Unemployed wife, how to optimize retirement planning?

My wife is unemployed and a full time mom. Since she didn’t work a single day in Switzerland I see my options to build up retirement accounts for her very limited. What do others do about this?

I think it’s likely that she starts working when my son reaches school age but she will probably be around 45 by then with 0 CHF in retirement accounts (AHV, Pillar 2, Pillar 3).

What are my options to improve her chances on retirement in Switzerland?

As you wrote that she is your wife, it‘s not true that her AHV is 0. It‘s combined for married couples.

Being employed is not a requirement for paying into 3a. Certainly an option to consider.

The swiss retirement system is very skewed toward working people, so you don’t have a lot of options.

Do you fill your taxes jointly? I’d contact the AHV office to make sure if there’s any way for her to contribute, that she does it.

If she’s willing to set up her own business, in whatever field, and the AHV office accepts it, she could register as a freelancer and contribute up to CHF 34,416.00 to a 3A plan (in 2021, it’s CHF 34,128.00 in 2020).

Other than that, basically, your own contributions are meant to serve you both during the time she’s not working and she should be entitled to half of it should anything happen. Your Pillar 2 plan should include some protection for her in case of your death/disability (if not done already, do check them), you can complement them with an additional 3A or 3B life insurance (I’d make sure that she is sufficiently covered should you die, these things can happen unexpectedly).

That leaves taxable contributions, which seems like the best way to provide yourself (as a family) with a nest egg for retirement on top of your Pillar 1, 2 and 3 contributions.

Things may vary depending on if you fill jointly or not (I’m not even sure if you can not fill jointly as a married couple?). Some 3B contributions can be deducted in some Kantons, it might be worth taking a look if there’s a way for you to use it.

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You can only contribute up to 20% of your annual revenue. So, you would need 172080 in revenue to contribute the maximum in 2020.

You do not need to be employed, but you need a revenue. Without revenue, you can’t contributed to a third pillar.

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I understood it is. Either 20% of self employment income or up to 6.8k when regularely employed, no?

Yes we do file them jointly as we are legally married and living in the same household.

That might be a possibility but I doubt that she will achieve an income of 170k CHF to allow for the maximum contributions. Easier probably would be some regular employment in a 20% - 40% setup but then the 6.8k can also not exceed 20% of the income right?

It does some 3x yearly salary as lump sum and iirc 60-70% as widow rent. Didn’t check recently

Ah I see @thepoorswiss already answered mostly the same.

So I conclude so far:

  • No possibility for AHV contributions because we will get the marriaged tarif anyway (will it be lower if she never contributed I would be entitled to the maximum due to my salary?)
  • No possibility to build up a Pillar 2 for her neither contribute to Pillar 3 unless she has some income/revenue

I’m less concerned about the case when I’m dying but more concerned about her situation in case of a divorce. I mean Pillar 2 funds would be split from point of marriage and all contributions to Pillar 3a too I guess. But what happens to AHV? Where would her Pillar 2 funds flow if there is no employment as cash to the bank account or to one of those “Freizügigkeits Konto”?

Thanks for your replies. There is a very nice overview on the requirements here:

I thought that it’s always possible to pay 3a while being unemployed. But as the page above mentions, it’s only possibly while you receive ALV. Which does not seem to apply to the person we are discussing here.

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not specifically for retirement but in general:

what my girlfriend an me will be doning if we get kids is, the one who is working will be paying the other who is doing childcare for taking care of the child (incl. some additional % for ahv and 2nd pillar,… but in cash not because there wont be an ahv or 2nd pillar).

what the perso, who is taking care of the child more often, is doing with the money, everyone can decide on its own

the main difficulty remaining, is to figure out a fair contribution for taking care of the child. i think that this is quite individual.

That’s definitely to be recommended & fair. I do that with my girlfriend / mother of my child.
But OP is married, so his is hers & hers is his, all in one pot etc, no reason to make “payments”.

If my divorced Swiss friends are anything to go by, you shouldn’t worry too much about your wife in a divorce situation. The law & divorce conditions are “somewhat skewed” to her benefit, is the impression I get. To steer against this, it should be a big priority for you, that she starts a job, part-time is good too, to simply get back in the job market ASAP. Don’t wait till 45. If she is 45 and ends up unemployable & you get divorced you’ll pay support till you die. In this case, U
unless you’re a great earner, you’re really screwed. I know you didn’t ask for this advice, and I’m really not cynical about it as it’s not my personal experience. I’ve just heard to many sh*tty stories & know it must be reality.

At divorce AHV gets split too. But not only your contributions are in the pot, cos as a stay at home Mum she is making theoretical contributions equivalent to CHF 80k income at this time.
Don’t worry about AHV.
Where half of your 2nd pillar flows - “worry” about that when you get there (hopefully never). There’s new options for 2nd pillar accounts (Freizügigkeitskonto is one option, Finpension another) for non-employed opening up every few months. Maybe she’ll be working by then, in that case it goes to her 2nd pillar at that employer.

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The pension plan must, for married couples. It’s the law.

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Well that dying could certainly be accelerated in that case. kidding aside. I guess I pivot my question again back to: Are there any tax optimized retirement investment options for unemployed houswives?

Tax optimised…for wife…? She’s an unemployed housewife - she doesn’t pay taxes.
You can use the usual retirement investments (stock up 2nd pillar, pay 3a) to optimise your taxes. She’ll get that (if u die) or get half of that (if u divorce).

Yes that all clear thanks. Let’s assume she starts working tomorrow and get a Pillar 2a, I was looking for suggestions like how I could max out her Pillar 2a in this case (which would lead to tax deductions iiuc).

Other people may correct me but the maximal amount you can buy back into the Pillar 2 is calculated as if you had contributed to it at your current salary from when you were 25.

When she starts working, you should be able to buy those years back if you so wish. You’d have to weight the gains of what you’re trying to achieve vs the opportunity cost of having that money earning low interest (though being tax deductible and convertible into an annuity at retirement age, provided she works until there).

That’s quite an oversight on my part, I should have thought of mentioning it earlier.

ETA: one thing you can do is optimize tax deductions on the way but mainly wait until close to retirement to buy back the pillar 2 in order to max it. Of course, that’s difficult to do in the specific case of a divorce. I mean, you can do it before divorcing but if you’re divorcing in good terms, there are a lot of other things you can do at that point to provide for her and care for her future life.

Yes, buying into Pension Fund (pillar 2) will be possible, approx as @Wolverine describes. But depends on many factors. She may start part-time & hence low to mid salary (=not so much tax saved), depends on family income I guess. Depends on Pension Fund of her employer, how good are the conditions, how healthy is it.
My gf returned to work 60%, we have various deductions for child etc, all in all even in a relatively high-tax canton I recommended she not pay in 3a (even less so pillar 2!) and invest the money in VWRL instead.
Don’t try too hard to focus on tax savings, it’s nice :slight_smile: but not everything.

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