FIRE Plan at Risk Due to Potential Parental Support Obligations

Hello everyone

I’ve been working on a financial plan this year and have calculated that I should reach FIRE status by the age of 49. However, I recently discovered a huge tail risk related to the subsidiarity principle in Switzerland which could change everything.

In a hypothetical scenario, if my parents need to enter a care home and their pension and AHV contributions are insufficient, they might have to rely on EL (Ergänzungsleistungen) and possibly even social assistance. With a personal income of 250k and a net worth of 2 million (maybe in 10yrs time), I could be required to contribute up to 86k per year in parental support.

I’m looking for advice on how to protect my assets under these circumstances. Any strategies or experiences you could share would be greatly appreciated.

Thank you!

I double checked with this AXA article (German) and this Ktipp article (German).

As far as I understand, normally only social assistance (“Sozialhilfe”) causes support obligations to direct-line relatives.

A special case causing it, is if they gift all their money to you, and need the EL/PC as a result. I’m not sure if gifting it to your sibling or a cute animal NGO, can also relieve you of your money (as unfair as that sounds).

Social assistance comes from the municipality, if they use expensive solutions, they will pay it themselves in most cases. That should lower the cost of the solutions. Also, before it comes to social assistance, health insurance and EL/PC will pay their share.

Solutions:

  • If the parents don’t ask for social assistance, social assistance won’t ask you.
    • Ensure that their affairs are in order (cheap accommodation & care, (additional) insurance, AHV, etc).
    • Convince them, that they don’t need/want social assistance.
    • Take over their affairs, get power of attorney, get guardianship.
  • If the parents neglected you when you where in need, or if they committed a crime against you, obligations get lower, or even disappear.
  • Leave Switzerland
  • Pay up or don’t become wealthy

There is, of course, the aspect that they are your parents, and maybe you don’t want to exploit them to the maximum extent possible for your FIRE.

Also there is the question, why society should take care of your parents instead of you. This is where this law comes from.

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At the Moment, the SKOS guidelines foresee to take your wealth minus 500k, and divide this by the numer of years of life expectancy. This plus your income. According to these guidelines, you only owe support if that number exceeds 120k as an individual /180k for a married couple. In practice, most cantons don‘t even bother and don‘t ask for such kind of support, so they don‘t even use this policy.

In practical terms, your life expectancy is i don‘t know 85 years, you are 50 years. So if you fire, you need more than about 35 years times 120k - income. That will be be in the range of 3M+. This assuming the canton went to court (very unlikely) and that you can’t claim dividends were not a double count with wealth. If you can claim, you would only need to pay if your wealth was north about 4.2M.

Conclusion: don‘t panic

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I am assuming you are referring to the regulation mentioned in the following article
Here

I think as others have suggested and is also mentioned in this article, such cases rarely happen.

But for argument’s sake let’s say if that happens, you would not want to support your parents? Or you are trying to understand how your parents can get support from canton instead of you?