Investing for retirement: How to invest your capital wisely

What money might you expect to receive in the years around your retirement?

• Capital from your pension fund, withdrawn in full or in part
• Payouts from life insurance policies and the 3^rd pillar
• Assets from inheritances
• Proceeds from the possible sale of real estate

How you manage this money will determine your financial situation in retirement. In a savings account, money gradually loses value due to low interest rates and inflation. In contrast, stock markets can experience significant fluctuations. And in both cases, you can't be sure how long the money will last. That is why it is important to find the best possible combination of security, predictable payouts and potential returns that works for you personally.

Pension fund payouts 

A good investment strategy for retirement starts with your overall financial situation. These three steps will help you get your finances in order and find suitable solutions.

1. Self-assessment: What is your current situation?
It all starts with an honest assessment of your current situation:

• Income: OASI, pension fund (pension or lump-sum payment), other pensions or regular income
• Assets: Pension fund assets, 3^rd-pillar balances, savings, securities, real estate
• Expenditure: Cost of living, housing, hobbies and healthcare costs, as well as dreams, such as traveling

Many people ask themselves: What should I do with my pension fund capital?

The answer depends heavily on your overall financial situation. Don't consider this question in isolation; instead, integrate it thoughtfully into your overall financial and retirement planning. Completing a self-assessment will help you with this.

2. Clarify goals: How would you like to live after you retire?
The second step focuses on your personal goals:

• Retirement date: When do you definitely want to stop working?
• Retirement budget: How much money do you need each month to afford your desired lifestyle?
• Housing in retirement: Would you like to keep your home, downsize or sell it?
• Time planning: How long does your capital need to last (keyword: capital consumption)?

There are various capital consumption calculators that provide a general guide. However, it is even more important to interpret the results correctly – and that is where professional advice is invaluable.

3. Implementation: The right investment strategy for your retirement years
Your personal investment strategy is derived from a self-assessment of your current situation and the clarification of your goals:

• What type of investor are you: Is security your top priority or are investment opportunities with a higher risk also important to you?
• What percentage of your assets would you like to use to generate a steady income?
• What percentage should be allocated to investments with a potential for high returns?
• Which solutions best suit your needs and goals?

Only on this basis can we meaningfully discuss concrete implementation strategies involving payment plans, private pensions, asset management or certificate products.

In retirement, it is important to structure your assets in a way that provides security, predictable income and reasonable opportunities for returns. As a rule, various solutions are combined for this purpose.

Investing pension fund assets and 3^rd-pillar funds wisely
Are you expecting to receive large sums of money, such as from your pension fund or the third pillar? If so, the key question is how you can best invest this capital. Putting all your money in a savings account is usually not a good idea. In fact, it may make sense to:

• use a portion for regular distributions (e.g. through a payment plan),
• set aside a portion for long-term security and retirement provision (e.g. a private pension, life insurance with a savings component),
• and invest a portion in opportunities for returns (e.g. asset management, structured products).

For more information on this topic, see the guide "Pension fund payouts: Lump sum or annuity" on zurich.ch.

Payment plans and private pensions
If you want to generate predictable income based on your capital, payment plans and private pensions are key components. They supplement other sources of income, such as the OASI pension, a pension from a pension fund (if applicable) or rental income, for example:

• Payment plan:
  Your capital remains invested and you receive regular, predictable payments over a set period (e.g. 20 years). The assets are gradually depleted but remain invested in the meantime.
• Private pension:
  You receive a life-long pension, regardless of how old you get. This provides additional security as the income is guaranteed for the rest of your life.

Often, a combination makes sense, for example
a payment plan followed by a life-long pension. This way you'll get higher, predictable payments at first and, later on, the security of a guaranteed pension for the rest of your life.

Asset management for larger capital sums
Those who have substantial assets and do not want to manage their investments themselves can use professional asset management services:

• The capital is broadly diversified (e.g. across various asset classes and regions).
• The investment strategy is tailored to your risk profile, time horizon and retirement income needs.
• Your portfolio is monitored on an ongoing basis and adjusted as needed.

Asset management can be an attractive option for people who want a structured investment but don't want to have to deal with this topic all the time.

Certificate products with capital protection and opportunities for returns
Certificate products are aimed at investors with a shorter investment horizon who value return potential but do not want to fully expose themselves to equity risk:

• You do not invest directly in a fund but rather in a certificate that tracks an index of different equities.

Certificate products from Zurich generally offer:

• capital protection in the event of negative stock performance
• additional returns in the event of positive performance

For example, there are 3‑ and 5‑year certificates, which are suitable for specific time periods. Zurich also offers a certificate-based solution with a 10-year term and death benefit coverage.
This gives you the opportunity to earn attractive returns while limiting your downside risk. For details on how these products work and the opportunities they offer, please see the overview page "Structured products: Capital protection & return opportunities" as well as our guide "Certificates as debentures: Opportunities & solutions" on zurich.ch.

Many people ask themselves: Are equities still a sensible investment option during retirement?

The answer is yes, but not as the only solution and always tailored to your situation:

• A moderate equity allocation can help protect your assets from inflation.
• In later life, equities are typically utilized through funds, asset management or structured products – as part of an overall strategy with clear security components.
• The key factors are your risk capacity and risk tolerance, your other sources of income (OASI, pensions) and your time horizon.

Savings options for retirees in Switzerland
Even in retirement, there are ways to improve your financial situation:

• Combine pension payments and lump-sum withdrawals (e.g. from your pension fund) strategically.
• Take advantage of tax optimization strategies (e.g. staggering your withdrawals).
• Check whether your existing investments and insurance policies still align with your current stage of life.

Comprehensive financial and retirement planning helps you identify opportunities and make the most of them. You can find more information on this topic on zurich.ch in the section on retirement planning and financial planning.

There are many key questions that cannot be answered in general terms, for example:

• When is the right time for me to retire?
• Should I withdraw my pension fund assets as a pension or as a lump sum – or choose a combination of the two?
• Will I still be able to afford my home when I retire?
• How can I plan my gifts effectively?
• How can I optimize my taxes in connection with pension and lump-sum payments?

There is no one-size-fits-all answer; the right solution depends on your personal situation. This is precisely where personal financial and retirement planning comes in:

• It takes into account all sources of income and assets (OASI, pension fund, 3rd pillar, savings, securities, real estate).
• It analyzes your goals, risks and time horizons.
• It develops a concrete plan with appropriate solutions and a coherent investment strategy.

Zurich offers you two key advantages here:

• Comprehensive financial and retirement planning by experts: Retirement provision, investments, taxes and home ownership are considered and planned in an integrated manner.
• A wide range of solutions from a single source: Thanks to our subsidiary, Zurich Invest Ltd, we are able to offer you a full range of retirement provision and investment solutions. With us, you can choose between payment plans, private pensions, life insurance policies with a savings component, asset management and certificate products. Based on your personal situation, we'll find the best combination for you.

If you'd like to invest your money wisely for the period after you retire, we're here to offer you advice and support. Zurich provides you with comprehensive advice and tailored solutions.