# Do you need a ridiculous amount of money to retire in Switzerland? **URL:** \ **Category:** Investing / Others\ **Created:** [September 19, 2023, 9:09am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907 "2023-09-19T09:09:07Z")\ **Posts on this page:** 20\ **Page:** 3
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 3:26pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/43 "2023-09-20T15:26:51Z")
So here it is. For one person in Baselland needing 72k of costs per year you need about 2.85 million of assets to retire at 50 and live until 90. - Wealth tax is calculated at flat 0.5% - Income tax is approximated with a degree 2 polynomial using 2021 tax rates for BL (ones I had easily to hand) and 2023 for Federal - Assumes kids until 2041 (impact on tax rates) - 4% return on assets - 3% inflation - 75% AHV (33/44 years) - Effective income tax rate varies between ~15%-25%. average: 20% - Including wealth tax, ETR averages 28% - Formulas at bottom for those wanting to review the calculation ![image](https://forum.mustachianpost.com/uploads/default/original/2X/7/743a482550c35b65476ea41f8c841f5aa3d69349.png) ---
**Author:** ![xmj](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/xmj/32/9471_2.png) [@xmj](https://forum.mustachianpost.com/u/xmj)\ **Post date:** [September 20, 2023, 3:29pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/44 "2023-09-20T15:29:06Z")
> [@Barto](#): > > Marginal wealth tax in Geneva is 0.8% and AVS when not in employment is 0.2-0.3% of NW. So these really are the expenses. Like with anything, you can be creative about these. If taxes are too high in Geneva, move to Vaud 😉 if AVS is levied on the wealth when not in employment _at all_, get some very part time job - sit on a board, perhaps, or help a mate grow his business on an on-and-off (5%, say) basis ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 3:30pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/45 "2023-09-20T15:30:25Z")
> [@xmj](#): > > if AVS is levied on the wealth when not in employment _at all_, get some very part time job - sit on a board, perhaps, or help a mate grow his business on an on-and-off (5%, say) basis Not so easy: if your AHV from employment is less than a fraction of that calculated on wealth basis, you still pay the higher amount. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 3:32pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/46 "2023-09-20T15:32:19Z")
Tax polynomials: ![image](https://forum.mustachianpost.com/uploads/default/original/2X/5/5c9ddde32c937c38164bbf1e8cf3a410eed565c0.png) Note, initially all calculations were done with no inflation and return on assets was calculated as a ‘real’ return and all costs were kept in nominal figures. Therefore all income values fell within the values shown in the pictures here. I didn’t check if the tax polynomials are still a good fit at the higher income levels. This might need checking and adjusting if a wider range of income is used, but hopefully doesn’t have a conclusion changing impact. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 4:31pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/47 "2023-09-20T16:31:32Z")
One thing the sheet highlighted to me is the viscious impact of inflation. With a 3% inflation rate, your 6k per month of expenses increases to 21k per month by age 90! ---
**Author:** ![anon17469660](https://forum.mustachianpost.com/letter_avatar_proxy/v4/letter/a/13edae/32.png) [@anon17469660](https://forum.mustachianpost.com/u/anon17469660)\ **Post date:** [September 20, 2023, 5:35pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/48 "2023-09-20T17:35:49Z")
Cool, thanks for putting this together. As an aside, I used to think that Zurich as a canton (and living in the city as the cherry on top) isn’t the greatest idea from a tax perspective (especially given cantons Schwyz and Zug would be within commuting discance, or, well, once FIREd, no commute necessary anymore) - and please don’t get me wrong: I actually mostly like paying my ZRH taxes given the benefits I personally see (infrastructure that I like and societal fairness) - but reading about the wealth tax you seem to have to pay in BL, I now feel privileged in Zurich. So thanks for that! 😉 Couple more points, and apologies if they have been discussed before in this thread: - you seem to have no pillar 2 or pillar 3 assets in your calculation? - I personally think you’re still too pessimistic to assume an overall “just” 1% return (4% nominal rate of return minus 3% inflation), but I suppose it’s prudent to calculate things with conservative assumptions. ---
**Author:** ![Barto](https://forum.mustachianpost.com/letter_avatar_proxy/v4/letter/b/e9c0ed/32.png) [@Barto](https://forum.mustachianpost.com/u/Barto)\ **Post date:** [September 20, 2023, 5:52pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/49 "2023-09-20T17:52:33Z")
> [@xmj](#): > > if AVS is levied on the wealth when not in employment _at all_, get some very part time job - sit on a board, perhaps, or help a mate grow his business on an on-and-off (5%, say) basis This potential loophole is closed. It was discussed [here](https://forum.mustachianpost.com/t/costs-after-early-retirement/5280/8) Summary: "Anyone who works for less than nine months a year or works less than 50 % of normal working hours is regarded as not being in permanent full-time employment.” [means: Pay AVS based on wealth] ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 6:28pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/50 "2023-09-20T18:28:35Z")
> [@anon17469660](#): > > but reading about the wealth tax you seem to have to pay in BL, I now feel privileged in Zurich. Yes, wealth tax in Basel is a killer - it’s one of the worst in Switzerland, behind only some of the French speaking cantons. I’m actually thinking whether to re-locate to neighbouring SO which has much lower wealth taxes. The difficulty is whether to really uproot the kids even though they are only 2 and 5 now. > [@anon17469660](#): > > you seem to have no pillar 2 or pillar 3 assets in your calculation? Pillar 2 should more or less offset my mortgage debt. Pillar 3a is a relatively small amount, but true that it will help to tax shelter some assets. Unfortunately, unlike the UK ISAs, once you have no earned income, you are unable to contribute further to Pillar 3a and so cannot gradually shuffle more from taxable accounts into it over time during retirement. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 8:45pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/51 "2023-09-20T20:45:20Z")
> [@PhilMongoose](#): > > Let’s say you want to retire early (say at 50) in Switzerland with a 6k monthly budget so 72k a year. At, say, 20% tax, you need gross of about 90k. Let’s say you have to pay AHV of 8k, so that is now 98k a year. Let’s say you have wealth taxes of around 14k per year, so that is 112k. If you can drawdown at 4% that means you need a pension pot of 2.8 million. > [@PhilMongoose](#): > > So here it is. For one person in Baselland needing 72k of costs per year you need about 2.85 million of assets to retire at 50 and live until 90. I just noticed: I do a quick back of the envelope calculation and get a figure of 2.8 million. I spend several hours doing a detailed excel model and still get 2.8 million! 😂 ---
**Author:** ![jay](https://forum.mustachianpost.com/letter_avatar_proxy/v4/letter/j/ed8c4c/32.png) [@jay](https://forum.mustachianpost.com/u/jay)\ **Post date:** [September 20, 2023, 8:53pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/52 "2023-09-20T20:53:03Z")
> [@PhilMongoose](#): > > 4% return on assets Are you assuming that the 4% return is all taxable income? If so, this doesn’t seem realistic for an average portfolio. 4% total nominal gross return with a 3% inflation is also very pessimistic. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 10:43pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/53 "2023-09-20T22:43:00Z")
Yes. I assume all is taxable. You could make an adjustment for this if there’s a significant amount in tax shelters. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 20, 2023, 10:50pm UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/54 "2023-09-20T22:50:24Z")
Since it took me half an hour to re-locate this, I will post on here: ![Screenshot_2023-09-21_00-49-10](https://forum.mustachianpost.com/uploads/default/original/2X/3/314db2de1de6d02cc0ce43b54a13edca666acbd7.png) Don’t forget to increase your property value for the AHV calculation! ---
**Author:** ![xmj](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/xmj/32/9471_2.png) [@xmj](https://forum.mustachianpost.com/u/xmj)\ **Post date:** [September 21, 2023, 3:42am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/55 "2023-09-21T03:42:06Z")
> [@Barto](#): > > This potential loophole is closed. It was discussed [here](https://forum.mustachianpost.com/t/costs-after-early-retirement/5280/8) > > Summary: "Anyone who works for less than nine months a year or works less than 50 % of normal working hours is regarded as not being in permanent full-time employment.” [means: Pay AVS based on wealth] Not so much a loophole as being creative about what to do in “retirement” / how to plan your lifestyle. The AHV/IV 2.03 document, where this quote comes from, also shows that the (active) income required to not be considered, and having to make, non-employed contributions is quite low and if you’ve ever run a firm, it’s trivial to find a way of having “active retirement income” exceed this through the company board positions I mentioned above. (Did you think I would do this for free?) ---
**Author:** ![jay](https://forum.mustachianpost.com/letter_avatar_proxy/v4/letter/j/ed8c4c/32.png) [@jay](https://forum.mustachianpost.com/u/jay)\ **Post date:** [September 21, 2023, 5:17am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/56 "2023-09-21T05:17:56Z")
> [@PhilMongoose](#): > > Yes. I assume all is taxable. You could make an adjustment for this if there’s a significant amount in tax shelters I wasn’t referring to tax shelters such as pillars 2 and 3a. I meant that if you have a nominal gross return of 4% in average, typically only about 2% will be from dividends and the other 2% will be from capital gain. Only the 2% dividend income is taxable, which should significantly reduce your income taxes. ---
**Author:** ![rolandinho](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/rolandinho/32/423_2.png) [@rolandinho](https://forum.mustachianpost.com/u/rolandinho)\ **Post date:** [September 21, 2023, 6:07am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/57 "2023-09-21T06:07:44Z")
> [@jay](#): > > 4% in average, typically only about 2% will be from dividends and the other 2% will be from capital gain. Only the 2% dividend income is taxable @PhilMongoose , I agree with @jay , I have a similar table/spreadsheet and I use 5% nominal return (in CHF), _2% as taxable income_ and _3% as capital gain (non-taxed)_. Then an inflation rate of 2%, except for my Krankenkasse which I separate out as an expense an increase by 3x2%(i.e. 6% KK inflation - basis for this is core infl 1997-2017 0.5%p.a. KK inflation 1997-17 4% p.a.) The pillar 2 and 3 is separated out from my NW until 65 (no annual taxes, real return 4.5%, tax on withdrawal 7 to 10% though). ---
**Author:** ![Luk\_nuts](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/luk_nuts/32/9302_2.png) [@Luk\_nuts](https://forum.mustachianpost.com/u/Luk_nuts)\ **Post date:** [September 21, 2023, 6:17am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/58 "2023-09-21T06:17:19Z")
> [@PhilMongoose](#): > > For one person in Baselland needing 72k of costs per year you need about 2.85 million of assets to retire at 50 and live until 90. According to your calculation, how much would that (IMO quite pessimistic) figure change, if one retired at 51, 52, 53 etc.? ---
**Author:** ![Patirou](https://forum.mustachianpost.com/letter_avatar_proxy/v4/letter/p/439d5e/32.png) [@Patirou](https://forum.mustachianpost.com/u/Patirou)\ **Post date:** [September 21, 2023, 7:13am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/59 "2023-09-21T07:13:20Z")
I think someone said it already, but 1% real return for a typical portfolio is low and has not been seen on an extended period of time in the past. Nominal return would be rather 7-8% so after inflation 4%. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 21, 2023, 7:31am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/60 "2023-09-21T07:31:46Z")
> [@jay](#): > > I meant that if you have a nominal gross return of 4% in average, typically only about 2% will be from dividends and the other 2% will be from capital gain. Only the 2% dividend income is taxable, which should significantly reduce your income taxes. Ah yes, you are absolutely right. I have to check my portfolio to see what the typical split is but it can change as the portfolio evolves. Normally, I like to have growth and low-dividends, but recently, the portfolio evolved to short duration assets and now even half of it is bonds where all the return is income - which is why I had it all as taxable so far. I will update the inputs to allow a split. Thanks! Currently, I neutralize the tax by by contributing the income into pension funds. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 21, 2023, 7:49am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/61 "2023-09-21T07:49:54Z")
You can just look the figure given on the rows for each of the ages you are interested in. ---
**Author:** ![PhilMongoose](https://forum.mustachianpost.com/user_avatar/forum.mustachianpost.com/philmongoose/32/12331_2.png) [@PhilMongoose](https://forum.mustachianpost.com/u/PhilMongoose)\ **Post date:** [September 21, 2023, 7:55am UTC](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907/62 "2023-09-21T07:55:13Z")
The good thing with the sheet is that you can easily play with return assumptions etc. to test different scenarios. At the moment, this is an all-on-one-sheet. But like you, I think I will do a more detailed expense calculation on a separate sheet and then feed it into the top sheet to get more nuanced expense evolution over time. I guess you could even apply historical or forecast different inflation rates for each category of expense and income. My version currently includes property column calculations, but these probably would also benefit from a separate sheet. Is KK the only expense you calculate a different inflation rate for? [Previous page](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907.md?page=2) [Next page](https://forum.mustachianpost.com/t/do-you-need-a-ridiculous-amount-of-money-to-retire-in-switzerland/10907.md?page=4)