Saving %

Dear FI Friends,

I would like to describe our total saving scheme which include the government, company pension fund, tax advantage and personal savings.

In Switzerland, I must say that we are really lucky to have a good retirement saving scheme, which is composed of 3 pillars of out 2 are mandatory and 3rd one is private but as a tax advantage benefit.

1) Social Security fund, taken directly out of our salary and represent 4.2%. The company contribute to 4.2% as well which give us a total 8.4%.

2) Company pension fund, taken directly out of our salary, the percentage has a minimum defined by law by can vary above this percentage from company to company. For my company, the percentage is 7% (new as of 1st of Jan 2015).

The 2 above funding process should represent around 60% of the last salary.

3) The privately funded 3rd pillar has a maximum amount 6768 for an employee, this amount is increasing a little bit every year. This amount if fully deductible from your tax (income).

All of the above cannot be withdrawn before 65 years old except if you are leaving Switzerland or for the 2) and 3) if you want to buy a house.

Now, our individual saving that goes at 100% into our portfolio increase. After all above deductions, taxes, rent and all other spending we are still able to put 18% aside.

So let’s recap on the below table:

Saving type

Saving percentage

Social security fund 4.20%
Company Pension fund 7.00%
Tax advantage fund 3.28%
Personal investing fund 18%
Total 32%

In total, we achieve a minimum of 32% saving, but from time to time we are able to save a little bit more on the personal investing fund.

We are away from some of our FI friends around the world but still believe that living in Switzerland is great achievement.

Let me know where you stand on the savings.

Cheers,
You can choose to put your money under a simple account that will give you around 1%-2% per year or you can choose in invest in fund with different risk level (% of equities).

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11 thoughts on “Saving %

  1. Hi @retiredat50,

    Interesting to see how we all calculate our savings rate.
    On our side for example, we don’t take into account our 1st and 2nd pillar. On the other hand, I take into account the money I put aside for our car cash cushion (in case we have an accident, to replace it easily) as well as the money we put on our children savings.
    I justify this by the fact that at some point these expenses should stop – once the cushion is built and once our children are over 18. Hence that would be money that we can account to our monthly savings rate.
    With this way of recording, we managed to average 34.5% of monthly savings rate in 2014! And as you say, with two children, we are quite proud about it even though we could go one step further.
    That’s actually one of our 2015’s goals: reaching 40% average!

    Out of curiosity, are you a family with children? Just to compare our situations.

    Good luck for this year – hopefully you reach a new record!

    Yours,
    MP

    Like

    • Hi MP,

      Thanks for commenting and pointing out our differences.
      We don’t children and I must say that I need to congratulate you even more to reach 34.5% and targeting 40%. For us it is already complicate to achieve our rate of savings.

      Based on the start of this year I have my doubt that our portfolio will increase like previous years. Let’s cross check in June-July where we stand…

      Cheers,

      Like

  2. Hello.
    Congratulations on your efforts. Just one comment, to reassure you: You don’t have to wait until the age of 65 to receive your ‘second pillar’ (company pension fund) payment. You have a right to early retirement from (now) 58 years old. The amount is less, but you would normally earn more by taking out your capital and investing privately.
    Good luck

    Like

    • Hi Lemanensis,

      Thank for passing by and drop a comment. You are absolutely right about the 2nd pilar and I can add that If we leave Switzerland definitively, we can take the lump sum.
      In my example, I took the worst are scenario without considering that option.

      Hope to see by again,

      Cheers, RA50

      Like

  3. Hello,

    do you know where we can exactly know how much is in our 2nd pillar right now? I cannot find it online.

    Thanks

    Filippo

    Like

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