What jobs offer early retirement in technology
It doesn't always have to be the hard cut
Published in Central Switzerland on Sunday in the Vorsorgekompass - Author: Silvia Steiner - WHP
Whether employees withdraw from working life in whole or in part before the normal retirement age or even continue to work beyond that: every model must be examined from the financial point of view.
In the past, the classic professional career began at some point with a full-time workload and ended with a full-time workload. Changes to employers were also less common than they are today. The reasons for this were the lack of childcare options, no full freedom of movement for pension fund funds or less financial leeway. Today, employees have different needs and different options: part-time work, unpaid vacations, job changes, home office, partial retirement and, more and more often, continuing to work beyond the normal retirement age. The pension from the AHV and pension fund together makes up around 60 to 70 percent of the previous wages after retirement - so far the theory. The practice is often different. Career interruptions, divorces or large lump-sum withdrawals from the pension fund to purchase residential property can reduce the retirement benefits from the AHV and / or the pension fund. This may lead to a significantly lower pension level. In addition, it is often financially difficult to live with “only” 60 to 70 percent of your previous income if it was not possible to build up larger reserves during your working life. For many people, early retirement is therefore not affordable. But that does not mean that you have to work full-time until you retire properly - or, conversely, that you are no longer allowed to work when you reach retirement age.
Model: reduce workload
Partial retirement could be an interesting option for those who cannot afford to take full early retirement for financial reasons. This gives you more free time earlier, while all or part of your retirement assets remain in the pension fund. Interest continues to be paid on the retirement assets and new contributions are added. In addition, the conversion rate is usually higher at a later point in time, and this creates a better financial position for yourself.
Partial retirement with pension fund: In principle, an insured person can reduce their workload in any number of steps after consulting their employer. Partial retirement does not necessarily have to take place. However, if you want to receive retirement benefits in the amount of the reduction in the case of a workload reduction, most pension funds require a workload reduction of at least 20 percent. The regulations of the pension fund apply here. If you take a partial retirement step with the pension fund, you can withdraw the pro rata retirement assets either as a pension or as a lump sum. Depending on the canton, two to three partial lump-sum withdrawals are permitted.
Continued insurance of the previous salary: As part of the measures to facilitate the labor market participation of older employees, pension funds have been able to offer their insured persons since 2011 that they can continue to insure their previous wages in the event of a wage reduction before regular retirement. The condition for this is that the wages are reduced by no more than half. As a rule, the employee alone pays for the contributions of the voluntarily insured wage component. However, this model is a voluntary offer by the pension funds and is therefore not always possible.
AHV pension: Those who take early retirement also have the option of drawing their pension early from the AHV. You can withdraw it one or two years earlier. However, the old-age pension will be lower as a result. With an early withdrawal of one year the reduction rate is 6.8 percent, and with two years it is 13.6 percent. In addition, the obligation to contribute to the AHV does not end when the AHV retirement pension is drawn, but remains in place until regular retirement.
AHV contributions as inactive persons: The AHV contributions as inactive persons must also be taken into account in connection with full or partial retirement. If you work less than 50 percent, you are no longer considered to be gainfully employed within the meaning of the AHV. It must therefore be checked whether AHV contributions are to be paid as an inactive person. If the employer and employee's AHV contributions settled through the acquisition make up at least half of the contributions that would have to be paid as an inactive person, the AHV contribution obligation is deemed to have been met and no additional contributions have to be paid as an inactive person.
Model: Working beyond retirement age
There are not only financial reasons why someone should continue to work after retirement age. Those who are fit and would like to continue working should not be deterred by the normal retirement age of 64 or 65 years. Many employers are pleased when they keep their workforce longer. It doesn't have to be full-time. Part-time work could be more needs-based in this phase. It does not have to concern the traditional job either. Many retirees want to do something completely different at some point in their lives. Here the financial aspect is less of a priority.
Continued insurance in the pension fund: If you stay with your previous employer beyond the normal retirement age, you can usually continue to provide occupational benefits. Since only the savings contributions are continued to be paid from the normal retirement age, the premium for the risk protection does not apply. As before retirement, at least half of the contributions are financed by the employer.
Continuing to work without pension insurance: You can continue to work after retirement without paying further into the pension fund. At the time of regular retirement, the employee decides to withdraw a pension and / or a lump-sum payment and no longer pays into the pension fund from this point on. If you continue to work 100 percent, it is important to note with this variant that the tax burden is likely to increase relatively sharply with a full pension.
Continuing to work with the pension fund, but without further contributions: There are also pension funds that offer something in the middle. The existing pension fund assets remain in the pension fund and continue to earn interest. However, no further contributions will be paid. This increases the net wage, and the retirement pension is usually calculated at a higher conversion rate when it is drawn later.
AHV contributions as a "retired employee": In Switzerland, the AHV contribution is mandatory from the age of 21 at the latest and at least until the normal retirement age is reached. If someone works longer, AHV contributions will continue to be levied. For retired employees, however, there is an exemption of CHF 1,400 per month or CHF 16,800 per year. The employer decides whether the monthly or annual approach is used. Incidentally, this exemption applies per employer. If the wage is higher, AHV contributions are due on the excess wage portion. However, what does not apply after the normal retirement age are the contributions for unemployment insurance.
Postponement of the AHV retirement pension: As things stand today, the income billed after regular retirement no longer forms a pension or, to put it another way, they do not increase the retirement pension. The AHV old-age pension only increases when the old-age pension is deferred. The postponement must take place for at least one year and may be requested for a maximum of 5 years. A postponement declaration must be submitted no later than one year after reaching normal retirement age. The surcharge rate for a postponement of one year is 5.2 percent, for 5 years it is 31.5 percent. In the case of a pension deferral, you forego your pension for a certain period of time in order to draw a correspondingly higher pension later. It takes a relatively long time for the waiver of pension in the deferment phase to be compensated for by the later additional pension. That is why a postponement should be carefully considered. The receipt of the old age pension from the AHV is not linked to the cessation of gainful employment. For example, you can continue to work until you are 70, but you can still draw your AHV old-age pension at the age of 64 or 65.
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