Early retirement at 58 or 60: What it really costs
February 18, 2025
2 min read
arvy's Teaser: You're 55 or 58 and thinking: "I don't want to work until 65." Nearly half of Swiss residents think about it. But between the wish and the reality lies a calculation most underestimate. AHV cuts, pension gap, health insurance, missing contribution years — costs quickly add up to CHF 200,000–500,000. Here's the honest math.
The 5 Costs Nobody Has on Their Radar
1. AHV reduction: −6.8% per year of early withdrawal
You can draw AHV from age 63. Each year costs 6.8% — permanently, for life. Early at 63 instead of 65: −13.6%. On a max pension of CHF 2,520/month, that's CHF 343 less every month forever. Over 20 years of retirement: CHF 82,000 less.
2. Pension fund: Less balance, lower conversion rate
Stopping early means missing the highest contribution years (18% age credits from 55–65). Many pension funds also reduce the conversion rate for early withdrawal by 0.15–0.2% per year.
At 65: CHF 500,000 × 5.4% = CHF 27,000/year
At 60: CHF 400,000 × 4.8% = CHF 19,200/year
Difference: CHF 7,800/year less — permanently. Over 25 years: CHF 195,000.
3. The gap until AHV: 2–7 years with no state pension
Stop at 60, earliest AHV at 63. Three years to fund entirely yourself. At CHF 6,000/month: CHF 216,000 from your own pocket. From 58 to 63: CHF 360,000.
4. Health insurance: No more employer contributions
After early retirement, you pay everything yourself — accident insurance, daily sickness benefits, potentially higher premiums. Budget CHF 400–600/month in additional costs.
5. AHV contributions as non-employed person
Even without working, you owe AHV contributions until 65. Based on wealth and pension income: CHF 514 to CHF 25,700 per year. And missing years further reduce your already-cut AHV pension.
What You Need to Stop at 60
How It Can Still Work: The 4 Levers
Lever 1: Partial retirement. Reduce to 60% or 40%, draw partial pension, keep working and contributing. Often the smartest solution.
Lever 2: Bridging pension. Some pension funds offer higher payments until 65 (compensating for missing AHV), then lower afterwards. Check your regulations.
Lever 3: Lump sum + own investment strategy. Take the capital and manage withdrawals yourself. At 3.5–4% withdrawal rate, CHF 500,000 generates CHF 17,500–20,000/year for 25–30 years. (→ The 4% Rule for Switzerland)
Lever 4: Invested savings as a bridge. Free investments built up from age 40–45 via savings plan can fund the bridge years without touching pension or 3a.
Example: CHF 1,000/month invested from age 45, 15 years (~6%) = ~CHF 290,000. Enough to bridge from 60 to 65 at moderate costs.
"Early retirement isn't free. But it's plannable. The earlier you start calculating and investing, the more freedom you'll have in the end."
Let's calculate your early retirement together.
How much do you need? How to invest the bridge years? Partial or full? We'll look at it together — no obligation.
Disclaimer: This article is for general information and does not constitute investment advice. All calculations are highly simplified and illustrative. arvy is a FINMA-regulated asset manager.
