Many Swiss citizens want to retire early – and around half of them actually manage to do so. Early retirement is particularly widespread among single people, people with higher incomes, and people living in French-speaking Switzerland. Credit Suisse economists have calculated the financial shortfalls associated with early retirement: For people in the middle-income bracket, drawing the AHV pension and employee benefits insurance pension two years early results in a reduction in income of approximately 14% over the course of a person’s life. Drawing pension fund benefits at the age of 58 results in a shortfall of as much as 23%. In view of declining pension fund benefits, the path to early retirement will likely become more difficult again in future.

There is a widespread desire to take early retirement in Switzerland. But what, in reality, is the attitude of the Swiss population toward retirement? The study published by Credit Suisse today shows that a significant proportion of Swiss citizens do indeed retire before the normal AHV retirement age (64 for women, 65 for men). While only 8% of women and 10% of men draw their AHV pension early (at most two years in advance), it is far more common to receive pension fund benefits early (women 43%; men 46%). In terms of the age at which a person describes themselves as retired, just over half of people retire at least one year before the normal AHV retirement age (women 47%; men 56%).

Early retirement is particularly widespread among single people, people with higher incomes, and people living in French-speaking Switzerland. However, nearly a quarter of early retirements are involuntary, with employees with a lower level of education or a lower household income more often affected by involuntary early retirement.

Early retirement can potentially reduce income by over 20%

Early retirement usually results in a lifelong pension shortfall. In their study, Credit Suisse economists use different scenarios to show how the choice of when to retire affects pension income derived from AHV and employee benefits insurance. For a man in the middle-income bracket (e.g. a teacher), drawing his AHV and pension fund benefits two years early results in a lifelong reduction in pension benefits from CHF 49,823 to CHF 42,742 per year (CHF 4,151 to CHF 3,562 per month) – a reduction of 14% compared with drawing the AHV and pension fund benefits from the age of 65. If he defers drawing his AHV pension until the age of 65, the pension fund benefits are still reduced by 8% if drawn from the age of 63 and by 23% if drawn from the age of 58. Furthermore, these reduced pension fund benefits and, ideally, a bridging pension or the consumption of capital (private assets, Pillar 3a) must finance living expenses until AHV benefits are drawn. In addition, AHV/IV/EO contributions must continue to be paid until the normal AHV retirement age. These contributions total between CHF 496 and CHF 24,800 per year, depending on pension income and assets. When considering early retirement, it is essential to take the financing of these contributions into account.

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