abroad.
Any thoughts about this issue ? How do you plan to deal with this situation ?
[edit] maybe it would be worth it to have a separate topic regarding optimization of health insurance costs (pros / contra of the different available options) ?
1 Like
Personally I have supplementary insurance which covers treatment abroad. It is included in my FIRE budget along with the deductible
For me it makes no sense to RE if I could instead work a while longer to be able to afford better healthcare as I get older. The chances of having cancer etc. increase every year
I also plan on a low Safe Withdrawal Rate ~2.5% so it is probable my assets continue to grow. I hope any illness happens far enough in the future so I could afford to pay cash for any new treatment that may not covered by health insurance, or e.g. a carer at home instead of an old folks’ residence, if I need it (so basically, self-insure)
1 Like
To continue the AHV discussion: an interesting thing for me is that my girlfriend and concubine (we have three children together) wants to continue work (she likes it, she would keep the 50% she has now).
For me I would probably need a big spreadsheet to see if it is worth to marry her to avoid paying AHV (she would make enough to compensate for me), compared to joint tax declaration etc
I can imagine the romantic proposal: “please marry me so I can jump on your AHV wagon, thanks”
lol
6 Likes
AHV will be capped at 3585 though.
1 Like
OK well you are playing it pretty safe. May I ask you how much are you accounting in health costs (insurance +) for your family (if you have a SO) as a % of your yearly RE budget ?
With current costs and especially their growth rate during the last years I see it as a real danger for our financial safety in the long term. I doubt my assets will be able to keep up…
Let’s pretend we consider a cash flow of 60 k/year of which 15 k/year would be eaten (today) by health costs. So 25%. In 20 years it might very well double → it would suddenly account for 50% of our expenses 
1 Like
true, married couple receive less AHV
But I expect some kind of armonization for married couple vs concubinat etc etc. Let’s see when the time comes 
1 Like
Worth checking. My understanding is that:
- when not working, you have to register as a « person without money-earning activity », and the annual contribution you have to pay for AHV is calculated based on your pension and fortune
- if your spouse works and pays more than twice the minimum AHV contribution, then your annual contribution is considered as paid
- AHV will not chase you, you have to register yourself proactively.
4 Likes
That is true and can be quite a hefty amount if you use the online calculator. (Of course when you FIRE as a millionaire that is not much but still more than having to pay nothing if your wife/husband still works).
Canton Zurich for example states that there might be reductions but you have to contact them for definitive answers:
Wenn der erwerbstätige Ehepartner oder die eingetragene Partnerin einen beitragspflichtigen Jahreslohn von mindestens CHF 9494.00 brutto erhält oder ein selbständiges Jahreseinkommen von mindestens CHF 18’400.00 erzielt, entfallen unter Umständen eigene Beiträge. Die Ausgleichskasse prüft auf Anfrage die individuelle Situation.
1 Like
I tried to capture that topic in this thread. [Edit: links to post above as threads were merged]
Summary: If you retire early in CH you should pay AVS contributions calculated as 0.2-0.3% of your taxable wealth (exception if your spouse works as per comment from @jmp above)
There are restrictions to block this loophole (see thread referred to above).
3 Likes
Is there any ROI on AVS/AHV somewhere here ? Like maybe investing that money is better than paying AHV/AVS, depending on opportunity cost, age etc. Additionally if you stop working at 50, you may already have 32 years of AHV paid. Maybe there is some optimal number like “paying another 3 years then stop and investing because marginal increase of AHV “salary” is not as big as opportunity gain loss”.
I would be curious if anybody had run the numbers or so. I don’t really know where to find the information or have time right now to try it.
1 Like
How would you avoid paying it? I think there is no choice, if resident in Switzerland
2 Likes
you are right of course, my first monday’ brainfart.
I remembered a comment of my mother about “not forgetting to still paying AH” for my brother but it was because he moved away in East Asia, not because AHV is optional 
somehow got mixed up in my head.
This is a good point for Swiss nationals that RE (or not) abroad. From what I understand, paying AVS/AHV is optional in this situation, so calculating ROI is interesting. I guess how many years you’ve already contributed plays a big role, not just how much you expect to pay per year.
I know some on the forum are quite knowledgeable about how 1st pillar pension works and is calculated, any inputs?