Successful Budget Planning for Retirement – What a Recent Article in The Market Reveals
When planning retirement, people often think of freedom, time for family, and new opportunities. However, to ensure this phase of life is not overshadowed by financial worries, one thing above all is required: foresight. A recently published article by Manuel Boeck in the renowned financial magazine The Market from NZZ impressively highlights how essential sound budget planning is for the years after retirement and what people in Switzerland often underestimate.
In the picture: Heinrich Bruhin, Head of Pension Provision at Tellco
“A solid budget for the time after retirement is essential to ensure financial security in retirement,” says Heinrich Bruhin, Head of Pension Provision at Tellco, in the article.
Budgeting Means: Acknowledging Reality, Creating Room for Action
The article illustrates that average retirement incomes often fall short of maintaining the accustomed standard of living. Particularly in old age, many costs rise again – for example, due to health or care needs. Those who start planning early can specifically close pension gaps. The article emphasises that clear figures and realistic assumptions are crucial for making well-informed decisions.
Taxes, Inflation, Housing Situation – The Underestimated Influencing Factors
According to The Market, many people forget that in retirement, not only does income decrease, but taxes, health insurance premiums, and inflation also significantly impact the budget. Moving to a more affordable area, for example, can have a greater impact than expected. And an overly optimistic assumption about inflation can severely affect purchasing power in the long run.
For this reason, Heinrich Bruhin recommends: “Include buffers for inflation and keep an emergency fund available to cover unexpected expenses.”
Lump-Sum Withdrawal or Pension? Both Have Their Merits
Interestingly, for the first time in 2023, more people in Switzerland opted for a lump-sum withdrawal from their pension fund than for a traditional pension. The article examines the advantages and disadvantages – including for heirs. While with a pension, unused capital reverts to the pension fund, with a lump-sum withdrawal, it remains in the estate and can be freely inherited.
However, it doesn’t necessarily have to be a decision between a pension or lump-sum withdrawal. Often, a mixed solution is sensible, combining financial stability with flexibility. By covering fixed expenses such as rent, health insurance, and taxes through regular pension payments, a portion of the capital remains available for spontaneous needs or long-term investments.
Our Conclusion at Tellco: Good Pension Planning Begins with Clarity
The insights from the article in The Market underscore how important it is to view budget planning not as a duty but as an opportunity. Those who realistically plan their finances in retirement gain security, flexibility, and quality of life.