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Retirement Planning - Useful Retirement Tips for Americans in Switzerland

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Retirement Planning

Useful Retirement Tips for Americans in Switzerland

American Women’s Club Switzerland | John Wanvig, CFP®, Financial Planner | March 17, 2022

About White Lighthouse

Disclaimers

  • This presentation is general information. Investments can lose money.

  • This advice may not apply to your situation. Seek professional advice to verify the best steps for you.

  • Past performance is no guarantee of future results.

  • Retain qualified professionals to determine proper tax planning for your specific needs.

Retirement Planning for Americans Living in Switzerland

Agenda:

  • Planning Is Everything

  • Your Retirement Number

  • Swiss Pension System

  • Investing For Retirement

  • Summary Of Useful Tips

“The PLAN has little value, BUT PLANNING IS EVERYTHING!”

-Dwight D Eisenhower

Retirement Planning

Are These Questions Keeping You Up At Night?

  1. At what age can I retire?

  2. Will I have enough money to retire well?

  3. How much do I need to save now?

  4. Can I buy a beach house?

One Number Will Help You Answer Those Questions

Your Money

  • Investments and Saving

  • Pensions

  • Social Security

Retirement Expenses

  • Annual Budget - Lifestyle

  • Taxes, Inflation, Life Expectancy

  • Beach House Costs

YOUR RETIREMENT NUMBER

THE AMOUNT OF MONEY YOU NEED TO SUPPORT THE RETIREMENT YOU WANT!!

Online Tools to Help Create a Savings Plan

Retirement Calculators*

  • www.Calculator.net – click on retirement calculator

  • www.white-lighthouse.com – click on Resources → Simple Retirement Calculator

  • www.financialmentor.com – click on Calculators → Ultimate Retirement Calculator

Be careful! It can be complicated to take into account taxes, pension income, and the time value of money.

*The results from these tools are rough estimates and may not apply to your situation. Seek professional advice to verify the best steps for you.

However: Money Is Not Everything

  1. What will you do in retirement?

  2. Where do you want to retire?

  3. What resources do you need beyond money?

  4. How many bedrooms in the beach house?

Swiss 3 Pillar Pension System

Key Points On Swiss Pension System

  1. Good and Safe – Comes with insurance but it has low returns

  2. Track the basis in your Pillar 2 (Americans pay tax on contributions)

    1. Key to avoid double taxation of Pillar 2

  3. High earners might be able to use a Pillar 1e program

  4. Don’t do buy-backs (usually not a good investment for Americans)

  5. Lump sum is usually best if retiring outside of Switzerland

  6. If American: Avoid the Pillar 3 but do invest in an IRA

Key: Complement Swiss System with US Retirement Tools

How To Invest For Retirement

Key Principles

  1. Low-cost investing

  2. Diversify

  3. Long-term discipline

  4. Use available US Retirement Tools

    1. IRAs, brokerage account, 401K, etc.

Which Brokerage – New Laws – Choices Limited

To Invest On Your Own: (currently)

  1. Interactive Brokers (Stocks and ETFs)

  2. Charles Schwab (only individual securities)

  3. Swissquote (only stocks, expensive)

With The Help Of An Investment Manager:

  1. Interactive Brokers (Stocks and ETFs)

  2. Charles Schwab (Stocks and ETFs)

  3. Swissquote and most Swiss Banks (Stocks, ETFs, expensive)

How To Invest For Retirement: Action Steps

  1. Low-Cost

    1. US Brokerage Firm: Free accounts, free trades, free IRAs

    2. ETFs: Very low cost, tax efficient (better than most mutual funds)

    3. UCITS: DON’T BUY

  2. Diversify

    1. Index ETFs: Broad diversification by asset class

    2. Global ETFs: Developed & emerging markets

    3. Asset Classes: Bonds, equities, gold, international, etc.

  3. Long-Term Discipline

    1. Disciplined: Asset allocation, tax-loss harvest, rebalance

    2. Stay invested: Do not buy and sell, 10- to 20-year timeframe

  4. Invest Regularly

    1. Pay yourself first

    2. Automatic: Create a simple, almost, automatic system to save

Low-Cost Investing Buys The Beach House

Low Cost Investing Means!!

  1. No account fees

  2. No trading fees

  3. No fees for statements, etc.

  4. Low ETF fees

  5. Tax efficiency

Total benefit could be 1.5%/year

**Past performance is no guarantee of future performance. Investments can lose money. All numbers above for demonstration purposes only.

Summary: Tips For Retirement Planning

  1. Planning is critical to retirement success

  2. The Swiss pension system is good and safe BUT NOT ENOUGH

  3. Know your RETIREMENT NUMBER

  4. Professional financial and tax help can pay off significantly over time

  5. Low-cost investing: free accounts, free trades, ETFs, tax efficient, IRAs

  6. Create an investment strategy: asset class allocation and proper management

  7. Diversify: globally and by asset class

  8. Don’t try to time the market: stay in the market and invest regularly

AND BUY YOUR BEACH HOUSE!!

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