What is Retirement Planning?

Retirement planning is the process of determining retirement income goals and the actions and decisions necessary to achieve them — covering savings, investments, insurance, taxes and withdrawal strategy.

Three legs typically support retirement income: state pensions (US Social Security, CH AHV/1st pillar), employer pensions (US 401(k), CH BVG/2nd pillar) and personal savings (IRAs, CH 3rd pillar, taxable accounts). Together they should replace 70–80% of pre-retirement income.

The biggest variables are savings rate, investment returns, retirement age and longevity. Starting early — even with small amounts — beats starting late with large amounts thanks to compounding. Working two extra years can shift retirement security more than any investment choice.

Example

A 30-year-old earning CHF 80k who saves 15% per year (CHF 1,000/month plus employer match) in a 60/40 portfolio reaches roughly CHF 1.3m by age 65 — enough for an inflation-adjusted CHF 50k withdrawal under the 4% rule.

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Related terms

FIRE Movement

FIRE — Financial Independence, Retire Early — is a movement and lifestyle that uses aggressive saving (typically 50–70% of income) and low-cost index investing to build enough wealth to retire decades before the traditional age.

Roth IRA

A Roth IRA is a US individual retirement account funded with after-tax dollars, in which contributions and earnings grow tax-free and qualified withdrawals in retirement are entirely tax-free.

401(k)

A 401(k) is a US employer-sponsored retirement account that lets employees contribute a portion of pre-tax (Traditional) or after-tax (Roth) salary, typically with an employer matching contribution, growing tax-deferred or tax-free until retirement.

Annuity

An annuity is an insurance contract in which the buyer pays a premium (lump sum or instalments) and the insurer pays a series of guaranteed periodic payments — for a fixed period or for life — typically used for retirement income.

Frequently asked questions

How much do I need?+

Rule of thumb: 25× annual retirement expenses for a 30-year horizon; more for early retirement.

When should I start?+

As soon as you earn — compounding rewards decades, not dollars.

Should I prioritise debt or retirement?+

Pay high-rate debt first; always capture employer match; then balance.