What about a thread to share the key numbers of our retirement plans?
— Example [random numbers] —
Age / Period
I’m 48 and plan to retire at age ~55 in Switzerland.
I might live for another ~40 years by then.
Withdrawal Rate
My net wealth should be at ~3M when I retire. (or leave empty)
I’m at ~75% of my target net wealth as of now.
I plan to withdraw ~3% p.a. for 10 years and, when AHV/AVS kicks in, it should go down to ~2.2%.
Asset Allocation
When retired, I plan to hold following asset classes and rebalance on a yearly basis.
Stocks: 60-70%
Real Estate: 10-25%
Bonds/Cash: 5-10%
Commodities: 5-10%
I’m 32 and plan to retire at age ~55 in Switzerland.
Withdrawal Rate
My net wealth should be at ~2.5M when I retire. (or leave empty)
I’m at ~12% of my target net wealth as of now.
I plan to withdraw ~3.5% p.a. for 10 years and, when AHV/AVS kicks in, it should go down to ~2.0%.
Asset Allocation
When retired, I plan to hold following asset classes and rebalance on a yearly basis.
Age / Period:
I’m 40 y.o. and plan to retire at age ~50 y.o. in France.
I might live for another ~40 years by then.
Withdrawal Rate:
My net wealth should be at ~2M when I retire.
I plan to withdraw a Safe Withdrawal Rate (SWR) of 3,50% p.a. or 70 kchf for 15 years and, when AHV/AVS kicks in, it should go down to ~2.5%.
My FI ration is at 55% of my target net wealth as of now.
I’ve set up a guardrail to go back to work whenever the portfolio falls to 30% under the target level, go back to work and make enough money to finance a 30% drop in withdrawals.
Asset Allocation:
When retired, I plan to hold following asset classes and rebalance on a yearly basis.
Stocks: 60%
Real Estate: 15%
Bonds/Cash: 25%
Commodities: 0%
I see lot of people have different percentage for before/after AHV kicks in.
How do you calculate that? I tried https://www.acor-avs.ch/conditions
and put 10000chf p.a. from fire to rent, but I’m unsure about it.I thought it will calculate by itself the minimum payment but I might be very wrong.
Yes, thanks for the link.
Unfortunately the simulator doesn’t allow me to switch from salary to taxable net worth, so I need to do some calculations. If I read the tables correctly, if I stop to work and have 1M chf, I should pay 2098.80 (page 30), so if I want to simulate that amount on the simulator of my previous link, I should put a salary of ~33600 (page 9)
It would be interesting to see for those planning to retire our of Switzerland to see how you count your 1st, 2nd and 3rd pillards in the calculation. Because at the moment I have there almost 1/3 of my assets and if I am not able to take it until 65years old, I am not sure how to count it properly. A playable excel would be really interesting if anyone has the time and energy!
Thanks
In other order of things, I have heard the option to pledge your money to get a cheap loan from the bank. The idea is that the bank gives you for example 1.5m$ for 15years and you set it up so every year it gives you 100k$. Since you have a solid portfolio of assets the i% shall be smaller than the gains you get over time with your basket of investments. This way you money is never reduced and can pass to the next generation. Now the question is how much a bank could give you with 2m$ in assets ?
For early retirement purposes, I’m basically aiming at a perpetual withdrawal rate. For allocation purposes, especially things like end targets for (age-x) allocations, I’m using the life expectancy at my current age table from the Federal statistical office with a +5% security margin: Life expectancy | Federal Statistical Office
Margin/lombard loans. This is the basics for the “buy, borrow, die” strategy. As your heirs would inherit both the assets and the debt, the difference vs selling assets is mainly taxes and fees.
Sequence of returns risk must also be taken into account: your assets may, on average, beat the interest rate but they may do so by first plunging deeply (because we’ve encountered a market crash) and then recovering deeply too. If your debt gets called while the value of the assets plunges, you don’t get to participate in the recovery, hence ending up having to sell a huge chunk/most/all of your assets at the worst possible time. You hopefully get more upside in a vast majority of cases but take on increased exposure to the tail risk of the consequences of a major financial event.
Switzerland is a bit specific in regards to that strategy as we don’t have capital gains taxes (for retail investors), which makes selling the assets less inattractive an option vs borrowing against them.
Do you mean that in Switzerland selling assets is more attractive since we dont have capital gain no?
You mentioned that if you pledge your assets and the a loan from the bank, and the a market crash happen, the bank could ask to return the debt since your assets fell by let’s say 40%?
3.14159265…%, just for the fun of it (I was aiming at something between 3 and 3.5%). I may reassess it when I’m closer to retirement.
In countries with capital gains taxes, selling assets that have deeply appreciated is unattractive because a big chunk of their value goes to taxes. This is doubly so if there’s some kind of “step up” at death, that would let the heirs reset their cost basis and forego, partially or totally, the taxes that were due on capital gains occurring previous to the owner’s death.
The bank secures the loan with your assets, that’s why they’re willing to offer you a lower rate than you would get for, for example, a private unsecured loan. I’m no specialist and don’t pretend to know all the financial vehicles available but for run of the mill margin loans, the bank retains the right to liquidate your assets to reimburse your debt in case their value goes below a certain threshold, below which their value would no longer fully secure your debt.
I would search the forum and the broader internet for margin loan and lombard loan, you’ll be able to find specifics that will better allow for you to decide if it’s a product adequate for your purposes.
Until now, I have never defined my financial independence (FI) strategy, which I expect to achieve in 10 years. However, after reading this post, I find myself asking questions for which I currently lack clarity. I’m curious if any of you have already considered these points:
While living in Switzerland, we are accumulating savings and investing in VT, VOO, and similar options. After some years, when we are ready to achieve financial independence, we plan to relocate our base from Switzerland to Spain due to the lower cost of living. What would you do with the ETFs? Would you sell them before leaving Switzerland to avoid high tax fees in Spain? If so, how would you generate a 4% withdrawal rate from the proceeds? Personally, I would sell before leaving and invest the proceeds in real estate in Spain through a holding company.
Alternatively, would you consider staying in Switzerland for 6 months and residing elsewhere for the remaining 6 months after retirement?
Are there any other countries that would welcome individuals like us and allow us to live wherever we choose?
You can do the 6month(+1 day) thing, but it means that you pay at the very least rent+health insurance+ taxes in Switzerland, which are probably > 50% of you costs right now and will be also in the future.
If you want to do that you should probably calculate that your FIRE will cost you more than your expenses right now.
Maybe if you have already a home in Spain you might save some money, but I suppose such a plan is not to save money but more for enjoying life there.
Yes, but that implies you retire in a country that doesnt tax capital gains. If you retire in Spain you must pay between 19% to 26% on taxes for those capital gains. So how to overcome to this problem?
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